You're fed up with your bank's credit card fees and terms. Would switching to a credit union bring any relief?
Many don't realize that credit unions are nonprofits owned by their members. The result is that they tend to offer more favorable terms.
This may sound attractive for anyone who's seen their credit card terms toughened in the past year. But that doesn't mean all is rosy with credit cards from credit unions.
Q: How would I even begin to get a credit card from a credit union?
A: The first step is finding a credit union you can join. Each of the country's 8,000 or so credit unions cater to a specific group, such as a company, university or geographic region.
Chances are you're eligible to join at least one, but it may not have the services you want.
For example, only about half of credit unions offer credit cards. So if that's your main reason for joining, make sure the credit union you're considering offers a card with terms you like.
You still have to apply for a credit card too; you don't automatically qualify just because you're a member. As with banks, your credit history is a factor in determining whether you're approved.
Q: Will the service and rewards be comparable to a bank-issued credit card?
A: Most credit cards offered by credit unions don't come with rewards programs. So if your main reason for using a credit card is to earn points, you might be better off with a bank. If you're considering a credit card from a credit union, however, chances are that your main concerns are fees and rates.
As for customer service, you may find it more personal at credit unions since they tend to be smaller. But that could also mean the hours of operation are limited.
Q: How much lower can I expect interest rates to be at a credit union?
A: Federally chartered credit unions, which make up about 60 percent of the industry, can't charge more than 15 percent. But that limit can be raised under certain conditions. For instance, the cap is 18 percent right now because of the economic climate.
The remainder of credit unions abide by rate caps set by the states they're chartered in. That's usually below 18 percent, if not less, according to the Credit Union National Association.