By: Megan DeLaire

Ildebrando Lucas is a professor of finance at Algonquin. He advises students about finance management and warns against viewing the issue of banks versus credit unions as black and white.

A full-time student in Canada who works, pays for school and food, buys coffees on the way to school and has no ties to a bank probably doesn’t exist.

And as much as the general population begrudges banks, they facilitate the quick transactions that make managing money relatively simple. That is no less the case for students, who must be especially cautious with their spending.

But what steps can they take to ensure the healthiest and most fulfilling relationship with their financial institutions?

And are banks or credit unions a better bet?

Credit unions represent smaller geographical areas, with many towns and cities having their own designated cooperative.

“Being a part of the community is a big part for credit unions because they’re, by definition, community organizations,” said Lisa Taylor, chartered accountant and chair of Algonquin’s Financial, Office and Legal Studies Department.

According to Credit Union Central of Canada, one out of three Canadians banks with a credit union, but it seems that most students are members of chartered banks. Could it be that they are missing out on a more personal banking experience, or are they already where they belong?

“I think it really is up to the services that the student is looking for and how they’re provided by the institution,” said Taylor. “I don’t think you can make a generalization that a credit union is better or a bank is better.”

To understand what a bank has to offer and what it expects in return, students should compare fees and services. Monthly service and transaction fees, interest rates and additional features and incentives vary not only between chartered banks and credit unions, but among similar institutions. The opposite can be true as well, with competitive institutions offering an equal calibre of service.

Compare an RBC student savings account with a Your Credit Union personal savings account. RBC is a good model for chartered banks because it is the largest chartered bank in Canada. YCU is a good model because it has a branch within close proximity to Algonquin and has an ATM on campus.

Both accounts are available with no monthly service fees and free access to phone and internet banking. RBC allows 25 free debit transactions monthly and charges one dollar for each transaction after that. Your Credit Union allows unlimited free debit transactions, but charges one dollar per cheque while RBC provides cheques for free. Your Credit Union offers a rate of 0.05 per daily interest while RBC offers a free online chat service 18 hours a day, every day. As far as fees and services go, the two appear practically equal.

But the similarities must end somewhere and a look at the structure of each institution reveals where they differ most.

“The question is, once you have a financial institution will your debit card be able to access an ATM without costing you any fees,” said Algonquin professor of finance Ildebrando Lucas. “That’s important for a student.”

Most cooperatives like YCU do not have a large inventory of their own ATMs, but they do work with other institutions to arrange for fee-less banking through partner ATMs.

“We’re a much smaller institution than any of the national banks are, but because of our different networks and our different partnerships we can offer very similar levels of service,” said Joel Lalonde, executive vice president of YCU. “Our members have access to over 2,000 ATMs across the country.”

While credit union-friendly ATMs exist, some searching through YCU’s website is required to find out which institutions offer free ATM use to YCU clients. Not all students are willing to do the extra work.

Another assumption is that credit unions, by their small, cooperative nature, offer a more personal banking experience than chartered banks. Clients must purchase a small share of their union which makes for more meaningful involvement with the institution.

“There’s this sense of ownership, like you actually have a say in what happens,” said Lia Walsh, a University of Ottawa student and client of YCU in Ottawa. “I’ve found that because it is so customer-oriented and because everyone does have a say in what’s happening that the services themselves and the products themselves create better value for the customers.”

Whatever the choice, students do have financial options and should be checking regularly what is available—and what is best for them.