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Credit Union Credit Cards: Their Pros and Cons, Plus 5 to Consider

Updated Sep 09, 2021 | Published Sep 05, 20187 min read

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At a glance

Credit unions differ from banks in many ways, typically offering lower annual fees and APRs, as well as better customer service. While they have their downsides, like fewer premium features, a credit union credit card may be a good fit for you.

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Wondering if a credit union credit card might be a good fit for you?

When compared to traditional bank cards, credit union credit cards offer low fees and personalized customer service — and aren’t as exclusive as you think.

Here’s everything you need to know.

Best Credit Union Credit Cards

Curious why we picked these as the best of the best? Learn more now.

What Are Credit Unions?

Credit unions are nonprofit, member-owned banks with all-volunteer, members-only boards.

Whereas the big banks charge high interest rates and high fees — and share those profits with their shareholders — credit unions pass profits to their members in the form of low interest rates and low fees.

Each credit union serves a unique community: people who live in one geographical area, work for a particular employer, or are members of a certain organization. It’s not hard to find a credit union you qualify for — more on that below.

The Pros and Cons of Credit Union Credit Cards

At your local credit union, you can get loans, checking and savings accounts, and credit cards.

Just like the big banks, credit unions issue credit cards on major networks like Visa and Mastercard — so even if your credit union is small, you can use your card anywhere its network is accepted.

Credit unions also usually report your credit card payments to the credit bureaus, so having one of their cards will help you build credit.

Here are the pros and cons of credit union credit cards.

Pro: Lower Fees

Because credit unions are nonprofit, they charge lower fees than for-profit banks.

Here are a few examples:

  • Annual fees: Whereas 45% of traditional bank credit cards charge annual fees, only 10% of credit union credit cards do.
  • Late fees: If you make a late payment, you’ll pay an average of 50% more ($35) at a major bank than at a credit union ($22.50).
  • Foreign transaction fees: On average, credit union cards charge a lower foreign transaction fee (1.15%) than bank credit cards (2.97%).
  • Balance transfer fees: If you want to transfer a balance from one credit card to another, credit union cards are a great choice. Whereas most bank cards charge fees of 3%–5%, many credit union cards don’t charge anything.

Pro: Lower Annual Percentage Rates (APRs)

Federal law restricts credit unions from charging more than an 18% interest rate on their loans — and that applies to credit cards, too, which often offer cardholders low rates.

According to the National Credit Union Administration, here are the average interest rates of:

  • Credit union credit cards: 11.71%
  • Bank credit cards: 13.13%

Though that doesn’t look like a huge difference, keep in mind rewards credit cards can have variable APRs upwards of 18–21%.

Insider tip

When you use credit cards strategically, APRs don’t matter: If you never carry a balance on your card, you’ll never have to pay interest on purchases.

Pro: Higher Approval Odds

Like any bank, credit unions check your credit scores and reports before extending you a line of credit.

But if you initially get denied, some say credit unions are more likely to reconsider your application.

Since you’re not just another face in the crowd, you might have the opportunity to explain your financial situation — and convince the organization you deserve its trust. You’ll have a better shot at this if you’ve been a good customer of the credit union for a long time.

You could also opt for a secured credit union card. With secured credit cards, you put down a small deposit (say $500) that serves as your credit limit. Since most credit unions report secured card payments to the credit bureaus, this is a great way to build your credit.

Pro: Better Customer Service

Chase has nearly 50 million digital customers (plus all the others who don’t use online banking services). Since your local credit union has fewer members, you’ll likely receive better customer service.

If you’re going through financial hardship, you can also ask for help from your credit union. In addition to offering personal finance education and resources, many may present solutions tailored to your situation.

Con: Cross-Collateralization

Most credit cards are “unsecured,” which means they don’t require collateral. But if you get a credit union credit card, you should be on the lookout for “cross-collateralization.”

This practice, common among credit unions, states that one loan’s collateral can be used to back other loans.

Say you have an auto loan with XYZ Credit Union, and then get a credit card from there, too. If you fail to make your credit card payments, XYZ could take away your car. Or if you’ve paid off your car — but still have credit card debt — XYZ could refuse to give you the car’s title until you pay off your other debt.

If you plan to take out multiple personal loans with a credit union, you should check for this clause in your credit card terms — and then decide if it’s worth it to you.

Con: Lower Credit Limits

To start out, credit unions may offer lower credit lines than bigger banks. If you put most expenses on your credit card each month, that could be a pain in the neck.

And, if you close one card to open a credit union credit card, a lower limit would increase your credit utilization — and therefore lower your credit scores. (That’s why you should always consider the consequences before closing credit cards.)

As with bigger banks, though, credit unions may be willing to raise your credit limit after a few months of on-time payments.

Con: Fewer Features and Rewards

Because of their relatively small size, credit unions can’t offer as many flashy perks as the Chases and Citibanks of the world. Their online banking services may also be less advanced.

While you will find credit union credit cards with decent rewards programs, cardholders won’t get the big signup bonuses you’d get with major rewards cards like the Chase Sapphire Reserve® (Review). It offers one of the better bonuses: 50,000 bonus points after spending $4,000 on purchases in the first 3 months.

How to Get a Credit Union Credit Card

Ready to get a credit union credit card?

