Why Credit Union Cards Might Be Your Best Choice
Have you been reading the credit card headlines lately? Things are getting ugly out there for card holders and issuers alike. If you have a credit card in your wallet, you’ve probably watched your interest rate soar and your credit limit drop. This is true even if you’ve made all of your payments on time and never maxed out your account. On the other hand, credit card companies have posted record losses, and some major retailers have even had to give up on their unprofitable credit card endeavors.
What does all of this mean for you? Two things are certain: Real credit card reform won’t come along until mid-2010, and in the meantime, you’d better make your credit card payments on time, every time, or risk going into default.
It might seem a little draconian to send a card holder into default if they’re only a few days late making their payment, but credit card companies have the right to do so – at least for now. And sky-high default interest rates will keep you from making any headway on your card balance. If you find yourself in default, what can you do?
Take your business to a credit union. They operate under a different (some would say more consumer-friendly) set of rules. Here are a few of the differences between a credit union credit card and a regular bank-issued card.
The Availability of Credit
The rules of lending are harsher than ever, thanks to the current credit freeze. Understandably, banks have become more picky about who they’ll issue credit to. By contrast, many credit unions are willing to issue credit cards to members with low credit scores.
The Interest Rates
Credit cards from federally chartered credit unions tend to have lower base interest rates than cards issued by banks. They’re also limited to a maximum interest rate of 18%, even if your account goes into default.
The Reasonable Rules of Default
Unfortunately, some credit card issuers have been known to place card holders’ accounts into default status after one missed payment. Credit unions seem more willing to work with their members. Many credit unions will overlook a few late payments before taking any action. Always check with your bank or credit union to learn their policy on default.
In today’s economy, we need all the help we can get. It doesn’t help card holders to be slapped with 29% interest when they’re having trouble making a payment in the first place. If your bank has raised your rates one too many times, take your business to a more forgiving credit union.
This article is courtesy of CreditorWeb.com, where you can compare business credit card offers and apply for credit cards online.
