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Credit unions have the best credit card deals

A new study also shows that, despite predictions to the contrary, the Credit CARD Act has been good for consumers.

By Karen Datko May 13, 2011 4:22PM

This post comes from Mitch Lipka, consumer advocate at dealnews.


Looking for a better credit card deal? Consider getting it from a credit union. A recently released study (.pdf file) by the Pew Safe Credit Cards Project examined the credit card market since the federal Credit CARD Act was passed two years ago. Pew found that the cards offered by credit unions give you a better deal, across the board. They have:

  • Lower interest rates.
  • Less costly cash-advance charges.
  • Lower penalty charges.
  • Lower fees.

The lowest advertised APR that Pew found in its study was 9.99% for a card issued by a credit union versus 12.99% from a bank. The interest rate on a cash advance was as low as 10.9% at a credit union compared with 24% at a bank.


Dire predictions didn't come true

There was a brief period before the rules imposed in the law took effect, so companies pushed interest rates higher. However, "Pew's research counters predictions that the legislation would spark new charges and long-term interest rate growth," Nick Bourke, director of Pew's Safe Credit Cards Project, said in a statement.

"Whatever increases in advertised interest rates we saw going into 2010 have not continued into 2011. The CARD Act created a new equilibrium where interest rates have flattened, penalty charges have declined and a number of practices deemed 'unfair' or 'deceptive' have disappeared. Consumers are enjoying safer, more transparently priced credit cards -- and banks and credit unions are able to compete on a more level playing field." Post continues after video.

For those who missed a payment and were subject to a penalty APR, banks charged a median of 29.99% compared with 17.99% at credit unions.

The study also found that overdraft fees have become increasingly rare among banks and nonexistent at credit unions.


Credit card expert Bill Hardekopf says credit unions have traditionally been more consumer-friendly than banks. "The credit unions are owned or run by their members, as opposed to banks that are owned by shareholders, where everybody wants a profit," he says. "For a credit union to try to stand out and be noticed by you the consumer, they have to do something that's going to differentiate them."


A better rewards card

Offering lower rates and fees is the main way they do that. But credit union-issued cards are not for everyone, he says, noting that there is one type of card you'll likely do better with from a bank.


"If you're a rewards-driven customer, whether that's cash back or airline miles, you're going to probably get a better deal with a card issued from a major bank rather than at the local credit union," he said.


Other good news for consumers in this report is that the CARD Act apparently has had the impact that lawmakers were hoping for: Interest rates and fees have stabilized and issuers are more upfront with their customers.


More on dealnews and MSN Money:

May 21, 2011 7:02AM
At my credit union, the VISA Gold is 8.0% and the VISA Classic is 12.0% with NO annual fee or cash advance fee.  THAT is the credit union difference.
Jul 20, 2011 2:23PM

I agree that credit unions offer some of the best credit card deals around.


I love my credit union credit card.  I bank at Obee credit union and find their fees and rates and other offers to be much lower and/or more lucrative than my former bank's were.  Right now, Obee has a great credit card program going on called "Rates for Life" where any transferred balance stays at the initial rate until that balance is paid off.  They have some other good perks associated with this Rate for Life program, check it out here:


My old bank just can't compete, I will never go back to a traditional bank again, I find my credit union makes better financial sense for me.

Jun 29, 2011 8:43PM
We are more on the rewards side of things, so we use bank issued cards.  We haven't paid a dime in card interest in decades and don't pay any fees, so the rebates we get are gravy. 
Oct 26, 2011 3:38PM
Banks were financially irresponsible, credit unions for the most part were not.
Citizens should reward responsibility with their business, and avoid irresponsible institutions.

Dec 12, 2011 8:57PM
Credit Unions really do have some of the best deals throughout the year - however - credit card issuers like Citi will release mega deals that credit unions just cannot match. Also, when you cannot meet a credit unions requirements you may have to join a partner organization to qualify - reducing your savings or earning potential.
May 14, 2011 9:44PM
Speak for yourself, Uncle Sam totally screwed me over. 
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