4 surprising facts you might not know about credit union credit cards

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In a Nutshell

Though traditional banks and credit card issuers get most of the press, credit union credit cards may come with bigger perks and competitive interest rates.

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You’ve probably heard of credit unions, and you might even have a friend or family member who raves about the one they belong to. But what makes credit unions so special? Better question, what makes them so different from traditional banks?

Let’s start with the basics: A credit union is a nonprofit, member-owned financial cooperative. It exists to serve its members, and it may offer competitive rates and benefits compared to a traditional bank account.

People join credit unions for all sorts of reasons. Sometimes they’re members of a qualifying organization like the military or a university. Sometimes they’re just looking for an alternative to the larger, more traditional banks. Whatever their reason, many people find that they can get a better, more personal experience by joining a credit union and using credit union credit cards.

That’s right: Credit unions offer credit cards, too. While most people are familiar with traditional credit cards, credit union cards may offer even bigger perks and better interest rates. Let’s jump in and explore some surprising facts you might not know about credit union credit cards.


1. You don’t have to be part of an exclusive group to qualify

A big myth surrounding credit unions is that you can only qualify if you’re already a member of a certain organization or part of an exclusive group. This may be true for some credit unions, but it certainly isn’t the case for all of them.

Many credit unions offer several different pathways to membership, and joining a credit union doesn’t have to mean jumping through hoops. “I think most folks will be surprised to know that the barrier to membership isn’t very high in many cases,” says Thomas Bright of RichmondSavers. “There are many that just require a small membership fee.”

For example, Alliant Credit Union sets aside membership for current or past employees of certain companies, relatives of existing Alliant members, members of certain organizations or people who work in a certain community. Doesn’t sound like you? Don’t worry — just contribute at least $10 to Foster Care to Success, Alliant’s partner charity for helping foster teens, and you’ll be eligible for membership.

2. You may get access to members-only credit cards with higher rewards

Many credit unions limit access to their products to members only. The good news? Once you’re in, you can potentially apply for a credit card with rewards rates that stack up well against traditional credit cards.

Alliant members, for example, can apply for a credit card like the Alliant Cashback Visa® Signature Credit Card, which offers 3% cash back on all purchases made in your first year and 2.5% cash back after. Just keep an eye out for the annual fee of $99, waived the first year.

Other cards offer similarly impressive rewards rates. With the PenFed Platinum Rewards Visa Signature® Card, you’ll earn five points per $1 spent on gas, three points per $1 spent at supermarkets and one point on everything else. This can prove exceptionally rewarding for those making regular runs to the grocery store and filling up the tank each week.

3. Credit union credit cards often come with very competitive rates

Rewards, of course, only make a difference if you aren’t paying a ton in interest and late fees. Fortunately, credit unions tend to score highly in those departments as well.

“Credit union credit cards are known for offering significantly lower APRs, late fees and balance transfer fees,” notes Bright. “Their rates on products like auto loans are also very competitive.”

The Lake Michigan Credit Union Prime Platinum Card, for example, currently offers a variable purchase APR as low as the Prime rate plus 3%. Also, there’s no annual fee and no balance transfer fee, making it a potentially appealing option for debt consolidation.

4. Most credit unions reimburse those pesky ATM fees

Another surprising fact is that many credit unions offer some sort of reimbursement for withdrawing money from out-of-network ATMs with a debit card. Keep in mind this is only when using your debit card. Using a credit card at an ATM might run you into some hefty cash advance fees.

For example, Consumers Credit Union offers no-fee out-of-network ATM withdrawals with ATM reimbursements.

If you often find yourself out and about with limited ATM options, this perk can add up to substantial savings. Just be aware that credit unions generally have fewer branches for in-person transactions and offer fewer ATM machines than traditional banks. This might be a downside depending on how you prefer to handle your banking.


Bottom line

While traditional bank accounts may seem like the most convenient and available options out there, credit unions bring a lot to the table. The best of them offer competitive rewards, rates and membership benefits, not to mention the opportunity to feel like part of a tighter-knit financial community.

Just remember to check your eligibility first, and see if there might be a less conventional way to gain membership if you don’t think you qualify. It can’t hurt to call and talk over your options with a representative.