LOWER FEES It’s not uncommon to find credit cards at a credit union with lower annual fees, balance transfer fees, cash advance fees, late fees and so forth. In fact, the average late fee is about $10 cheaper at a credit union than at a bank, according to a Membership Benefits report by the Credit Union National Association. The types of fees assessed vary by credit union.
But while the rewards and perks are often flashier on bank-issued credit cards, credit union credit cards may offer generous incentives of their own or other forms of value. Plus, a credit union provides many of the same services that banks do, but the profits are returned to members in the form of reduced fees, lower interest rates and more. Here are some ways in which credit union credit cards can eclipse glitzy offers from banks. Navy Federal Credit Union in Virginia, for instance, has a military focus and fees to match members’ lifestyles.
“We know that many of our military members are stationed abroad so having no foreign transaction fees on any of our credit cards, we think, is a really fantastic way that we are able to serve our community,” says Justin Zeidman, head of credit card products at the credit union. Fees are an important factor to consider when choosing a credit card at any institution.
LOWER INTEREST RATES If you carry a balance on a credit card over a long period, you can potentially save more money on interest with a credit card from a credit union than one from a bank. That’s because, unlike at banks, interest rates at federally chartered credit unions are capped. Federal law caps the interest rate on loans and credit cards at 15%. However, the National Credit Union Administration Board temporarily raised it to 18% and recently voted to maintain this rate through March 10, 2023. As of March 2021, the national average interest rate for a credit card from a credit union is 10.97% compared with 12.55% at banks , according to the NCUA.
POTENTIALLY HEALTHY REWARDS Some credit union credit cards compete with the sign-up bonuses or ongoing rewards rates found at big banks. It’s one of the ways these not-for-profit institutions return value to members. For Keenan Kimbrough , a 27-year-old resident of Pennsylvania, the rewards and low-interest rates were worth making the switch from a bank-issued credit card to a credit union card. His credit union card gets a lower interest rate of 12% compared with the 22% of the old card and the credit union card earns elevated rewards in common spending categories.
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