One of my favorite topics is one of the 4 topics Canadians are not supposed to talk about .  (Canadians don’t talk about Sex, Money, Religion, or Politics.)  I like talking about Money, Politics and Religion.  So this morning I had a great meeting with a Financial Specialist at my local Credit Union.  We talked about money, and stocks and finance.  It is always better if you can talk with someone who knows their stuff.  This Financial Specialist does.

I am a big supporter of Credit Unions.  I really believe in people not computers.  That is a principle that most Credit Unions are built on.  I get lots of people who say they will not use a Credit Union because they charge a fee to open an account, when a bank is free.  That is about the only thing from a bank that is FREE.  Let me clear up that point first.  Credit Unions have different rules of operation than banks.  Banks can deal with anyone.  But Credit Unions are only allowed to deal with members.  So how do you become a member?  You buy a membership.  (Just like a gym, or club.)  Except if you ever leave the Credit Union, you usually get your membership fee back.  When was the last time a gym did that?

Credit Unions are usually local businesses.  They may have multiple branches in different cities, but they are not National, like most Canadian Banks.  Credit Unions provide loans, mortgages, GICs, Saving, and Chequeing Accounts.  You can pay your bills there, Their biggest benefit, I think, is that they are Local, and so have PEOPLE who make decisions locally.  If you need a loan or a mortgage, the decision is made by people who live in your area.  Most Bank loans are approved by a mathematical formula in the head office computer.

Credit Unions are in business for their MEMBERS.  Unlike banks which are in business for their SHAREHOLDERS.  By the way, who are the biggest Bank Share Holders?  Other Banks, Insurance Companies, Mutual Fund Companies, and some private investors.  When a bank makes a profit they pay a dividend to their SHAREHOLDERS.  When a Credit Union makes a profit, they pay a dividend to the MEMBERS.  These dividends are often based on how much BUSINESS you do with the credit union.  So if you have a Savings Account, a Chequeing Account and a GIC you get paid on the value of those.  But wait!  What if you have a loan?  Guess what, that is business as well.

Can you buy shares in the Credit Union? Yes you can.  But Credit Unions are not public companies.  Only members can buy shares.  Since they are not traded publicly, the price of the shares does not fluctuate the same way that Bank shares do.  Shares in Credit Unions are normally held for the dividend they pay, not the change in value.  I hold both regular shares and the shares that every member gets as part of the business they do at the Credit Union.  The return on both of them has been more than competitive.  Especially compared to the interest you get from a Bank.

When you have a loan at the bank, the interest (profit) on the loan goes out to the share holders.  At a Credit Union, the interest on the loan (profit) goes to the members.  Think about that for a minute.  Did you ever get any of the interest you paid at a Bank back???  These are just some of the reasons I like Credit Unions better than Banks.

My meeting today had been in response to a letter I received from the Credit Union, regarding a GIC that had come due in my RRSP.  They wanted to know what to do with the money.  So I booked an appointment and went in to discuss it.  All I ever saw advertised at the branch was their GICs.  Don’t get me wrong, there is nothing wrong (and a lot right) about a GIC.  But I was interested if they had something that had a higher rate of return.  Either via Mutual Funds or online investments.  I had never seen any advertising about either one.

Guess what!  They have both available.  That was great.  I could invest my GIC money in one of the Dividend stocks I have.  All I had to do was set up an online trading account with their partner broker.   Then they could transfer the money directly to my new online RRSP Account.  WOW.  Here was a whole side of the Credit Union I had not known about.  I asked why they did not advertise, that they have access to Mutual Funds and Online trading.  The answer was that they were not allowed to advertise that service.  Under the same rules that say they can only deal with members.

What a conspiracy to make the rich banks richer, while hurting the average Canadian.  Allow the banks to advertise Mutual Funds and Online Trading so they can sell more of their Mutual Funds, and collect commissions off our Online Trades made through the brokerages that they own, so they can pay their rich Share Holders the profit.  If we did the same things through Credit Unions, the Members would make the money.

That is one of the reasons I like talking about money.  You never know what you will learn.  Especially when you start asking questions.  Some of the best practical financial advice I got came from the Credit Union.  Never dealt with a Credit Union??  Why not go in and see what yours could do for you.