Credit union credit cards for educators: Pros & cons

Teacher playing with her students.

Most educators are familiar with teachers’ unions, but what about credit unions? An alternative to banks, credit unions for educators are nonprofit organizations that offer financial products such as checking and savings accounts and loans. Educators can even get a credit union credit card that might offer better rates than major banks, in addition to other benefits.

What are credit unions for educators?

Credit unions are very different from banks. First and foremost, credit unions are nonprofit organizations. When a credit union makes a profit, it is distributed among its members. This can come in the form of reduced fees and more favorable rates. The resulting benefit is that instead of prioritizing profits, the credit union’s primary goal is to benefit its members.

Another key difference is that credit unions are member-owned. The credit union’s members are responsible for electing its board of directors, who serve the organization on a volunteer basis.

Typically, credit unions consist of individuals who share a common trait, such as living in the same geographic area or working in the same industry. This is how credit unions for educators are formed; they are comprised of members who work in education and therefore share similar financial interests.

Some educators prefer credit unions because of the lower fees and APRs associated with their financial products. Since credit unions are nonprofits, they can charge less than for-profit banks. For example, according to the National Credit Union Administration, the average APR on a credit union credit card is 11.71% while a bank will charge 13.13% on average.

Educators with poor credit or outstanding student debt may find it easier to get approved for a credit union credit card. While a bank might turn away someone with low credit entirely, credit unions for educators will be sympathetic to some of the financial hurdles commonly faced by those in the field.

As a final benefit, credit union members can expect a better in-person relationship with their organization than they would at a bank. A TimeTrade survey found that credit union members experienced more personalized service and visited their branch more frequently than those who used banks. The same survey also discovered that millennial credit union members specifically were more likely to visit their branch in person than the rest of the membership base.

Why choose a credit card over a credit union?

Despite the advantages of credit unions, there are still plenty of reasons to get a credit card from a bank. The main benefit to credit cards is that many offer comprehensive rewards programs that can help save money if used responsibly.

For educators, one of the best rewards credit cards is the ChaseTM Freedom Unlimited®. The card offers 3% cash back on purchases up to $20,000, followed by 1.5% cash back on all remaining purchases. This all comes with no annual fee and an introductory 0% APR for 15 months.

The Union Bank Rewards Visa® Credit Card is another great no-annual-fee option for educators. Its complex points system includes five points for every $1 spent on mobile wallet purchases up to $6,000, a worthwhile deal for anyone willing to spend a few minutes setting up a mobile wallet program on their smartphone. Cardholders also get three points for every $1 spent at restaurants and two points for every $1 spent on gas and groceries, for up to $6,000 in purchases each. This Union Bank credit card is currently offering 10,000 introductory bonus points after making $1,000 in purchases within the first three months.

The Citi® Double Cash Card is one more credit card with a rewards system that benefits educators. Cardholders receive 1% cash back on purchases when they buy, plus an additional 1% cash back when they pay it off. There is no annual fee.

Some educators prefer credit cards to credit unions because banks can typically offer higher credit limits. This is important in building credit since having a low overall credit usage will lead to a higher credit score. However, credit union members will most likely see their credit limit increase very quickly if they establish a good history of paying their bill on time.

Finally, there’s the convenience factor. Most major banks have thousands of branches across the country, while credit unions tend to have a very limited number of physical locations. This can make it highly inconvenient to access personal funds when traveling or relocating. Credit union members may also find that these institutions have a less diverse offering of financial products when compared to banks.

In a nutshell

When deciding between a credit union credit card and one offered by a bank, think about what benefits and features are most important. Banks offer credit cards with comprehensive rewards programs, more convenience and higher limits, while credit unions typically have lower fees and APRs and can be a better choice for those with low credit. Educators should reach out to their local credit union to discuss their options. Find a credit union near you.