Big banks are known for their fees lately and big bank credit cards are no different. Many people have switched to credit unions for their banking needs to avoid big bank fees and many are wondering if they should do the same with their credit cards.
A recent article by Janna Herron published on FoxBusiness.com reviews the good, the bad and the tricky about credit union credit cards, outlining all the things to consider before making the switch.
Like most credit union loan products, the rates are much better than with the big banks. The average APR on a rewards credit card with a credit union was 9.38% as of November 1, 2012 compared with 12.89% for big banks. More interestingly, credit union credit card interest rates are capped at 18%. The National Credit Union Administration (much like the FDIC for banks) mandates the 18% cap for most loans made by federally chartered credit unions, although some short-term small loans have a 28% cap.
Credit union credit cards are also known for lower late payment fees, having a five-day grace period for late payments (compared to one at big banks), and having the same variety of credit card options, such as secured cards, reward cards and platinum cards.
One of the drawbacks to having a credit union credit card are lower limits than with the big banks. Credit unions are risk averse and new accounts will often face lower initial credit limits. Consistent on time payments can often increase the limits more quickly, but it is still a consideration before making the decision to switch.
To read the entire article, click here.