Why get your credit card from a credit union?
In today’s market, there’s no shortage of credit card options, so it can be difficult to decide which one is the smartest choice. It’s always wise to shop around for the best deal, which, more often than not, is your local credit union.
Same function, better features
Why should you consider a credit card from a credit union over a big bank issued credit card? Here are a few things to keep in mind:
Better rates. Credit union credit cards carry an average annual percentage rate that can be several percentage points below those offered at big banks. In fact, federal law prohibits federal credit unions from charging interest rates higher than 18%. Big banks have no restrictions on the amount of interest they can charge their credit customers.
Lower fees and penalties. In addition to lower APRs, many credit unions waive balance transfer fees, and levy significantly lower over-limit, cash advance, and late payment fees. With all of your options, be sure you’re aware of the fees before you sign on the dotted line. One misstep could be especially costly.
Generous grace period. Credit unions typically extend a five-day grace period for late payments in comparison with one day at big banks, and most will give you a second chance before raising your interest rate. Over time, an increased interest rate adjustment can amount to a substantial penalty if you carry a balance each month.
Rewards programs. The same incentives provided by big bank credit cards are also offered through credit union credit cards. If points, travel, or gift cards are what makes you happy, you won’t have to sacrifice your favorite perks. Most of those bonuses come from the payment processor, like Visa or MasterCard, not from the card issuer, so rest assured your refund protection and car rental insurance can very possibly remain intact.
A strong competitive edge
Credit unions are able to offer more customer-friendly options and conveniences because they are owned by their members. They are not-for-profit organizations and, therefore, don’t need to maximize their revenue. In fact, profit on credit cards is used to provide lower mortgage rates and higher savings account rates to its members. In today’s cost-conscious market, their consumer-focused service and competitive products have earned them a substantial edge over the traditional big banks where profit is a top priority.