Credit unions and banks are both financial institutions that function similarly in several ways. Both cater to savings and checking accounts and offer loans and credit card services. However, if there’s one thing that sets them apart, it’s the fact that credit unions are nonprofit organizations. And because they are nonprofit, they generally have lower fees, higher interest rates and offer better customer service. And if you’re someone who relies on credit cards a lot, you might want to consider getting them from a credit union. Read on and learn why you should switch to credit union credit cards.
Caps for interest rates
Credit card companies usually don’t have a limit when it comes to the interest rates they can charge to cardholders. But that’s not the case for credit unions. Credit unions are prohibited by federal law from charging more than 18%.
According to Credit Card Monitor, credit card companies usually charge an average of 16.7% for the cards they issue. But those with less than stellar credit are charged with rates higher than 20%. If you have a habit of carrying over a balance month after month, having a cap on the interest rate can save you thousands of dollars every year.
Since credit unions are nonprofit, their fees and penalties are lower than for-profit financial institutions. Credit union members typically pay an average of $20 for going over their credit limit or paying a bill late. Banks, on the other hand, charge as high as $39 for penalties.
When it comes to cash advance, credit unions only charge a 13.7% rate whereas banks charge as much as 21%.
Higher chances of approval
Similar to banks, credit unions rely on your credit score to determine whether or not to extend you a line of credit. However, the good thing about credit unions is that an application that gets denied also gets reconsidered. In a credit union, you are given the chance to explain your financial situation which helps boost approval odds. Here you are more than just a customer because you are a member and a member is an owner.
Like mentioned above, credit unions are owned by its members and banks are owned by shareholders. This means that as an organization, a credit union doesn’t go after maximizing profit as it doesn’t have any investors to please. Instead, profits go back to their members in the form of lower fees and higher interest rates.
Better customer service
Another great thing about credit unions is the fact that they provide better customer service to its members. Unlike banks with thousands of customers, credit unions are relatively smaller in terms of member count. With fewer members, better customer service is more likely provided. Also, credit unions take time to listen to each member’s story and financial hardships. You aren’t just another customer because you are a valued member. You can always reach out for help and they are more than happy to offer options that fit your situation.
Access to higher rewards
Most credit unions limit their products and services to their members only. But the catch is that once you’re in, you can take advantage of lucrative credit card rewards that stack up against other traditional credit cards.
How to Get a Credit Union Credit Card?
If you think that credit union credit cards are for you, the first thing to do is to look for a credit union you qualify for. As soon as you find one, make sure that this branch offers a credit card that works for you. Learn about their application requirements. Some credit unions require that you open a savings or checking account with them while others only ask for a one-time membership fee payment. It’s easy to get approved for a credit union credit card if you have a stellar credit score. So if you’re considering applying for one, start working on improving your credit score as early as possible.
Traditional banks may seem like they have so much more to offer, but when it comes to credit cards, credit unions bring several benefits to the table. If you’re looking forward to having your first credit card with a credit union you can trust, please feel free to visit Calcite Credit Union.