A caisse populaire is a member-owned financial services cooperative that provides many of the same services as a traditional bank, but there are key differences between two types of organizations. If you are trying to choose a home for your banking needs, make sure you understand the distinctions so you can select a service provider that matches your needs.
Caisse populaires are nonprofit cooperatives. They are jointly owned by the members, and if there is any extra money, it is distributed to the members through dividends. Although these potential distributions aren’t typically very high, they can put extra money in your pocket, which doesn’t happen with most bank accounts. Additionally, caisse populaires are strongly committed to providing benefits to their communities and members. As a member, you are allowed to attend annual meetings and vote for management issues.
Banks, in contrast, are for-profit businesses. They exist to put money in the pockets of shareholders. As a bank account holder, you don’t get any say in the bank’s operating strategies, and you don’t receive any direct benefits from the bank’s profits. That is all distributed to the shareholders.
Generally, banks and caisse populaires offer similar services – they provide chequing accounts and loans to individuals and businesses. However, the services may vary from institution to institution. While choosing between financial service providers, look for products and services that meet your current needs as well as ones that are likely to meet your future needs.
Some caisse populaires can’t offer the volume of funding offered by big banks, which can be limiting, especially for small business owners who need financing. In contrast, caisse populaires are known to be more flexible with loan approvals, while banks tend to reject a significant portion of most business loan applications.
It is relatively straightforward to open a business chequing account. As long as your name isn’t listed on a national register for writing bad cheques, you should get approved. With caisse populaires, however, there are often membership restrictions. Many banking co-ops require their members to meet certain criteria. For example, in some cases, you may need to live or do business in certain area, or you might need to be involved in a certain industry.
Local Versus National
Caisse populaires tend to have a local focus, which can provide a more personal experience between you and your banking professionals. Big banks, in contrast, are often spread throughout the country, and they aren’t necessarily committed to local interests.
However, if you travel frequently, you might prefer using a bank. It is easier to find ATMs from big banks when you are travelling – small co-ops may only have a handful of ATMs in their immediate area. Caisse populaires often have safeguards in place to address this issue – they may offer to waive ATM fees when you withdraw funds out of town. Ultimately, you should look at several business accounts from both banks and caisse populaires and compare the benefits closely.
References & Resources
Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.