Monday, January 25, 2016

How a credit union works

Yuriy Diakunchak Director of Marketing
Ukrainian Credit Union Limited
In today’s world of infinite choices of financial institutions (FI), people often don’t understand what the difference is between one or another FI. Bank, credit union, trust company, what’s the big difference?
The difference is actually quite substantial. My own personal rule is own a bank – buy shares in banks, hold on to them, enjoy the dividends and watch your equity grow – but bank at a credit union. Why is this? Banks are privately owned (by shareholders) corporations with the express goal of making profits. They accomplish this by charging a range of fees to their customers. Please note that in this scenario owner and customer are two very different people. They can sometimes be the same person, but more often than not, bank customers do not own the shares of the banks they do business with. Banks, I might add, are very successful at charging fees and I, as an owner of bank shares applaud them for their success.

Credit unions charge you less
Credit Unions on the other hands are owned by their members. That means that every single person who does business with a credit union is also an owner of that credit union. Credit unions as a rule charge fewer fees than banks do. Ukrainian Credit Union Limited for example does not charge any monthly administration fees on our personal chequing and savings accounts and we do not require our members to have a minimum balance in our accounts. We do not impose a limit on how many transactions you can perform on your account each month. We also offer things like cheque imaging for free – banks charge you for this. You simply cannot get this at a bank.
Your account at a bank either has a monthly fee, a minimum balance required in order to avoid the monthly fee or additional fees charged after you perform a certain number of “free” transactions. Sometimes you get as few as 2 transactions a month. I know, my old TD account required me to keep a minimum of $1,500 on deposit (interest free obviously) in order to avoid the monthly fee of $3.95. And if I wanted to see an image of my cheque? Ding, another fee. This was the so-called “Minimum” account. The “All-inclusive” account has a monthly fee of $29.95 and a $5,000 minimum balance[1].

A say in running the credit union
Aside from the financial benefits of being a member of a credit union, there is also the key matter of ownership. You – the member of Ukrainian Credit Union Limited – are also an owner. As an owner you have a say in how the credit union works. Every year, we have an Annual General Meeting (AGM) for our membership at which members gather and vote on by-law amendments and MORE IMPORTANTLY they vote on who will sit on the Board of Directors.
The Board of Directors of Ukrainian Credit Union Limited consists of the representatives of our membership. They oversee the operation of the credit union and it is their duty to make sure that the executives and managers of the credit union do what is in the best interests of the membership. You DO NOT have this level of power at a bank. Even if you own some shares of the bank, even if you own a lot of shares at the bank, you are unlikely to have anywhere close to this level of say in what happens at a bank.

The credit union is a part of your community

Credit unions are run as not-for-excessive-profit organizations. That means that we return a larger share of our profits back into the community – a community that our members are all part of. The credit union is important, but you are even more important. Here is how it all works:
When you open an account at Ukrainian Credit Union Limited you deposit money ―→ We use the deposits to give loans to your fellow members ―→ When people pay the money back we make a profit ―→ We then use some of those profits to continue providing low-cost services (like the fee-free accounts I mentioned above) and we use some of the rest of the profits to support schools and churches and dance groups and festivals and cultural events and other things important to the community ―→ You as a member of the community participate in some or all of these activities and without you, these things could not exist.
Notice, how nowhere in this equation do any of Canada’s banks make an appearance. It’s not that they don’t earn enough profits off of you personally to support these activities, it’s that they don’t need to support these activities in order to earn profits from you. We on the other hand could not exist if the community did not exist and thus to us, the health and vitality of the community is as important as it is to you.

Don’t forget, we are just as convenient as a bank
With online banking, telephone banking, mobile APP banking and over 3,300 ATMs across the country (visit our blog for details on that –, we are as convenient to bank with for the modern Canadian as any bank is. If you are not already a member of UCU, come join us today!

Yuriy Diakunchak
Director of Marketing
Ukrainian Credit Union Limited
416-763-5575 x208


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