Credit Unions Are Bringing Out The Big Guns And Getting Ready To Take On Credit Lenders

Angelina Jolie

If you’re thinking about jumping ship from your credit card company, now’s the time to think about switching to a credit union too.

Here’s why: 

Credit card companies have dealt with enough risky business lately and they’re scrambling to make up for last revenue by reeling in the cream of the credit score crop.

They’re already introducing a host of new fees on all sorts of services (low balances, overdrafts, balance transfer, to name a few) and APRs for low performing consumers can be found as high as 25 per cent these days. 

That means for those of you who are struggling to pay down your cards, finding yourselves hit with fees and barely making your monthly payments, now’s the time to get out.

Credit unions know this better that anyone and are stepping up their lending game to scoop up big bank refugees once again. (See 3 things to know before you ditch your bank.)

Here’s how: 

First of all, federal credit unions’ credit card and loan interest rates are capped at 18 per cent–no matter how crummy your credit is, the National Association of Federal Credit Union says. (See 3 things you need to know about joining a credit union.)

Says NAFCU President and CEO Fred R. Becker, Jr: “Recent data shows that the average rate for a classic credit card at a credit union averaged less than 12 per cent with many rates as low as 9 per cent.”

They’re also blowing away big banks in customer service rankings and making a point not to slap customers with pricey annual fees for credit cards. 

Credit card comparison site NerdWallet recently debunked some myths surrounding credit union credit cards. 

The site looked at 400 credit union credit offers across the country and found they consistently beat for-profit competitors in interest rates and fees. 

Some of their key findings:

  • Student credit cards have: an average of $10 less in late fees, 20% lower minimum APR and 14% lower maximum APR
  • Secured credit cards have: 60% lower annual fees, 40% lower APR, 56% lower balance transfer fees and 67% lower cash advance fees
  • Low interest credit cards have: 52% lower minimum APR, 23% lower maximum APR and 63% lower balance transfer and cash advance fees

Credit unions are also getting in on the rewards game, an area where they tend to fall behind compared to other lenders. 

“Even if you have great credit, you might well find a better rewards card at your credit union than at your typical bank,” the site says. “Facing their lowest interest yields since before 1980, credit unions are searching for ways to put their excess cash to good use, and are happy to give out rewards in the process, making now an ideal time to open a credit card account with them.”

There are two great tools on the web to help find the right credit union for you:

Try NAFCU’s credit union locator site, or Nerdwallet’s credit union finder, which both let you compare rates at competing lenders. 

Now see 10 of the biggest banking trends of 2012 >