Bank of America’s misstep with debit card fees has brought a lot of attention to credit unions. Even though Bank of America is “taking back” the fee in response to the outcry from the public, Bank Transfer Day still took place on Nov. 5.
Even if you don’t switch banks, you can still consider taking a look at credit cards offered by credit unions. In most cases, you’ll need to have good-to-excellent credit, but if you’re turned down, call and ask if they’ll look at your application again. Credit unions have been known to take unusual circumstances into consideration.
Here are a few things you need to know about credit union credit cards:
#1: You have to become a member
This isn’t always easy because some credit unions serve only a select group. You can join the Pentagon Federal Credit Union with a one-time $20 donation. But you can’t join Navy Federal unless you’re associated with the military.
But there are many others out there that do allow a broader membership so you just have to do some research. You can start your search at A Smarter Choice, which is associated with Credit Union National Association. You can search by location or even do an advanced search by occupation, school and more.
#2: You usually get lower interest rates
Credit unions are non-profit organizations that are owned by the members. According to the Credit Union National Association, federally chartered credit unions have an interest rate cap of 18 percent on all loans, including credit cards. This fact helps to keep rates low.
But the rates are also low because you’re not just a customer, you’re an investor. So many credit unions funnel their profits back to you. This results in savings on various financial products.
If you revolve a balance, a credit union credit card is a good choice because you’ll save money on interest expense.
#3: You still have to read the fine print
Don’t assume that since it’s a credit union, you don’t need to worry about protecting yourself. You still need to read the disclosure statements carefully. Shop around and compare the terms to a similar card at a regular bank. When it comes to credit products, it’s always buyer beware.