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The Pros and Cons of a Local Credit Union

I remember the day I got my first bank account. My mother and I went to our bank, where I stood so short I could barely see the top of the counter, let alone the person sitting behind it. I hugged my mother’s leg while she talked about things I didn’t understand, but I did realize that I got a new t-shirt and a fancy bank balance book which was wonderfully, gloriously empty – except for the starting balance. Over the next few years I would be taught to save a portion of the allowance that I got on a weekly basis ($1/week), and every couple of months we would go and make a deposit into my bank account.

I didn’t realize this at the time, but this bank account was a local credit union that my parents had been going to since they moved into the city. It continued to be my bank account until I moved off to college, where they didn’t have a branch. Once I got a job out there, it just made more sense for me to have a bank branch nearby, so I started a new account at a different local credit union. This one continued to work well for me for a couple of years, until I moved, again, and yet again I did not have a local branch to go to, so I switched banks to yes, another local credit union.

I’ve always avoided big banks. I don’t exactly know why, but it probably has something to do with the fact that I was taught to use a local credit union, and that big banks have never offered anything for me to consider switching. In fact, in talking with friends who do use bigger banks, I’ve found that their banking solutions leave much to be desired.

The biggest reason why is the simplest one. My local credit union doesn’t charge me to use their bank. There is simply no monthly fee. I know of friends of mine who pay anywhere from $3.50 to $10+ each and every month for the privilege of using their bank. To me, that is insane, as you’re directly cutting into the profit that you’re making (interest) keeping it in the bank in the first place! My bank doesn’t charge me a monthly fee. It doesn’t charge me to use cheques (just to buy them in the first place). It doesn’t charge me to use ATMs (unless I use a non-credit union bank). It doesn’t charge me to use my debit card, no matter how many times I swipe it. These small differences can end up saving me a lot of money, as I’m not losing $3 here, $5 there to small petty things like using my debit card more than 15 times in a 4-week period.

Now, they do charge me for things like overdraft on our chequing account, or using an out of system ATM to deposit or withdraw funds, but that is true across all banks (as far as I know). And while my local credit union only has a few branches, and therefore ATMs, within a fair distance of me, the benefit of being with a credit union is that I can use any credit union’s ATMs without fees. That doesn’t just double or triple the ATMs available to me, it increases the chances of me getting a free ATM 6 or 7 fold.

Another huge positive for using a local credit union is the fact that they often offer better interest rates than big banks. As a smaller company they are more flexible and therefore able to ride the waves of the market, allowing them to offer their customers better interest rates. Personally, my bank has offered us a rate lower than my wife’s big bank loan. Again, because they are smaller and more adaptable to your local situation, the banks are more likely to work with the customer. Every time I’ve had to go into our bank to deal with them directly I’ve almost always had a pleasant and positive experience. The last time I sat down with the bank manager himself and told him that they needed to up their interest rates in order to remain competitive with online banking, and he not only agreed, he said that he has been talking with upper management about it for quite some time and is hoping to get it changed as soon as possible. Personally, this made me feel like this was “my” bank, where I had a say in what happens.

Unfortunately, the small, flexible, local credit union does have some drawbacks. While it deeply cares about its customers, it also cares about its employees, and that means that a lot of the branches don’t have the best hours for availability. I know that each branch is often closed throughout the weekend, and closes pretty early on weekdays too. When I work full time 9-5 Monday through Friday, I have a hard time finding a branch whose hours work with my schedule. And as I found out when I went to buy a car a couple of weeks ago, the entire bank, including the call centers, closes down every single day of a long weekend.

The most annoying problem, I would estimate, of using a local credit union, is the same problem I discovered when I moved from city to city. The locality of the bank means that when you are no longer local, the bank is more or less useless to you. I’ve had memberships at 3 different credit unions because of this. If I was someone who moved around a lot more often, or if I travelled for extended periods of time, or if I had two different properties where I split my time, then a local credit union wouldn’t make sense for me because I would need something that was national.

All in all, I would recommend a local credit union every time, simply because it costs less, seems more personable, and provides a sense of security. Unless you’re constantly travelling, moving, or need a lot of one on one attention from your bank, a local credit union is a surefire solution to your banking problems.

Do you use a local credit union? What positives/negatives have you had with your bank?


