Credit Union And Regional Bank Credit Cards

Compare Credit Card Offers from Credit Unions

Updated: March 11, 2020

Credit unions are local, customer-centric and they have the financial products of a bank. What’s not to love?

Add to that, they offer credit cards with lower APRs and no annual fees – and sometimes no fees at all.

There are a few disadvantages, though, that might influence your decisions about whether to take out a credit union credit card. Here, we look at:

• How credit unions and credit union credit cards work
• Pros and cons of going with a credit card from a credit union
• How to join a credit union
• Who should get a credit card from a credit union?
• What are the top credit unions?

What are credit union cards and how do they work?

Credit unions, which are not-for-profit and owned by their members, offer a low-fee option to traditional banks. The National Credit Union Administration, which is an independent governmental entity, insures deposits at federally insured credit unions, protects the members who own credit unions, and charters and regulates federal credit unions.

Like banks, credit unions offer loans, savings and checking accounts, and even credit cards. These cards can range from basic, low-interest products to pretty great rewards cards. Two-thirds of credit unions offer credit cards, so you may find a credit union with a card that suits you.

The biggest advantage of a credit union credit card? It likely has significantly lower interest, possibly even offering rock-bottom interest on cash advances. In November 2018, the average interest rate offered by credit unions for credit cards was 11.1%, a steady figure over the last 10 years. That compares to the national average rate of 17.08% in March 2020, according to CreditCards.com.

That said, you have to be a member of a credit union to land its cards, and you have to qualify with the requisite credit score and income. Membership is often generous, in some cases merely requiring membership of an association partnered with the credit union.

One nice thing about applying for a credit card at a credit union – if you don’t qualify, chances are the credit union will have lending products to help you build your credit without paying high interest or ridiculous fees. While credit unions and their cards may not have the rewards of a commercial bank’s, the savings on fees and interest charges could be well worth looking at credit union cards.

Pros and cons of going with a credit card from a credit union

Credit unions are beholden to you, not the shareholders. That means that unlike for-profit financial institutions, such as banks, credit unions answer to you, the member, while for-profit entities answer to the shareholder. For example, a Pew Charitable Trusts study found that credit unions’ credit cards advertised lower APRs than for-profit banks. Also, while penalty fees were more common with credit unions, they were typically lower. Here are the advantages and disadvantages of having a credit union credit card:

Pros of credit union credit cards

• There are re-dos. Even if you are initially rejected by a credit union for a credit card, some credit unions have a loan committee that reviews appeals. So, even if your credit isn’t its best, with a desire to make a fresh start, you might get approved.
• They’ll work with you. If you fall on hard times, a credit union may modify loans and card terms to help you out of your jam.
• Their ATMs likely partner with the Co-op Network. With this network, your credit union is affiliated with 30,000 ATMs across the U.S. and Canada.
• Lower APRs. Credit union credit cards can have lower interest rates than mainstream cards, sometimes even under 10%. For example, the PenFed Gold Visa Card offers a 0% intro APR for balance transfers for 12 months, then a go-to APR that ranges from 8.24% to 17.99% (variable).
• Low fees. Credit unions may have penalty fees, but they will likely be lower. And a no annual fee is easy to find with a credit union. Some, such as the PenFed Promise Visa, actually promise no fees, including foreign transaction, annual, late, and cash advance fees.

Cons of credit union credit cards

• Accounts are tied together. Called cross-collateralization, with a credit union, your financial products may be linked. For example, although you may not know it, your credit card may be tied to your checking account, meaning that if you default on the card, in theory, the credit union can pull the funds from your checking account. Worst case scenario? Your car could be repossessed.
• Credit unions may want a little more. If you don’t have the best credit but the credit union decides to take a chance on you, you may be asked to take a financial education class, which a traditional bank likely wouldn’t do.
• Credit unions aren’t immune to downturns. Because credit unions are local financial institutions, a severe economic downturn in town could damage the credit union. But even if your credit union falls on hard times, depositors are protected up to $250,000.
• ATMs may be in limited places. While your credit union may be linked to the Co-op Network, the ATMs may not be located at convenient places, so it’s worth your while to research ATM locations before you go to a new city.
• Rewards may not be amazing. Credit union credit cards may not have the rewards of major rewards credit cards. You may find a credit union card with a sign-up bonus, as in the case of the PenFed Gold Visa’s $100 bonus after a $1,500 spend in 90 days, but ongoing rewards may be hard to find.

