Credit union question

[Cstl05]

What is a credit union?

How does a card from say penfed differ from another one from say Amex or Chase?

Thank you. 

[Itsmeagain]

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@gl4662 wrote:

What is a credit union?

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A credit union is a financial instution, similar to a bank in that they offer checking, savings, loans and credit cards.

The major difference is that a credit union is formed by a like group of people who offer memberships instead of just accounts.  The credit union is owned by it's members and is not beholding to stockholders,  Therefore, they can offer higher interest on savings products and lower interest on credit products.

Since it is a "members only" organization, you must demonstrate that you fit into a similar group to obtain membership. For example, Navy Federal Credit Union is for current and retired military personnel.  There may be alternative ways to join as each CU has affiliate organizations that, if you are a member, allow access to CU membership. Alliant CU (for example), will allow membership if you are a member of a local or national PTA and you can join the national PTA for a one time fee of $25.00 (I think).  PenFed accepts members who are also members of the National Military Family Association, which you can join for (I think), a one time fee of $25.00.

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@gl4662 wrote:

How does a card from say penfed differ from another one from say Amex or Chase?

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There is no difference in the utilization of their credit products.  It is a Mastercard or Visa and is welcome anywhere these cards are accepted.  The difference lies in the fact that credit unions will typically give larger opening credit lines and lower interest rates than most banks.

Hope this helps.

IMA

[Anonymous]

We have had relationships with credit unions for several years, and now have a car loan from a local CU (best rates) and a CC from Alliant CU (great credit limits).  So, I'm a big fan. 

However, from FICO's standpoint, a credit union is not in the same category as a bank.

FICO wants to see at least one revolving account from a bank or national CC.  (It's FICO reason code #3 - too few banking accounts.  You only need one).

So when you're deciding to work with banks and credit unions, make sure at least one revolving account is a bank account.

The other issue we run into with CU's, is that some of them only report to one or two CRA's.  Alliant, for example, does not report to TU.  So even though DH has a nice $10,000 CL with them, it does not report at TU and does not impact his utilization there.  Our last car loan was with a local CU, and they also did not report to TU.  Our current car loan, with a different local CU, reports to all 3 CRA's.

Another thing we ran into was that our local CU's were more conservative with granting credit.  They wanted 12 months post BK discharge.  We were able to get other bank CC's more quickly.