Find out how credit unions differ from banks and compare your options here.
Credit unions provide a range of financial products and services that are similar to conventional banks. They are often run by members who focus on providing benefits to all of their members and the profits are usually passed on in the form of more competitive products and services.
Use this guide to learn how to compare and chose credit union credit cards, and how they’re different to banks.
Our pick for a credit union card
Compare credit union credit cards
How does a credit union work?
Credit union credit cards tend to have lower ongoing interest rates and annual fees than those provided by larger financial institutions. They may also come with extras such as rewards programs or complimentary travel insurance and other perks.
To get a credit union credit card, you need to become a member of the credit union, which usually involves a fee of around $5 to $25. You may also need to open an everyday transaction account before or during your application for a credit union credit card.
Once you’re a member, you 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.
What’s right for me? Credit unions or banks?
| Credit union | Banks | |
|---|---|---|
| Focus | Provide better member experiences and improve their financial situation with quality products and suitable advice. | Maximize profits for their shareholders, so they can attract more investors. |
| Profit | Goes back into the system to provide its members competitive rates and offerings. | Goes to its shareholders. The bank might invest some of it in different kinds of financial products. |
| Security | Credit unions offer Mastercard and Visa credit cards, both of which provide secure payment systems and protection against fraudulent electronic transactions. | Banks offer the same security measures. |
| Rewards | Credit unions provide credit cards linked to a limited amount of major rewards programs. | Banks offer a range of rewards credit cards as well. |
| Other benefits | You have a say on how the credit union is run as a member. | Banks also offer added features through their credit cards, but you might have to pay higher annual fees in this case. |
How to compare credit union credit cards
Include the following factors in your comparison to find the right credit union for you:
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Standard interest rates.
Credit union credit cards tend to have lower standard purchase rates than bank options. Some credit union cards also apply the same interest rate to both purchases and cash advances (rather than having a separate and higher cash advance rate). -
Promotional interest rates.
As credit union credit cards typically offer low ongoing interest rates, the promotional rate offers may be more conservative. -
Balance transfers.
Some credit union credit cards don’t offer balance transfers. The cards that do provide this service are less likely to have a 0% interest rate during the introductory period when compared to cards from banks. However, credit union credit cards usually have a lower ongoing interest rate than typical credit cards. -
Annual fees.
Most credit union credit cards have low annual fees. There are also some credit union credit cards that don’t charge an annual fee. -
Grace period.
If you pay your balance in full by the statement due date each month, you could get up to a certain number of interest free days for each statement period. This feature is available with both credit union and bank credit cards. -
Rewards.
Credit unions offer fewer rewards credit cards than banks. There are still a few options that offer points for purchases made on the account. For example, the Navy Federal Credit Union Rewards card offers one point per every dollar you spend on eligible purchases. -
Other fees.
The most common fees include international transaction charges, late payment fees and cash advance fees. -
Complimentary extras.
In general, only gold or platinum credit union credit cards will offer complimentary extras such as travel insurance or concierge services. -
Branch access.
Credit unions may have a more limited branch network when compared to larger financial institutions.
Benefits and disadvantages of credit union credit cards
Benefits
- Competitive ongoing interest rates.
- Lower annual fees.
- Same interest rate for purchases and cash advances.
- Personalized service.
Disadvantages
- You have to meet membership eligibility requirements.
- Limited reward options.
- Limited balance transfer options.
- Less competitive introductory offers.
Other factors to consider
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Community.
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 while working on building stronger human bonds. -
Limited membership.
Some credit unions also limit membership to people in specific industries. For example, Teachers Mutual Bank primarily offers membership to retired and current teachers, university students studying to become teachers and other employees in the education sector. -
Banking differently.
As a result of these credit union features, people often pay as much attention to a credit union’s philosophy as they do to 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 to people who can make repayments and that they have support services in place to help members going through rough patches.
Now that you know more about the different structure and focus of credit unions, you can compare these cards with the larger financial institutions to find one that suits all of your needs.
