September 1, 2010
The turbulent global economy is leading to a trend of rising interest rates and lower credit limits, which is bad for cardholders and in some cases good for credit card companies. Even cardholders who have made all of their credit card repayments on time and in full have experienced raised interest rates in the past two years. However, there are many credit card companies that have been taking losses as well, and many retail chains have decided to stop providing store credit cards.
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February 7, 2010
There has been a growing dissatisfaction with the big banks and financial institutions since the credit crunch and there has been a growing movement back to smaller institutions, including credit unions. As many credit unions are now offering credit cards, borrowers are considering switching their credit cards to these local institutions.
Credit unions have been around for just over one hundred years. They originated in nineteenth century Bavaria in southern Germany, and were particularly popular with Catholic groups when they started to spread as they were based on Catholic social teaching. Today many of them are work based, with many of the largest being in the Federal Civil Service or the armed forces. They are owned by savers and borrowers rather than shareholders. This means that credit unions are not aiming to make a profit for their shareholders, and they aim to have their operations as close as possible to the people that they were serving.
Although many of the larger credit unions have a lot of professional staff, some of the smaller credit unions are run predominantly by part time office holders. They became a popular way of accumulating savings and make small loans in a way that reduced the need to rely on extortionate money lenders who threw many people of modest means into poverty.
Credit unions now offer credit cards through larger credit card companies such as Visa and MasterCard. These tend to lack the variety of many credit card providers, but their non-profit making status tends to mean that they offer a lower interest rate than standard bank credit cards, particularly those of the larger banks.
One big difference between credit union credit cards and bank issued credit cards is that with a credit union all the accounts, including credit card accounts, are tied together. This means that it is not possible to segregate credit cards and savings accounts.
Unlike banks, particularly large banks, credit unions can be persuaded to give a borrower another chance if there is a poor credit score. It is often possible to appeal to the credit union committee. However many credit unions will grant the request on conditions that the borrower attends financial management courses.
Credit unions often require a borrower to have had an account with them before getting a credit card, although this is not a universal requirement. Credit unions are quite small and some of them can come under intense financial pressure when there are local difficulties in their area.
Credit unions are part of a co-operative ATM network that means that members can get lower fee withdrawals from cash machines in almost any part of the United States or Canada.
