Credit Unions Credit Cards

Updated 1 July 2020

While there are plenty of big bank credit cards out there, checking out what the smaller players have to offer as you compare your options can often be worthwhile. Looking beyond the big banks, you will find a whole range of credit cards on offer within the customer-owned sphere, provided by credit unions, building societies and mutual banks.

So, what do these players have to offer? As the name suggests, customer-owned providers are owned by their customers. Set apart from big banks, they do not have the same focus of providing profit for external shareholders. Instead, they focus on providing ongoing savings and value to their customers, while also working to benefit the communities they serve.

As you check out credit cards offered by credit unions, you will notice many offer low cost options with low annual fees and low interest rates. Depending on the provider, some cards may provide extras such as rewards, with some enticing introductory offers to be found as well.

But of course, choosing a credit union credit card means more than just the features it has to offer. When you apply for a credit union credit card, you become a member of that credit union. This gives you a say in how the credit union is run, while also being able to benefit from the many ways your credit union gives back to your community.

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Why switch to a credit union credit card?

If you’re willing to look beyond the big banks for your credit card, you will find a whole range of alternatives to choose from within the customer-owned sphere. Making the switch to a credit union, you could benefit from lower rates and fees, while still making the most of essential features. Handy extras such as rewards also have their place here – and on top of that, you can have your say in how your credit union is run.

Choosing A Credit Union Credit Card

Let’s start with the basics. What is a credit union? A credit union is a member-owned financial cooperative, which is created and controlled by its members (who, in case you’re wondering, are its customers). Unlike a big bank, which may be run by a board to the benefit of external shareholders, a credit union is run by its members – for the benefit of its members.

Credit unions tend to focus on providing value, keeping costs low to help members save money on the financial products and services they need. When it comes to credit cards, credit unions typically keep their offering fairly basic. So, while you may see big banks offering a dozen or more different credit cards, a credit union may only have one or two.

Cost

One of the main reasons to choose a credit union credit card is to help keep costs down. Credit unions pride themselves on passing on savings to their customers, which results in lower annual fees and lower interest rates.

Why choose a card with a low annual fee? A card with no annual fee or a low annual fee could help you save year by year. With some cards’ annual fees reaching hundreds of dollars, this could indeed provide a significant saving.

Cardholders who tend to suit low annual fee credit cards are those looking to keep costs down, those who perhaps don’t use their card that often, or those who simply don’t see the point in paying loads for a card when they don’t have to.

What about interest? Choosing a card with a low interest rate could help you save on interest if you tend to carry a balance. This makes better sense than having a high rate card and paying over the odds in interest, negating the value of any fancy features on offer.

Cardholders who tend to suit low interest credit cards are those who carry a balance month to month, those starting out with credit, and those who prefer a basic credit card.

Features

While value may be the focus of most credit union credit cards, there are still plenty of features to be found. Obviously, you can expect to enjoy all the basic features found on all credit cards. These are typically offered by the issuer – be it Visa or Mastercard – but the credit union may throw some additional extras on top, depending on the type of card.

In terms of the essentials, you should expect to be able to make contactless payments, while enjoying security in the form of fraud prevention and zero liability. Compatibility with Samsung Pay, Apple Pay and Google Pay can be a bonus as well, and well worth looking out for.

Want to earn rewards? Some credit union credit cards offer rewards, occasionally through the credit union’s own rewards program, or more often as part of a larger program offered by an external provider. Meanwhile, higher end options may also offer extras such as complimentary travel insurance, purchase protection and concierge services.

Benefits

So then, why else might you choose to apply for a credit union credit card?

Security: Credit unions in Australia have to abide by all the same rules and regulations as banks. Credit union credit cards also offer all the security features you’d expect on a credit card, including chip & PIN, fraud monitoring and zero liability on fraudulent payments.

Community: Credit unions are often involved in the communities they serve. By being part of a credit union, members can give back to their community for the benefit of all.

Philosophy: Credit unions are run differently to banks, with many going so far as to have their own philosophy regarding the way financial institutions should be run. For cardholders who do not like the way big banks are run, switching to a credit union could be a refreshing change.

