Credit union credit cards: Why they're better than banks'

Credit Union credit cards are better than bank credit cards in the sense they have lower average interest rates and may be issued more responsibly. Since credit unions are non-profit organizations, the modus operandi is different than for a for profit bank. Moreover, a credit union is a collaborative and cooperative of members who's deposits, fees and interest payments to the credit union assist the credit union in serving the membership as a whole. This is reflected in credit union credit cards because they are generally more cost effective than bank credit cards. Bank credit cards do have some advantages in terms of accessibility, credit limits and product line however, credit union credit cards are on average more cost effective than bank credit cards as this article demonstrates.

Bank credit card(s)

According to indexcreditcards.com, the average credit card rate for the entire credit card market is 14.03%. This market includes credit unions which have a 2.74% lower average interest rate on credit cards than banks (hffo.cuna.org) Banks are also more likely to charge higher fees for penalties such as late payments and over limit fees. According to Judy Dahl, a writer for hffu.cuna.org, banks charge $15-$20 more for late payment fees than Credit Unions in addition to an average $13 higher over limit fee on checking accounts.

• Higher average interest rates
• More late payment fees
• Elevated over limit fees
• Credit card checks may charge transfer fee
• Bank profits from credit card interest 
• Fees do not necessarily lead to lower interest products
• Low credit scores more likely to lead to higher credit card APR
• Additional fees and/or surcharges more likely

Credit Union Credit Card(s)

Credit Union's are interested in serving their members financial interests as a priority rather than meeting the banks profit objectives as first order of business. This leads to overall benefits on credit cards across the board. Junk fees are less likely to be charged, additional or supplementary services related to payment or maintenance of credit cards is more likely to be free or lower cost and penalty fees are more lenient on average.

• Manage credit card payments through credit union
• Lower average interest rates
• More cost effective late payment fees and over limit fees
• Credit Union income serve member interests
• More likely to issue credit responsibly
• Fewer and/or lower supplementary service fees
• Free online credit card bill pay at some credit unions

Summary:

The benefits of credit union credit cards are clear as this article has demonstrated. While some banks may offer better credit card deals than some credit unions, on average, banks are less likely to provide more financial cost advantages to credit card holders based on average statistics. Obtaining a Credit Union credit card may be more difficult than a bank credit card, and credit limits may be lower on average, however other than this, the benefits tend to stack up in favor of credit union credit cards due to the lower costs. There is always some room for disagreement as to which is better as banks may have a wider range of products and services for a higher cost. Moreover, if cost is not an issue for a client, the lower costs provided by credit unions may not be considered an advantage. For budget minded folks however, credit union credit cards present a clear cost advantage.

Sources:

1. http://www.consumersavvytips.org/the_credit_union_vs_the_bank.html
2. http://www.indexcreditcards.com/creditcardmonitor/
3. http://hffo.cuna.org/13856/article/1894/html/