Credit Union Credit Cards

A credit union is a not for profit financial institution that offers banking services that is also widely recognized as an alternative to banks. Credit unions used to only allow customers to join as members if they belonged to specific groups, however most have begun to allow a wider range of membership. These institutions give consumers an alternative to traditional banks by offering all of the same products for less. Many of them have their own credit card lines. In most cases, credit unions offer its members credit cards with a much more attractive interest rate than most commercial banks.

But you may want to check out other options in the following locations:
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{ 3 comments… read them below or add one }

Lee August 24, 2009 at 7:20 am


Do you know with the PenFed Visa rewards card if you have to actually transfer a balance from another credit card, or can you actually take out the money yourself. Seems like if you could, even after paying the 2.5% balance transfer fee (capped at $100) that it might be a good opportunity for some arbitrage.

Silicon Valley Blogger August 24, 2009 at 12:06 pm

Hi Lee,
There are two rates they provide: the low rate applies to your transferred balance, but they’ve got a purchase APR that’s much higher: 13.99%. So you’d have to determine which rate it is you’ll end up having to pay when you perform any sort of arbitrage.

Of course, if anyone out there has the PenFed Visa card, we’d love to hear what you think!

Silicon Valley Blogger February 3, 2012 at 12:57 pm

Compared to a lot of 0 apr cards these days, PenFed cards aren’t as attractive IMO. Over the past year or so, Citibank, Discover and other card companies have released rewards cards that have very long intro periods with no interest rate charges (18 months to 21 months for some of them) and what appears to be reasonable long term aprs for good credit customers. The credit card industry is officially back to its old devices.

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Credit Union Credit Cards vs Regular Bank Credit Cards

What is a credit union credit card? A credit card offered by a credit union works exactly the same way as a credit card issued by a traditional bank issuer. The main difference between the cards lies in the terms. Credit unions have a more customer focused approach when it comes to its bank products and tend to offer better terms to its credit cards customers.

Here are some great features you'll get with a credit union credit card:

  1. Lower Interest: Although banks tend to have the edge when it comes to offering low introductory rates and $0 account maintenance fees, credit unions tend to win out over the long term. According to a study performed by Pew Charitable Trusts in 2009, credit unions offered rates between 9.90% and 13.75% on purchases made with their issued cards, while banks averaged 20% higher. Here's more on low interest credit cards.
  2. Flexible Lending Terms: While most credit unions tend to be on the conservative side when it comes to issuing credit, most will allow customers who have been turned down for a credit card to appeal the decision and have their application reevaluated by a loan committee. If you have a lower credit score than the credit union normally approves, but have adequate income and assets to support getting a card, then you can also write a letter to the committee and offer more information regarding your circumstances in order to get approved.
  3. Solid Customer Service: As mentioned before, credit unions are highly focused on their customers. This is a great feature if you are experiencing a financial hardship. Many credit unions will work with you in an effort to get you back on your feet when the chips are down.

Of course, credit union credit cards aren’t necessarily for everyone. Credit unions aren’t immune to tough economic conditions, either. Most credit unions are much smaller than national banks and tend to feel economic pressures more acutely. In some cases, they end up closing their doors and can leave you high and dry.

Another drawback for these cards has to do with a customer's accessibility to cash. Credit unions tend to be local organizations and most only have a few ATMs that can be used to withdraw cash without a fee. And lastly, when you have multiple accounts with a credit union, they are cross-collateralized. This means that if you have a secured loan as well as a credit card with a credit union, then your credit card balance is also secured by the collateral of the secured loan. This implies that if you default on your credit card, your collateral may still be seized and liquidated even if you happen to have already paid off your secured loan. These institutions do this sort of thing in order to help them offset any losses.