Why Credit Union rarely give 0% intro APR?

[w20031424]

I know some do.. but at least 8 out of 10 doesn't have 0% intro APR for new CC applicants. While a lot of banks do give out this kind of promo. Why is that?

[boomhower]

My guess is typically their revolving APR is significantly lower and many have no balance transfer fees.

[w20031424]

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@boomhower wrote:
My guess is typically their revolving APR is significantly lower and many have no balance transfer fees.

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Then it comes the next question, why do they choose this route? We can clearly see the different strategy between CUs and banks.

[Simply827]

I would think that offering a lower APR would keep your customers loyal to your card. If they ever needed to carry a balance for some reason, the CU card would likely be the one they choose if they are out of 0% promos. Some people also have the "on to the next one" mentality and are constantly on search for the next bonus/promo/hot card. I suppose the CUs are satisfied with being the trusty back up.

[tcbofade]

It's also true that the local CU just doesn't have the risk tolerance of the bigger banks...therefore, a lower, more reliable profit is a better option for them, and it probably saves their members money in the long run...

[CreditCrusader]

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@w20031424 wrote:

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Then it comes the next question, why do they choose this route? We can clearly see the different strategy between CUs and banks.

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Because CUs are looking to build long-term relationships, not necessarily maximize profits. Banks know that a significant percentage of 0% BT/Intro customers will not PIF before the end of the promo period...then get saddled with a lump sum of interest added to the balance. CUs offer, as a general rule, lower APRs for credit products over the long haul...and therefore secure many "customers for life" by virtue of the money saved over that lifetime.

YMMV, of course, but that's my take

[Guyatthebeach]

I asked my credit union the same thing when my secured Visa was converted to an unsecured Visa. The loan officer said since they don't charge annual fees or transactions fees, they don't do the 0% intro promotion. The promotion my CU does is the 1.9 to 3.9% APR for 1 year on BT's.

He went on to say banks use the fees to make money. CU don't make much money on the credit cards. Balance transfer balances can tie up a lot of the credit card funding capital and most credit  unions don't like to tie up lots of capital with their card portifilio.

[boomhower]

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@Guyatthebeach wrote:

I asked my credit union the same thing when my secured Visa was converted to an unsecured Visa. The loan officer said since they don't charge annual fees or transactions fees, they don't do the 0% intro promotion. The promotion my CU does is the 1.9 to 3.9% APR for 1 year on BT's.

He went on to say banks use the fees to make money. CU don't make much money on the credit cards. Balance transfer balances can tie up a lot of the credit card funding capital and most credit  unions don't like to tie up lots of capital with their card portifilio.

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That makes a lot of sense. 

[LS2982]

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@boomhower wrote:
My guess is typically their revolving APR is significantly lower and many have no balance transfer fees.

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I agree with this, and i'd rather have the high limit low APR card then 0%.

[austinguy907]

most CU accounts fall under NCUA guidance.  they have a template form of accounts and loans.  it's pretty standard across the board when you look at the paperwork between east / west coast CU's.  everything comes on a "Loanliner" form that's NCUA approved.  they don't do a whole lot of 0% to draw people in because they aren't for profit when the period is over their APR doesn't shoot up to 20%+ like Bank of America, Chase, Etc.  Quality over Quantity is the name of the game when lending from a CU.  

go do some research on how many banks vs CU failed during the financial crisis.