Credit Union And Regional Bank Credit Cards

Compare Credit Card Offers from Credit Unions

By: Laura Mohammad

Updated: June 21, 2018

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:

• 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?

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.
• Thin credit files welcome. A credit union is more likely to grant a credit card to someone with a thin credit file than a traditional bank.
• 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 8.99% to 17.99% (variable). Add to that, there is no annual fee.
• 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 3 months, but ongoing rewards may be hard to find.

Pros, cons of credit union credit cards...

How to join a credit union

A credit union is a member-owned, non-profit financial institution. Like a bank, it may offer car loans, mortgages, credit-builder loans, CDs, money market accounts, checking accounts and credit cards.

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.

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.