Compare the Best Credit Union Credit Cards

What is a Credit Union?

 A credit union is a financial cooperative that is owned and operated by its members. It is designed to provide a range of financial services, including savings and checking accounts, loans, and other financial products.

Similarly, credit union credit cards are offered by credit unions, which are not-for-profit financial institutions owned by their members. These credit cards work similarly to traditional bank-issued credit cards, allowing you to make purchases and borrow money up to a certain credit limit.

How Do Credit Unions Differ from Banks?

As mentioned, credit unions are community banks and financial institutions. Here’s a detailed breakdown of how credit unions differ from traditional banks:

Ownership and Structure:

• Credit Union:Credit unions are owned by their members, the customers. Members elect a volunteer board of directors and have a say in how the credit union is run.
• Traditional Bank:Traditional banks are typically owned by shareholders and run by a paid board of directors. Customers do not have a direct ownership stake in the bank.

Profit Motive

• Credit Union:Credit unions are not-for-profit organizations. This means that any profits made are returned to members through better interest rates on savings, lower fees, and competitive loan rates.
• Traditional Bank:Traditional banks are for-profit entities that aim to maximize shareholder value. This can result in higher fees and lower interest rates for customers.

Membership and Eligibility

• Credit Union:Membership in a credit union is often based on a common bond, such as employment in a certain industry, living in a specific area, or belonging to a particular organization. However, many credit unions have expanded their membership criteria to be more inclusive.
• Traditional Bank:Traditional banks are open to the general public, and anyone can become a customer regardless of their affiliations or, in some instances, geographic location.

Services

• Credit Union:Credit unions offer a similar range of services to traditional banks, including savings and checking accounts, loans, credit cards, and other financial products. They may also have a focus on financial education and community initiatives.
• Traditional Bank:Traditional banks also provide a wide range of financial services, including investment products, wealth management services, and international banking.

Regulation

• Credit Union:Credit unions are regulated at the state or federal level, and they are often subject to oversight by the National Credit Union Administration (NCUA) in the United States.
• Traditional Bank:Traditional banks are regulated by federal and state banking regulators, such as the Federal Reserve, the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC).

It’s worth noting that while credit unions are not FDIC-insured, they are insured by the NCUA for up to $250,000, meaning credit unions are just as safe as your national bank.

Benefits Of a Credit Union Credit Card

Credit union credit cards feature many of the same benefits as credit cards from banks like Bank of America, Chase, or USAA. In addition, these cards provide quirks and perks that bigger banks can’t match:

Lower APR

One of the major benefits of credit union credit cards is that they tend to have lower interest rates compared to traditional bank-issued credit cards. This can save you money in the long run, especially if you tend to carry a balance on your credit card.

Lower Fees

In addition to lower interest rates, credit union credit cards often have lower fees. This can include annual fees, balance transfer fees, cash advance fees, and foreign transaction fees. By choosing a credit union credit card, you can avoid or minimize these fees, ultimately saving you money.

Personalized Customer Service Support

Credit unions are known for their personalized customer service. You can expect to receive the individual attention and support you deserve with a credit union credit card. Whether you have questions about your account or need assistance with a transaction, the credit union staff will be there to help.

Limitations of Credit Union Cards

Credit union cards offer significant value to many credit card consumers, especially when it comes to securing a great interest rate. However, there are some drawbacks to credit union cards as well. These drawbacks are most closely associated with the low-interest rates these community banks offer.

Fewer Card Options for Bad Credit

Credit unions tend to offer fewer credit products than larger banks, making it more difficult for those less-than-perfect credit to get accepted for a credit card. Due to their low APR rates and relatively small cash reserves, credit unions are more likely to expect an applicant to have excellent credit or at least good to very good credit.

Eligibility Requirements

Before applying for a credit union credit card, be sure to check your credit score to ensure you meet the credit requirements. Merely being a member isn’t enough. That said, sometimes joining a credit union can be tricky, so make sure you are eligible first.

Smaller Welcome Bonuses

Credit unions are member-owned, meaning you can expect the lowest possible rate on credit cards and loans. However, the members-first approach often results in smaller introductory bonuses on cards.

Longer Application Process

Because credit unions require joining the union before applying, many credit card applications take significantly longer than applications with bigger banks.

Tips for Using Your Credit Union Credit Card Wisely

Using your credit union credit card wisely can help you maximize its benefits while avoiding financial pitfalls. Here are some tips for using your card responsibly:

• Pay your balance in full each month: Aim to pay your credit card balance in full each month. This will help you avoid paying interest on your purchases and ensure you’re not accumulating unnecessary debt. By paying your balance in full, you can enjoy the convenience of a credit card without the burden of interest charges.
• Keep your credit utilization low: Credit utilization refers to the percentage of your available credit that you’re using. Keeping your credit utilization below 30% is generally recommended to maintain a good credit score. By keeping your balances low relative to your credit limit, you demonstrate responsible credit management to lenders.
• Avoid unnecessary debt: While credit cards can be convenient for making purchases, it’s important to avoid unnecessary debt. Before making a purchase, consider whether you can pay off the balance in full when the bill arrives. If not, waiting until you have the funds available may be best.
• Review your statements: Take the time to review your credit card statements regularly. This will help you identify any errors or fraudulent charges and ensure that your balances are accurate. If you notice any discrepancies, contact your credit union immediately to address the issue.
• Understand your rewards program: If your credit union credit card offers a rewards program, like CU Rewards or other group rewards plans, take the time to understand how it works. Familiarize yourself with the types of rewards offered, how they can be redeemed, and any limitations or restrictions.

Conclusion

Choosing a credit card from a credit union can offer several advantages, including potentially lower fees, competitive interest rates, and a member-focused approach to customer service. Credit unions often emphasize financial education and community involvement, which can appeal to individuals seeking a more personalized banking experience. However, it’s important to consider the potential limitations, such as membership eligibility requirements and a potentially more limited branch and ATM network compared to larger banks.

When considering a new credit union credit card, it’s essential to carefully assess its terms and features, including the interest rates, fees, rewards programs, and any additional benefits. You can make informed decisions that align with their financial needs and goals by conducting thorough research and comparing various credit union credit card options.