To CU or not to CU - an easy question

[Anonymous]

I have found over the past several weeks, a pervasive theme in this forum --  MAJOR BANKS ARE RJ, CLD, AND CANCELLING CREDIT CARDS  IN ANTICIPATION OF THE NEW LAW.

Everyone appears susceptible to the practice, although PIF and low UTIL help.

Being proactive by nature, I have been accumulating great CU cards and lines of credit with an EQ Fico in the high 600s.  I've noticed posters have. 

I strongly suggest that you read the following link:

http://curiouscapitalist.blogs.time.com/2009/06/23/the-credit-union-model-of-credit-cards/

[creditwherecreditisdue]

Decent article. Nothing too deep that I didn't really know, but it does emphasize this point: you are much less likely to be abused by a CU. That's why an increasing proportion of my available revolving debt is CU sourced. They get the overwhelming majority of my use, too.

[Anonymous]

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@creditwherecreditisdue wrote:
Decent article. Nothing too deep that I didn't really know, but it does emphasize this point: you are much less likely to be abused by a CU. That's why an increasing proportion of my available revolving debt is CU sourced. They get the overwhelming majority of my use, too.

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Exactly.  Just like a good trader diversifies his/her portfolio, its essential to diversify your credit options.

[Anonymous]

I could be wrong, but I think the Credit Union and Credit Card business is going to have a radical shake up.

Years ago, when Interbank launched its "Credit card" (MASTERCARD) many small banks got in it and mass mailed them to people. Sadly, they did not have the reserves to back them up.

Over the years, Credit Unions have not primairly been in the Credit Card business, on a large scale and frankly, when I look at the Financials of many of them, I dont see how they have the Capital reserves to sustain a great deal of Credit card issuence.

When I look at the capitalization of the "Major Credit Card issueing Banks" compared to that of Credit Unions, I just don't see it.

[creditwherecreditisdue]

Well that's just it DickC, they just don't issue that many credit cards. They are a fly on the back of an elephant. Just because there is a lot of talk on the boards about CU's doesn't mean the world at large is beating a hasty path to their closet CU. So if some smart folks take some of their credit business to CU's at this point in time it is a miniscule trend. Personally I have dealt with a credit union for over 40 years. I have had two auto loans, both from CU's. My graduate school student loan was from a CU. I fact other than my CC's I have never borrowed one red cent from a commercial bank. I don't see that changing anytime soon.

Message Edited by creditwherecreditisdue on 07-24-2009 04:53 AM

[Anonymous]

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@creditwherecreditisdue wrote:
Well that's just it DickC, they just don't issue that many credit cards. They are a fly on the back of an elephant. Just because there is a lot of talk on the boards about CU's doesn't mean the world at large is beating a hasty path to their closet CU. So if some smart folks take some of their credit business to CU's at this point in time it is a miniscule trend. Personally I have dealt with a credit union for over 40 years. I have had two auto loans, both from CU's. My graduate school student loan was from a CU. I fact other than my CC's I have never borrowed one red cent from a commercial bank. I don't see that changing anytime soon.

Message Edited by creditwherecreditisdue on 07-24-2009 04:53 AM

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Thats fantastic and I am happy that you are receiving good service from your Credit Unions. I have maintained an acccount in WESTSTAR CREDIT UNION , which serves the Gaming Industry, since 1980. We had two Mortgages through them.

Also have been a Customer of US BANK for over 20 years and certainly have no complaints with them.

As you say, I would certainly encourage anyone to have a nice relationship with a Credit Union.

[Uborrow-Upay]

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@Anonymous wrote:

I could be wrong, but I think the Credit Union and Credit Card business is going to have a radical shake up.

Years ago, when Interbank launched its "Credit card" (MASTERCARD) many small banks got in it and mass mailed them to people. Sadly, they did not have the reserves to back them up.

Over the years, Credit Unions have not primairly been in the Credit Card business, on a large scale and frankly, when I look at the Financials of many of them, I dont see how they have the Capital reserves to sustain a great deal of Credit card issuence.

When I look at the capitalization of the "Major Credit Card issueing Banks" compared to that of Credit Unions, I just don't see it.

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I discovered an interesting difference between CU issued credit cards and those issued by commercial banks when fact-checking a reply I had already made in another thread.  (I had made a comment based on only partially-accurate info.  Should have done my fact-checking first, duh!)

Unlike most (if not all) commercial bank issued consumer credit cards, CU issued CCs terms may include "right of offset", subject to regs of the geographical jurisdiction.   It has been noted by other posters that this appears to be a term commonly used in CU CC agreements.

Perhaps the reserve requirements are accounted for differently, as the CUs have access to the deposit funds of the borrower for the repayment of delinquent balances?  I don't know.

BTW, DickC...Thanks for answering my casino credit questions from another thread!

[Anonymous]

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Uborrow-Upay wrote

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I discovered an interesting difference between CU issued credit cards and those issued by commercial banks when fact-checking a reply I had already made in another thread.  (I had made a comment based on only partially-accurate info.  Should have done my fact-checking first, duh!)

Unlike most (if not all) commercial bank issued consumer credit cards, CU issued CCs terms may include "right of offset", subject to regs of the geographical jurisdiction.   It has been noted by other posters that this appears to be a term commonly used in CU CC agreements.

Perhaps the reserve requirements are accounted for differently, as the CUs have access to the deposit funds of the borrower for the repayment of delinquent balances?  I don't know.

BTW, DickC...Thanks for answering my casino credit questions from another thread!

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My pleasure to answer your question. Having worked and retired from working in the industry, it is an area I know a bit about.