Millennial Money: Don’t Neglect Credit Union Credit Cards

When you’re frequently bombarded with credit card ads from big banks, it’s easy to overlook credit cards at a local credit union. These nonprofits typically require membership based on location or affiliation with an employer, family member, or organization. Major credit card issuers generally do not have these requirements.

But while rewards and perks are often flashier on bank-issued credit cards, credit union credit cards can offer generous incentives of their own or other forms of value. Additionally, a credit union provides many of the same services as banks, but the benefits are returned to members in the form of reduced fees, lower interest rates, and more.

Here are a few ways credit union credit cards can eclipse glitzy offers from banks.


It’s not uncommon to find credit cards at a credit union with lower annual fees, balance transfer fees, cash advance fees, late fees and so on. In fact, average late fees are about $10 cheaper at a credit union than at a bank, according to a report on member benefits from the Credit Union National Association. The types of fees assessed vary by credit union.

The Navy Federal Credit Union in Virginia, for example, has a military orientation and fees that match the lifestyle of its members.

“We know a lot of our military is stationed overseas, so having no foreign transaction fees on any of our credit cards, we think, is a really fantastic way to be able to serve our community,” said said Justin Zeidman, head of credit. credit union card products.

Fees are an important factor to consider when choosing a credit card at any institution.


If you carry a balance on a credit card for a long time, you can potentially save more money on interest with a credit card from a credit union than from a bank. This is because, unlike banks, federally chartered credit unions have interest rate caps. Federal law caps the interest rate on loans and credit cards at 15%. However, the National Credit Union Administration Board temporarily raised it to 18% and recently voted to keep that rate until March 10, 2023.

As of March 2021, the national average interest rate for a credit card from a credit union is 10.97% compared to 12.55% at banks, according to the NCUA.


Some credit union credit cards compete with sign-up bonuses or ongoing rewards rates found at major banks. This is one of the ways these not-for-profit institutions return value to members.

For Keenan Kimbrough, a 27-year-old Pennsylvania resident, the rewards and low interest rates made it worth switching from a bank-issued credit card to a credit union card. Its credit union card earns a 12% lower interest rate compared to the old card’s 22% and the credit union card earns high rewards in common spending categories.

When redeeming rewards, “I can get $40 or $50” in cash back, Kimbrough says. “It was a good decision.”


When you have less than ideal credit and don’t have enough money for a security deposit on a secured credit card, a credit union can offer you alternatives for building up credit. For example, USAlliance Financial, a New York-based credit union, is one of many credit unions that offers a credit loan as an alternative to members who cannot pay a minimum deposit upfront to qualify for a secure credit card.

“More than half, or about 53%, of members are in credit unions that offer credit-building loans that help people build credit,” says Jordan van Rijn, senior economist for the Credit Union National Association. .

With this type of loan, the amount borrowed is held in a bank account while you make small incremental payments over the term of the loan. At USAlliance Financial, the lowest payment with a credit builder loan can be around $4.2 a month, compared to a minimum upfront cost of $250 for a secured credit card. At the end of the loan, the funds are returned to you and can be applied to a secure credit card deposit to continue building your credit.


Credit unions generally provide their members with access to resources when it comes to managing a credit card or spending money.

“Financial education and financial literacy programs are extremely common in credit unions, that’s a big part of what they do,” van Rijn says. “We have data showing that 83% of credit union members are in credit unions that offer financial education classes.”

Resources are available in the form of online educational tools, seminars, or partnerships with organizations that offer credit counseling or financial planning services. Offers vary by credit union.


This article was provided to The Associated Press by personal finance website NerdWallet. Melissa Lambarena is a writer at NerdWallet. Email: [email protected] Twitter: @lissalambarena.


NerdWallet: How to choose a credit card in 4 easy steps

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Darcy J. Skinner