Credit unions are regulated and owned by their members, who can directly vote for the institution’s board of directors. Unlike banks, which are for-profit companies that seek to maximize profits from interest charged on loans, they offer lower fees and competitive rates.
What type of card is a credit union card?
Credit cards are an important financial tool, helping you build your credit and earn rewards on everyday purchases. But before you get a card, there are some things to consider. For example, whether you want a card with a low interest rate or one with plenty of cash back. And, how much you plan to charge on the credit union cards is also important because it determines your credit limit and what you’ll pay in interest each month.
There are many options available to you, including those from traditional banks and credit unions. In addition to looking at savings and lending rates, you should also scope out the availability of ATMs, branch locations and membership fees.
Credit unions use your contributions to create a communal pool that provides loans for other members. This is called cross-collateralization and it protects you in the event of a debt default.
Some credit unions also provide members with perks like low interest rates and generous rewards programs that compete with those of big banks. For Keenan Kimbrough, who uses a card from Community First in Pennsylvania, those benefits made the switch worth it. The card carries a 12% APR, compared to 22% on his bank card.