Millennial Money: Do not overlook credit union credit cards

When you are often bombarded with credit card ads at major banks, it is easy to overlook credit cards at a local credit union. These nonprofits usually require affiliation based on location or relationship with an employer, family member, or organization. Large credit card issuers generally do not have these requirements.

However, while rewards and privileges are often more impressive on bank-issued credit cards, credit union credit cards can offer generous incentives of their own or other forms of value. In addition, a credit union provides many of the same services that banks offer, but profits are returned to members in the form of reduced commissions, lower interest rates and more.


It is not uncommon to find credit cards in a credit union with lower annual charges, balance transfer fees, cash advances, arrears and so on. In fact, the average down payment is about $ 10 cheaper in a credit union than in a bank, according to a report on membership benefits by the Credit Union National Association. The types of supplies that are evaluated vary depending on the credit union.

The Navy Federal Credit Union in Virginia, for example, has a military focus and charges to suit members’ lifestyles.

“We know a lot of our military members are based overseas, so having no foreign currency charges on any of our credit cards is a really fantastic way to serve our community,” says Justin Zeidman. head of credit. credit card products.

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


If you have a credit card balance for a long time, you may be able to save more money on interest with a credit card than with a bank. This is because, unlike banks, interest rates on federally chartered credit unions are limited. Federal law limits the interest rate on loans and credit cards to 15%. However, the National Credit Union Administration Board temporarily increased it to 18% and recently voted to maintain that rate until March 10, 2023.

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


Some credit union credit cards compete with the sign-up bonuses or current rewards rates found at major banks. It is one of the ways in which these nonprofits return value to members.

For Keenan Kimbrough, a 27-year-old Pennsylvania resident, the rewards and low interest rates were worth the transition from a bank-issued credit card to a credit union card. His credit card has a lower interest rate of 12% compared to 22% of the old card and the credit card earns increased rewards in common expense categories.

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


When you have less than ideal credit and you do not have enough money for a security deposit on a secure credit card, a credit union can provide alternatives to building credit. For example, USAlliance Financial, a New York-based credit union, is one of the many credit unions offering a credit card as an alternative to members who are unable to pay a minimum deposit in advance to qualify for a secured credit card.

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

With this type of loan, the borrowed amount is kept in a bank account while you make small gradual payments during the loan. At USAlliance Financial, the lowest credit line loan payment can be around $ 4 2 per month compared to a minimum down payment of $ 250 for a secured credit card. At the end of the loan, the money is returned to you and can be used for a secured credit card deposit to continue building credit.


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

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

Resources are available in the form of online training tools, seminars or partnerships with organizations providing credit advisory or financial planning services. Offers vary depending on the credit union.


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


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