Membership: Many credit unions were originally created to serve members within a certain geographical area or a certain industry. While some continue to limit their membership to those who fit that criteria, most are open to all.

Being Part of Something: When you apply for a credit union credit card, you are essentially becoming part of something. Where to a big bank you are a customer, to a credit union you are a member. This often comes with voting rights, which allows you to have a say in how your credit union is run.

A credit union is a mutually-owned financial organisation run to the benefit of its members. As its customers are its members, when you apply for a credit card with a credit union you become one of its owners. This gives you a say in how it is run.

When you apply for a credit union credit card, you typically have to join the credit union to become a member. You may have to pay a small joining fee and fill in a membership form, which may be done online or in person.

Some credit unions limit their membership to certain industries. So, for example, only those who currently work within a certain industry, or who used to work in that industry and have now retired will be eligible.

In other circumstances, a credit union may have the name of a certain industry or geographic location, but membership is open to all. If you are unsure, check out the credit union’s FAQs or take a look at the small print within the credit card application.

There are plenty of reasons why you might want to choose a credit union credit card.

You want to save money: Credit unions focus on value, reinvesting their profits back to offer savings to their customers. This typically results in lower annual fees and interest rates on their credit cards, which can help cardholders save in the long term.

You want a simple card: While there are credit union credit cards with features and rewards on offer, many keep it simple instead. This can work well for cardholders who don’t need complex extras, who simply want to use their card to access credit, or who want to keep a card for emergencies.

You want a say in how things are run: As a cardholder, you are a member owner of your credit union. That usually means you can attend AGMs, to then get a vote in how the credit union is run.

You want to give back: Credit unions often have a strong focus on community. Being part of a credit union means you are aligned with an organisation that gives back to the community, providing help where it’s needed most.

You don’t like big banks: While big banks certainly have their fans, they’re not for everyone. A credit union can provide a worthy alternative to those who don’t want to be part of a big bank corporation.

Just like any other type of credit card, there are certain factors to consider when comparing the options on offer from a credit union.

Annual Fee: Want to keep costs down? Opting for a card with a low annual fee could make that happen. And luckily for you, there are heaps of credit union credit cards with low annual fees to choose from. Want to save even more? Keep an eye out for no annual fee options.

Interest: If you tend to carry a balance, choosing a card with a low interest rate could save you some serious money. Credit unions and other customer-owned providers often have the lowest purchase rates in the market, so if low interest is what you want, a credit union is most definitely the place to be.

Features: For the most part, if you choose a low cost card with a low annual fee and interest rate, there won’t be many extravagant features on offer. As with the big banks, low annual fees typically mean fewer features, while higher annual fees mean more features. While there are credit union credit cards with some nice perks, it’s a good idea to weigh the perks against the cost before you apply.

Rewards: Credit unions typically offer a smaller range of credit cards than bigger banks. But for those credit unions with a few cards on their books, a rewards option may be available. Find out more about the rewards program if you’re unfamiliar with it, while also taking into account the card’s earn rate, your potential points earn, and any points caps in place.

By checking out the range on offer, you may just find the intro offer for you. While you are unlikely to find big ticket bonus rewards offers often found within a big bank range, you may find some enticing offers on purchases, balance transfers and annual fees.

Balance Transfer Offers: With this type of offer, you could pay a lower rate of interest over an introductory period when you transfer a balance from another card. If you think you may not be able to pay off your transferred balance within the intro period, a credit union credit card with a low revert rate could be easier to deal with in the long term than a big bank card that reverts to a cash advance rate in the 20% p.a. range.

Purchase Offers: With this type of offer, you will pay a lower rate of interest on purchases over the card’s introductory period. This could provide an easy way to save on interest if you have a larger purchase planned – as long as you manage to pay it all off within the intro period.

Annual Fees: With this type of offer, you pay a reduced annual fee either for the first year, or for the life of the card. Allowing you to save money, it could also let you try the card on for size while enjoying more value on everything it offers.

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