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Credit unions provide a range of financial products and services that are similar to banks. While banks are led by shareholders and focus on generating profits through products and services, credit unions are often run by members and focus on providing benefits to all of their members collectively. This focus means the profits made by credit unions are usually passed back onto customers in the form of more competitive products and services.
Our guide covers everything you need to know about credit union credit cards, including how they differ from banks and what you need to know to choose the credit card that’s right for you.
Credit union credit cards often focus on providing potential savings and ongoing value for members. As a result, the credit cards available from credit unions tend to have lower ongoing interest rates and annual fees than those provided by banks. They may also come with extras such as rewards programs or complimentary travel insurance, alongside some other perks.
In order to get a credit union credit card, you’ll need to become a member of the credit union, which usually involves a small fee, which is often paid monthly or yearly. You will also likely need to open an account before or during your application for a credit union credit card.
Once you’re a member of the credit union, you will also have the opportunity to influence how the credit union is run. For example, you may be able to vote at annual general meetings or provide feedback that influences the features of different products and services.
In comparison, banks and larger financial institutions operate more like conventional businesses. This means they often provide more competitive introductory offers than credit unions. For example, balance transfer credit cards from banks typically provide lower introductory interest rates and longer promotional periods in comparison to those offered by credit union credit cards.
Banks also tend to provide more comprehensive rewards programs and complimentary extras than credit unions. When it comes to applying for a bank credit card, you don’t need to become a member or pay any annual fees, while you may also not need to open an everyday savings or chequing account. However, a bank does not give you a say in how the bank is run or how different products or services work.
Credit union | Banks | |
---|---|---|
Focus | Credit unions focus on providing better member experiences and on improving their financial situation by providing quality products and suitable advice. | Banks focus on maximizing profits for their shareholders, so they can attract more investors. |
Profit | Any profit that a credit union generates goes back into the system to provide its members competitive rates and offerings. | Profit that banks generate goes to its shareholders, and the bank might invest some of it in different kinds of financial products. This works in your favour only if you’re a major stakeholder of the bank you’re banking with. |
Security | Credit unions generally offer either Mastercard and/or Visa credit cards, both of which provide secure payment systems. You get protection against fraudulent electronic transactions with both types of credit cards. | Banks offer the same security measures as credit unions. |
Rewards | Credit unions provide credit cards linked to some of the major rewards programs. | Banks offer a range of rewards credit cards as well. |
Other benefits | Credit union credit cards sometimes offer extra perks like travel rewards, insurance coverage and more. | Banks also offer added features through their credit cards, but you might have to pay higher annual fees. |
If you’re interested in getting a credit union credit card, you should consider the following factors when comparing different cards:
As well as being focused on benefitting members, credit unions usually have a community focus. For example, they may provide funding for local community groups and schools, encourage arts and performance and work on building stronger human bonds.
As a result of these unique credit union features, people often pay as much attention to a credit union’s philosophy as they do to its specific products and features. This level of involvement means that credit unions often suit people who want to completely change the way they bank.
Credit unions also try to make sure they only lend money to people who can make repayments, and they have support services in place to help members who are going through a rough patch. When it comes to credit cards specifically, credit union options tend to offer the most value to people who want an ongoing, affordable option.
If you’re looking for a card that offers short-term value, on the other hand, you may find that bigger financial institutions and banks provide you with more options.
Either way, it can be worth comparing credit cards from both credit unions and banks to see which option is most suited to your financial needs. Credit unions offer a wide range of credit cards for members, including low rate, low fee and reward options.
Now that you know more about the different structure and focus of credit unions, you can compare these cards to those of larger financial institutions like banks to find one that suits all of your needs.
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