How to join a credit union

Although credit unions are often linked to a major employer or university, in many cases, you can join one because of a family member or a group you are a part of.

Each credit union serves what they call the “field of membership.” Here is what a credit union might look at:

• Employers. Large employers, including the military and universities, often sponsor their own credit unions.
• Location. Credit unions are usually a local option for the consumer. A credit union might serve anyone who lives or works in a certain area.
• Family ties. Many credit unions will allow your family members to join.
• Group membership. If you are a member of a particular church, school, labor union, homeowners association or other group that is linked to a credit union, you might qualify.

If you are interested in looking into credit unions, check out ASmarterChoice.org, which can help you find a credit union in your area.

Who should get a credit card from a credit union?

A credit union credit card isn’t for everyone, but used correctly it can save you money and help you build credit. Here are 5 types of people who are a good choice for a credit union credit card:

1. You’re a member. If you qualify to join a credit union, you might want to look at the credit card products that are offered.
2. You think you’ll carry a balance. Credit union credit cards are typically the best among cards in the ongoing APR rate offered, sometimes less than 10%.
3. Rewards aren’t an issue. If you plan to use the card for occasional purchases and not for earning rewards, a credit union credit card can be a good choice.
4. You don’t want to get hit with a lot of high fees. Credit unions are known for providing credit cards that don’t hit you with high fees, including annual fees. In fact, a Pew Charitable Trusts study found that credit unions are significantly less likely to have annual fees on their credit cards.
5. You want to build your credit. A credit card is an excellent way to build your credit. Just a few months of on-time payments can increase your credit noticeably.

Top credit unions

Credit unions have grown up with this country since 1901, serving communities large and small. Today, there are 5,500 credit unions with 117 million members.

We’ve taken a look at the credit unions in the U.S., using the National Credit Union Administration’s database. Studying assets and membership, here are 5 of the top credit unions in the U.S.

Navy Federal Credit Union

• Vienna, Virginia
• Assets: $95.3 billion
• Members: 8.1 million

Membership to Navy Federal is open to service members, veterans, Department of Defense employess and their families. Cards range from a secured card to business cards to rewards cards, all with low variable APRs – even starting under 10%.

State Employees’ Credit Union

• Raleigh, North Carolina
• Assets: $38.6 billion
• Members 2.3 million

Membership is stricter for this credit union – eligible consumers include North Carolina state employees, family members and surviving spouses who have not remarried, some county employees, members of the North Carolina National Guard and others. State Employees’ sole credit card is open to all adult members who live in North Carolina, South Carolina, Georgia, Tennessee and Virginia, and has an APR of 10% variable (including cash advances), although there are no rewards. There’s also no balance transfer fee.

Pentagon Federal Credit Union (PenFed)

• McLean, Virginia
• Assets: $24 billion
• Members: 1.7 million

This credit union doesn’t require you to have served in the military. In fact, you can qualify by being a member of such associations as the American Red Cross or by living in qualified areas. PenFed offers a number of credit cards, all with no annual fee. Many are rewards cards, although you can get a lower interest rate by going with a basic card such as the PenFed Gold Visa Card.

Boeing Employees Credit Union (BECU)

• Tukwila, Washington
• Assets: $18.7 billion
• Members: 1.1 million

In addition to the obvious – you are affiliated with Boeing – if you live or work in Washington state or parts of Idaho or Oregon, or you are a member of certain associations, you qualify for membership at BECU. This credit union offers 2 credit cards, both with low variable APRs. One offers rewards and the other will lower your rates as your credit improves.

SchoolsFirst Federal Credit Union

• Santa Ana, California
• Assets: $14.9 billion
• Members: 845,685

As you would think, the members of SchoolsFirst are associated with qualifying schools, colleges and universities in California, primarily for employees and family members. This credit union’s credit cards include a secured card with a fixed rate APR of 13.90%. One offers payment plans for 10- and 11-month paycheck cycles.

Laura is an editor and writer at CreditCards.com. She has written extensively on all things credit cards and works to bring you the most up-to-date analysis and advice. Laura’s work has been cited in such publications as the New York Times and Associated Press. You can reach her by e-mail at laura.mohammad@creditcards.com and on Twitter @creditcards_lm.