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3 Things to Know About Credit Cards from Credit Unions

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Bank of America’s misstep with debit card fees has brought a lot of attention to credit unions. Even though Bank of America is “taking back” the fee in response to the outcry from the public, Bank Transfer Day is still set to happen on Saturday, November 5.

Even if you don’t switch banks, you can still consider taking a look at credit cards offered by credit unions. In most cases you’ll need to have good-to-excellent credit, but if you’re turned down, call and ask if they’ll look at your application again. Credit unions have been known to take unusual circumstances into consideration.

[Related article: Not Your Grandmother’s Credit Union]

Here are a few things you need to know about credit union credit cards:

#1: You have to become a member

This isn’t always easy because some credit unions serve only a select group. You can join the Pentagon Federal Credit Union with a one-time $20 donation. But you can’t join Navy Federal unless you’re associated with the military.

But there are many others out there that do allow a broader membership so you just have to do some research. You can start your search at A Smarter Choice, which is associated with Credit Union National Association. You can search by location or even do an advanced search by occupation, school and more.

[Resource: Get your free Credit Report Card]

#2: You usually get lower interest rates

Credit unions are non-profit organizations that are owned by the members. According to the Credit Union National Association, federally chartered credit unions have an interest rate cap of 18 percent on all loans, including credit cards. This fact helps to keep rates low.

But the rates are also low because you’re not just a customer, you’re an investor. So many credit unions funnel their profits back to you. This results in savings on various financial products.

If you revolve a balance, a credit union credit card is a good choice because you’ll save money on interest expense.

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#3: You still have to read the fine print

Don’t assume that since it’s a credit union, you don’t need to worry about protecting yourself. You still need to read the disclosure statements carefully. Shop around and compare the terms to a similar card at a regular bank. When it comes to credit products, it’s always buyer beware.

Kristen Christian, who started the Bank Transfer Day movement, will be a guest on The Credit Line radio show hosted by Credit.com chairman and co-founder, Adam Levin, this Saturday Nov. 5 at Noon ET/9 a.m. PT, streaming live on Los Angeles’ KFWB 980 AM.

Image: Indiana Public Media, via Flickr.com

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  • Megan

    Thank you for the article! I wish I could find a site comparing my local credit unions. This financial speak is hard!

    • Beverly Blair Harzog

      Megan–You’re so right that financial speak is hard! Click on the “A Smarter Choice” link in my blog. You can type in your area and find credit unions within a certain distance. Or try doing a Google search on credit unions in your area. Also check with friends and see if any of them have a credit union they’re happy with.

  • http://besttravelcreditcard.us/ Ron

    Another good tip is to look online first to see what sort of rewards cards you can apply for online. If you look at some of the returns on cash back or rewards cards it may make more sense to get a good cash back card than a lower interest rate [but no reward] card.

    • Beverly Blair Harzog

      Ron-Good tip! If you don’t carry a balance, you can truly take advantage of reward cards and come out ahead financially.

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