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.
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:
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.