  1. Natalie Joan

    I love my local credit union. We are very small – one branch – but I have the whole credit union network to rely on.

    We currently offer the highest interest rate on TFSA available in Nova Scotia, and are competitive on other rates as well.

    Unlike your credit union, I do pay a monthly service fee, but at $9.25 it is lower than what I was paying a local bank and offers far, far more in terms of services.

    I love the personal service. I love that staff remember my name when I walk in. And I love the sense of community.

  2. James

    i use a “big bank”. i personally like the ability to grab money from any ATM around town while i am out and about.

  3. Duff

    I switched to a credit union for most of my banking a few years ago, but when I did I still kept an old free checking account at a big bank. That way I can transfer money to the big bank checking account if I’m going to be somewhere without convenient access to one of the credit union’s ATMs.

  4. Richard

    It’s nice to know that my local Credit Union is locally owned and democratically controlled by its members with all the profits being shared among it’s members (paid out in annual dividends) as well as reinvested back into the local community through charities, scholarships, event sponsorships, etc.
    Who controls the Big Banks and where do all the profits go?

  5. Miss T

    I had a great experience with my credit union. I needed a loan a few years ago to get me out of a bad place and they gave me a great rate. My bank wouldn’t even consider borrowing me money. I was in a desperate situation and they looked after me. I felt like a customer, one that mattered, not just a number, which is how I often felt at the bank. I do agree though, their hours are sometimes a pain, but then most banks are not much better.

  6. MoneyCone

    My credit union is outside my state! I’ve never visited my bank – not once and I’ve been with them for more than 10 years!

  7. Valerie

    I switched from a bank to a credit union in high school when I started working, and I won’t look back.

    When I went to college, I switched from my home credit union to MSUFCU (Michigan State University Federal Credit Union). It’s designed to continue to support students once they’ve left the school/state/country, so even now that I’m 6 hours away, using my credit union isn’t any more of a hassle than it was when I was on campus.

    There aren’t any fees of any kind (even overdraft!), the rates are really good, and the customer service has been fantastic.

  8. Future Money-Bags

    I bank at BMO. As long as I keep the minimum balance of 5k, I have no fees. (Before this I had a no fee bank account, with lower min. balance,but with no perks)

    I get unlimited transfers(phone,online), unlimited atms, 2 free Email money transfers, free USD checking account, No fee USD and CDN Mastercards, And there are too many branches available to worry about finding a bmo atm. (In vancouver anyways)

    Some will argue that keeping that min. $5k, means that you COULD be using that money to generate more than the $15/month. But truth of the matter, you really should have an emergencey fund at all times; why not benefit from it?

  9. Dougie

    I’ve always felt that all banking should be local banking. It used to be that way, and now, as you so eloquently point out, it appears most of the major financial institutions have forgoten this simple concept. Like never before investors are treated like faceless numbers and it’s a shame. If bankers at the top level were more intimately aquainted with their customers on the local level do you think the current financial crisis would be this bad?

  10. William

    I’ve been a credit union member since I was a kid.I’ve travelled and lived in many places and have had to set up new accounts with different credit unions after moving – I’ve always accepted this as a small price to pay relative to the benefits. Credit unions are great esp. for the little guy i.e. the person who has a bit of savings and needs access to quality and fair loan products. The credit union movement championed these basic tools of banking to help people get ahead.

    After saying this I would encourage people to compare credit unions before they join because every once in a while you’ll find one that just doesn’t measure up. I recently moved to Sault Ste. Marie Ont. and became a member of Northern Credit union. – for the first time ever I was truly disappointed…. the reasons?

    1) Members do not receive dividends
    2) If you want to take out a basic loan it must be a MINIMUM of $3000.00
    3) Monthly fees on chequing accounts that are too
    similar to the big banks
    4) A website where interest rates for savings and
    loans are in small print on an obscure
    Unfortunately, there is the odd credit union that really doesn’t live up to the ethos of the credit union movement and therfore you may be better off going with a big bank if you can’t find a good local credit union.

  11. Chris Pederson

    The fact that your credit union doesn’t charge a monthly fee is enough for me to look for one like that near me. A bunch of people told me to avoid them. But I have only heard good things about credit unions so I might as well try and find one to learn more.

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