You probably enjoy the convenience of having a credit card, but do you also enjoy the high interest rates and fees charged by many credit card companies and banks? Probably not. While you might expect to pay a price for the convenience of not needing to carry large amounts of cash in your wallet or purse, your credit card rates and fees shouldn’t be draining your finances.
If your credit card is costing you too much money, there is a cost-effective alternative for you that you might enjoy more than a big bank. It’s called a credit union, and these institutions have been growing in popularity over the years. According to the Credit Union National Association, membership reached 100 million in June 2014, with about 2 percent increase each year.
Why You Should Consider a Credit Union Credit Card
Like banks, credit unions offer a variety of credit cards, including secured credit cards, travel cards, cash back card and rewards credit cards. But when you get a credit union credit card, you’re not only getting the card — you’re getting the numerous perks that come with belonging to a credit union. Below are seven ways you can benefit from a credit card with your local credit union.
Related: 10 Best Credit Union Credit Cards
1. You’re a Member-Owner
When you join a credit union, you become a member-owner, not a customer. Whereas banks typically have the goal to make profits, a credit union works with the interests of its members in mind. Also, you can vote for board of director members and other elected officials. Whether you have an account of $100,000 or $1, you have these privileges as a member-owner.
2. Fewer Fees
Along with lower interest rates, credit unions tend to offer lower fees in general — including credit card fees. Sure, an annual fee might be worth the expense for some credit cards, but who really wants to pay balance transfer, foreign transaction and cash advance fees? Alliant Credit Union’s Platinum and Platinum Rewards credit cards do not charge balance transfer fees, and PenFed’s Travel Rewards American Express Card does not charge a cash advance fee or a foreign transaction fee
3. Lower Interest Rates
Compared with large banks that offer credit cards, credit unions generally have lower interest rates. For example, Los Angeles Federal Credit Union’s Cash Back Visa credit card offers a 0% introductory APR for the first 12 months. After that, the card boasts variable interest rates as low as 8.99% APR. Capital One’s Quicksilver Rewards credit card has a 0% introductory APR as well; however, the variable APR ranges between 12.90% and 22.90% after the period is over.
4. Emergency Cash Availability
Emergencies happen to everyone, and many credit unions offer members credit cards that can help them when they’re in a financial bind. Erin Lowry of DailyFinance wrote she got a PenFed Promise Visa Card — which boasts no annual, balance transfer, cash advance, late or over-credit-limit fee, as well as no penalty APR — in case of emergencies. “Credit cards are not the ideal way to manage your debt,” she wrote. “But sometimes you need to make a payment quickly and don’t have time to shop around for the cheapest alternative.”
5. Extensive Surcharge-Free ATM Network
Credit unions might have had difficulty competing against the large number of bank ATMs, but there are now tens of thousands of ATMs in the CO-OP network. Many of these ATMs are surcharge-free, and the credit unions often offer to reimburse any fees you might incur when you use other institutions’ ATMs.
6. You Get Second Chances
According to CreditCards.com, credit unions tend to be more willing to give second chances to their members. So if you apply for a credit card or loan and get denied, a committee of employees and members might review your application again to see why you got turned down.
Keep reading: How to Get a Credit Card After Being Rejected
7. You Can Enjoy the Credit Union’s Other Services
If you become a member at a credit union by getting a credit card, there’s a good chance you might be able to qualify for its other services and products. With lower rates on loan and higher rates on savings, you might be interested in getting an auto loan or savings account with the credit union in the future. If so, you could end up saving (and earning) a lot of money during your time with the credit union.
Is a Credit Union Right for You?
Although credit unions provide a variety of perks, there are a couple of factors you’ll want to consider before becoming a member and applying for a credit card. For example, a small credit union might have less credit card options when compared with a national bank, like Bank of America or Wells Fargo. Also, if you’re the type of person who prefers visiting brick-and-mortar branches, you might have a hard time finding a credit union branch when you’re traveling out of town.
Choosing a credit card can be a hard decision. As important as fees and rates are, you also want to be able to trust your financial institution. Before deciding on a credit card, make sure you check out what your local credit union has to offer.