What You Need to Know About Credit Union Credit Cards

NEW YORK (MainStreet) — More than 600,000 people moved their bank accounts to a local credit union following November’s Bank Transfer Day in an attempt to escape fees and find better interest rates. But what about credit card accounts?

According to Tim Chen, CEO of NerdWallet, who closely monitors the credit union sector, people definitely get a better shot at a low interest rate when they apply for a card backed by a credit union. 

“The rates are better and your [credit] score doesn’t have to be perfect,” he says.

Atlanta-based Associated Credit Union, for example, offers a Visa Platinum Preferred credit card with a fixed 9.9% annual percentage rate to members with a FICO score higher than 680 and a fixed 12% APR to members with a FICO score of 600 or higher.

Chen notes that credit unions are also more open to working with local customers than big banks tend to be so even those who don’t meet their standard underwriting guidelines may be able to secure a card with favorable terms and conditions. The varying rates can make it hard to compare one credit union to another, but are still generally much lower and less stringent than what is being offered at big banks.

Of course, there is also a trade-off, and credit union cardholders may have to make a few adjustments in how they manage their accounts.

“Most national banks have 24-hour customer service,” Chen says. “You may not find that at some of these smaller credit unions.”

Additionally, it may require a bit more legwork to obtain the credit card since credit unions, by design, only lend to their own members.

But while small local unions may only let nearby residents apply, larger ones have “back doors” that allow almost everyone to join. The Pentagon Federal Credit Union, for instance, allows anyone to join if they make a one-time $15-$20 donation to one of the nonprofit organizations associated with it.

Most members will find the legwork worth it.

“They tend to have more of a mom and pop feel,” he says. “Members say they receive great customer service.”

Want to find out more about what new credit union members have to say about their experience? Read our article on where Bank Transfer Day participants are now.