One of the reasons that you should look into credit union credit cards is because their interest rates are often lower than other credit cards. Because credit unions work with the best interest of their members in mind, there are other benefits as well.
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Credit unions have been around for a long time and there are certain requirements to become a member. Fortunately, membership has become easier to get in the last few years. Although many credit unions offer credit cards, not all of them do, so you should research. Also, keep in mind that a credit card from a credit union may not be the best choice for everyone.
How are credit unions different from banks?
You may think that a credit union is the same as a bank. Although they are both financial institutions, there are quite a few differences between the two. One of the biggest differences is that credit unions are nonprofit organizations. Individuals who have accounts are considered members and they actually are part owners of the credit unions as well.
Since the members are also owners, credit unions make decisions that are in the best interest of the members. This shows up in a number of areas. One is that when a credit union has income, it returns part of it as dividends to its members.
According to the website for Consumers’ Credit Unions, the rates and fees for loans are lower than at most other financial institutions. The interest rates for savings and investment accounts are usually higher as well.
How do you become a member of a credit union?
Each credit union has its own eligibility requirements to become a member. Credit unions often are for particular organizations, occupations, and the families of them. In the past years, many credit unions have made it easier to become a member.
Part of the reason for more open membership is because banks have increased their fees and people have become frustrated and angry. Credit unions have become a more popular choice because of it. Oftentimes if you live in the county or city of a particular credit union, you are eligible for membership.
To see if you are eligible for membership of one of your local credit unions you can just call and ask a representative. He or she will let you know if you can apply. To apply you just need to fill out an application and usually make a minimal deposit into a savings or checking account.
How are credit cards from credit unions different?
For many people, getting a credit card from a credit union is a good choice. The federal government puts a cap on how much credit card interest can be charged, which is usually around 18%. The average APR for credit union credit cards ranges between 9.0% and 17%. For banks, which are not bound under the same regulations, average APRs range between 12.99% and 20.99%.
Fees for credit union credit cards are also often lower. Most of them do not have an annual fee and the fees for late payments, balance transfers, and advances for cash are lower on average. In addition, because you are a member of the organization, it may be a little easier to get a credit card than it would through a bank.
Many credit unions are willing to give members a second chance if they have had financial challenges in the past. This means that you may have a better chance of getting a credit card with a poor credit history or if you have filed for bankruptcy in the past from a credit union.
Keep in mind, however, that the credit union still expects you to be financially responsible if they grant you a credit card. Some will be willing to give you another chance only if you make an effort to show that you are working on budgeting and personal finances. One of the ways to do this may be by taking a class or seminar about money management.
If you have had financial difficulties in the past, it would also be a good idea to do your own research on money management. There are a number of resources for this such as the website for My Money.
Credit unions offer a number of benefits and credit cards are one of them. Check with your local credit unions to see if you are eligible to become a member.
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