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

6 min read
Susan Shain By Susan Shain Sep 05, 2018 | Updated May 01, 2020

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), which offers 50,000 rewards points after you spend $4,000 within 3 months of the account opening.

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

PenFed Gold Visa® Card

Our rating
Min. credit levelFair
Details
Annual Fee$0
Regular APR8.24% to 17.99% Variable
Apply Now

securely on the issuer's website

  • $100 statement bonus after spending $1,500 in purchase transactions within the first 90 days of account opening.
  • 0% promotional rate for 12 months on balance transfers made between now and September 30, 2020.
  • After that, the APR for the unpaid balance and any new balance transfers will be a non-variable rate of 17.99%. 3% balance transfer fee per transaction. Subject to credit approval. If you take advantage of this balance transfer, you will immediately be charged interest on all purchases made with your credit card unless you pay the entire account balance, including balance transfers, in full each month by the payment due date.
  • Rate and offers current as of July 1, 2020 and subject to change.
  • No annual fee
  • No foreign transaction fee
  • No cash advance fees
  • Chip and Contactless ‘Tap to Pay’ enabled for added security, ease and convenience at the point of sale
  • Click and Pay eligible, via Secure Remote Commerce, so you can enjoy easy and secure online buying checkout
  • Purchase variable Rate As Low As 7.49% APR and capped at 17.99%
  • Regular APR as low as 8.24% to 17.99% Variable
  • Promotional APR available (see details)
  • $100 statement credit after spending $1,500 in the first 3 months 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

Aspire Platinum Rewards Mastercard

Our rating
Min. credit levelFair
Details
Annual Fee$0
Regular APR10.90%–18.00% Variable
Apply Now

securely on the issuer's website

  • 0% intro APR for 6 billing cycles for purchases and balance transfers, and then your rate will be 10.90%–18.00% Variable
  • 5,000 points after spending $2,000 in the first 3 months of account opening
  • 1X point per dollar for all of your card purchases
  • Mastercard benefits
  • No annual fee
  • 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

NFCU Platinum Credit Card

Our rating
Min. credit levelFair
Details
Annual Fee$0
Regular APR7.49%–18.00% Variable
Apply Now

securely on the issuer's website

  • 0% introductory balance transfer APR for 12 months, for transfers requested within 30 days, then your rate will be 7.49%–18.00% Variable
  • Access to your FICO Score based on Equifax data
  • No annual fee
  • No balance transfer fee
  • No foreign transaction fee
  • No annual fee
  • No balance transfer fee
  • No foreign transaction fee
  • Purchase APR: 7.49%–18.00% Variable
  • Balance Transfer APR: 0% for 12 months, for transfers requested within 30 days, then 7.49%–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

NFCU Visa Signature® Flagship Rewards

Our rating
Min. credit levelFair
Details
Annual Fee$49, $0 first year
Regular APR11.49%–18.00% Variable
Apply Now

securely on the issuer's website

  • 3X points per dollar spent on travel
  • 2X points per dollar spent on all other purchases
  • 50,000 bonus points after spending $4,000 in the first 90 days of account opening
  • Cell phone protection
  • Access to one of your FICO scores
  • No balance transfer fees
  • No foreign transaction fees
  • $49 annual fee, waived the first year
  • Earn 30,000 points (a $300 value) toward travel after spending $3,000 in the first 90 days
  • $49 annual fee (waived the first year)
  • 2X points per dollar on every purchase
  • 11.49%–18.00% Variable APR

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

Alliant Cashback Visa® Signature Credit Card

Our rating
Min. credit levelExcellent
Details
Annual Fee$99, $0 first year
Regular APR11.99%–14.99% Variable
Apply Now

securely on the issuer's website

  • 3% cash back earned in the first year, then 2.5% after
  • No limit on cash back earnings
  • $99 annual fee waived the first year
  • No foreign transaction fee
  • 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.

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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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