- Competitive ongoing interest rates
- Lower annual fees
- Same interest rate for purchases and cash advances
- Personalised service
Credit unions and member-owned banks offer the same kinds of products and services as major banks, including transaction accounts, home loans and credit cards.
But while standard banks are owned by shareholders and focus on generating profits, credit unions are typically owned and run by members. And the profits made by credit unions are usually passed on in the form of more competitive rates and fees.
Credit union credit cards often focus on providing potential savings and ongoing value for members. As a result, the credit cards available tend to have lower ongoing interest rates and annual fees than those provided by larger financial institutions. They may also come with extras such as rewards programs or complimentary travel insurance and other perks.
To get a credit card, you need to become a member of the credit union, which usually involves a fee of around $5 to $10. You may also need to open an everyday transaction account before or during your application.
Once you’re a member, you also have the opportunity to influence how the credit union is run. For example, you may be able to vote at annual general meetings or provide feedback that influences the features of different products.
In comparison, banks and larger financial institutions operate more like conventional businesses. This means they often provide more competitive introductory offers than credit unions. For example, balance transfer credit cards from banks typically provide lower introductory interest rates and longer promotional periods in comparison to credit union credit cards.
Banks also tend to provide more comprehensive rewards programs and complimentary extras than credit unions. When it comes to applying for a bank credit card, you don’t need to become a member or open a transaction account. However, this means you don’t have a say in how the bank is run or how different products work.
Like credit unions, these member-owned financial institutions have a focus on providing value to members and offer the same kinds of products. So credit unions, building societies, mutual banks, member-owned banks and customer-owned banks are often put in the same category.
Since 2010, many established credit unions and building societies in Australia have actually rebranded as member-owned banks or customer-owned banks. For example, Teachers Mutual Bank was known as "Teachers Credit Union" until 2012 and Greater Building Society became Greater Bank in 2016. But apart from the names, very little changed.
|Credit unions and member-owned banks||Banks|
|Focus||Credit unions focus on providing better member experiences and on improving their financial situation by providing quality products and suitable advice.||Banks focus on maximising profits for their shareholders, so they can attract more investors.|
|Profit||Any profit that a credit union generates goes back into the system to provide its members competitive rates and offerings.||Profit that banks generate goes to its shareholders, and the bank might invest some of it in different kinds of financial products. This works in your favour only if you’re a major stakeholder of the bank you’re banking with, not otherwise.|
|Security||Credit unions offer Mastercard and Visa credit cards, both of which provide secure payment systems. They are subject to the EFT code, so you get protection against fraudulent electronic transactions.||Banks offer the same security measures.|
|Rewards||Credit unions provide credit cards linked to some of the major rewards programs.||Banks offer a range of rewards credit cards as well.|
|Other benefits||Banks offer a range of rewards credit cards as well.||Banks also offer added features through their credit cards, but you might have to pay higher annual fees in this case.|
Pay attention to the factors below to find the right option for you:
As a result of all these credit union features, people often pay as much attention to a credit union’s philosophy as they do to specific products and features. This level of involvement means that credit unions often suit people who want to completely change the way they bank.
If you’re looking for a card that offers short-term value, on the other hand, you may find that bigger financial institutions provide you with more options. But either way, it can be worth comparing credit cards from both credit unions and banks to see which option is most suited to your needs.
Can I apply for a credit union credit card online?
This depends on the credit union you wish to deal with, and you can find a number of credit unions that accept online applications for credit cards.
What eligibility criteria would I have to meet to apply for a credit union credit card?
The eligibility criteria for credit cards can vary, but generally includes the following:
For specific information on application requirements, refer to the product page of any credit union credit card you’re interested in. You may also want to visit a specific credit union’s website for more details.
Is there a credit union in Australia with branches in all states and territories?
Most credit unions have small branch networks in comparison to banks. But some may allow you to bank in partner branches, or offer other services. Refer to individual credit union websites for details of their branch networks and access options.
Are credit unions regulated in the same way as banks?
Yes, both credit unions and building societies are accountable under the same regulations and laws as banks in Australia. All credit unions must have an Australian Financial Services Licence (AFSL) to be able to provide financial services and products. The Australian Prudential Regulation Authority (APRA) monitors the functioning of both credit unions and banks.
If you're looking for a standing desk for the home office, the Omnidesk Ascent is our #1 choice for 2023.
It's time to sort out your NBN plan for the new year.
Invest in an index fund instead of actively trading stocks and you not only save on time and fees, you could be earning more in returns too.
SPONSORED: Upgrade your internet before the end of 2023 and get ahead on your life admin! We take a look at some of the benefits of a faster internet connection.
Young Australians cite overspending as the main reason for not reaching their financial goals.
What you need to know about investing in Shein from Australia.
Your guide to currency exchange in Brisbane, including how to get the best exchange rate.
Addressing speculation that interest rates might fall in late-2024, ANZ CEO Shayne Elliott said he thought it was too optimistic.