First, you’ll need to find a credit union you qualify for. To make it easy, you could use a tool like this credit union locator. Since not all credit unions offer credit cards, you may have to do some searching until you find one that works for you.

Once you decide which credit union credit card you want, ask about application requirements. You may have to pay a one-time membership fee, or you may have to open a checking or savings account with the institution. Some will let you apply for a credit card first, then join if you get approved.

Insider tip

Before applying for any credit cards, it’s wise to check your credit scores and credit reports. If your scores aren’t in the suggested range, work on improving them first. Every time you apply for new credit, it dings your scores slightly — so it’s best to do it when you’re confident you’ll get approved.

The 5 Best Credit Union Credit Cards

Although the “best” credit union credit cards depend greatly on where you live, where you work, and what organizations you’re part of, here are a few solid options with broad membership eligibility.

For most of them, you’ll see you can become a credit union member simply by making a donation to a partner nonprofit.

Best for Low Interest Rates

Apply Now

securely on the issuer's website

PenFed Gold Visa® Card
Apply Now

securely on the issuer's website

  • Min. credit levelFair
  • Annual Fee$0
  • Purchase APR7.49% to 17.99% Variable
  • Regular APR as low as 7.49% to 17.99% Variable
  • Promotional APR available (see details)
  • $100 statement credit after spending $1,500 in the first 90 days of account opening
  • No annual fee
  • No foreign transaction fee

Eligibility: To open a PenFed (Pentagon Federal Credit Union) credit card you’ll need to become a member of PenFed. PenFed is federally insured by NCUA.

Best for Balance Transfers

Apply Now

securely on the issuer's website

Aspire Platinum Rewards Mastercard
Apply Now

securely on the issuer's website

  • Min. credit levelFair
  • Annual Fee$0
  • Purchase APR0% for 6 billing cycles, then 10.90%–18.00% Variable
  • No annual fee
  • No balance transfer fee
  • Intro APR of 0% on balance transfers for 6 months; after that, the APR is 10.90%–18.00% Variable
  • 5,000 rewards points after spending $2,000 in the first 3 months (which includes your balance transfer)
  • 1% foreign transaction fee

Eligibility: Employees of participating partners are eligible. Or join the American Consumer Council for $8.

Best for Avoiding Fees

  • No annual fee
  • No balance transfer fee
  • No foreign transaction fee
  • Purchase APR: 5.99% - 18.00% Variable
  • Balance Transfer APR: 0% for 12 months, then 5.99% - 18.00% Variable

Eligibility: You must be a military or Department of Defense employee, veteran, or retiree — or have a member of your immediate family or household who is.

Best for Travel Rewards

Apply Now

securely on the issuer's website

NFCU Visa Signature® Flagship Rewards
Apply Now

securely on the issuer's website

  • Min. credit levelFair
  • Annual Fee$49
  • Purchase APR9.99%–18.00% Variable
  • Earn 40,000 bonus points and a free year of Amazon Prime for spending $3,000 in the first 90 days of account opening
  • Annual fee: $49
  • 3X points per dollar spent on Travel
  • 2X points per dollar on every other purchase
  • Purchase APR: 9.99%–18.00% Variable

Eligibility: You must be a military or Department of Defense employee, veteran, or retiree — or have a member of your immediate family or household who is.

Best for Cash Back

Apply Now

securely on the issuer's website

Alliant Cashback Visa® Signature Credit Card
Apply Now

securely on the issuer's website

  • Min. credit levelExcellent
  • Annual Fee$99, $0 first year
  • Purchase APR11.99%–14.99% Variable
  • 3% cash back on all purchases for the first year (2.5% afterwards)
  • $99 annual fee (waived for the first year)
  • No foreign transaction fees
  • 11.99%–14.99% Variable APR

Eligibility: You can join if a family member is already an Alliant member, if you live in certain parts of Chicago, if you’ve been employed by certain businesses, or if you donate $5 to Foster Care for Success.

Wrapping Up

While credit union credit cards certainly have drawbacks — including fewer rewards and perks — they’re worth considering for their low fees and top-notch customer service.

If you’d like to compare them to major bank cards, here’s a list of the best credit cards on the market today. As long as you have good credit scores, you’ll have a solid chance of qualifying for most cards from both major banks and credit unions.

Frequently Asked Questions

What are the pros and cons of credit union credit cards?

Some of the advantages to getting a credit union credit card include:

  • Lower fees (annual fee, late fee, foreign transaction fee, and balance transfer fee)
  • Lower APRs
  • Higher approval rates
  • Better customer service

But there are a handful of downsides too. These include:

  • Cross-collateralization (If you have multiple loans with the credit union, such as a car loan and a credit card, the credit union could hold on to your car title once you’ve paid off the loan if you still have credit card debt. Or, if you fail to make credit card payments, the credit union could take away your car.)
  • Lower credit limits
  • Fewer benefits
  • Lower rewards

Check out a more in-depth breakdown of these pros and cons.

What are the best credit union credit cards?

Here are our top choices for the best credit union credit cards:

Curious about how we chose these cards? Take a look.

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Written by

Susan Shain

Susan is a freelance writer who specializes in turning complex financial topics into engaging and accessible articles. She's been writing about personal finance for six years, and was previously the senior writer at The Penny Hoarder and a staff writer at Student Loan Hero. Her personal finance writing has also appeared in publications like MarketWatch and Lifehacker.

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