Bank Credit Cards vs. Credit Union Credit Cards

When choosing between bank-issued credit cards and those issued by the credit union, there are many things to consider. Credit unions are owned by their members so they can often offer better deals. However, there are some limitations and drawbacks that their credit cards have over bank-issued cards. Here is a comparison of both types so you know what to expect.

Availability
There are about 8,000 credit unions in the United States. Of those 8,000, only about half of them issue credit cards for members. As a result, you may not get a credit card just because you are a member of a credit union. In fact, since credit unions typically cater to specific groups, you may not even be able to become a member and even if you do, you may not qualify for a credit card. You have a better chance with a bank because there are more options available to you and you do not have to belong to a specific group in order to be a customer at the bank.

Rewards
Many banks offer credit cards with a rewards program. You might get a small percentage of the money you spent throughout the year rewarded to you simply for using the card. Other banks, such as Bank of America, may automatically put money into your savings account each time you use your card. Credit unions do not typically offer rewards programs with their credit cards. If you are getting a card just for its rewards, a credit union credit card is not your best option.

Interest Rates
Credit cards issued by credit unions generally have a lower interest rate than the ones that your bank may offer. According to the Credit Union National Association, the rate caps for credit union are 18 percent, but the actual rate depends upon the state in which the credit union is located. On average, bank credit cards have higher caps and interest rates run between 12 and 18 percent while the average rates for credit union cards are somewhere between 10 and 14 percent. If you qualify for a credit union card, your interest rates will have a better chance of beating those of the bank cards you can get.

Fees or Charges
Before becoming a member of the credit union, you will be asked to pay a membership fee, or dues. According to the Credit Union National Association, fees range between $5 and $50. This is a one-time fee, but you may also need to buy a share in the credit union, which can cost as much as $20.

Weighing the differences between bank-issued cards and credit union ones is the best way to find the one that is right for you. Shop around at the various banks and credit unions in your area to see what types of deals they offer before making your decision.