How can credit unions offer more fair and ethical credit cards to consumers?

  1. Credit Unions are non-profit and do NOT have stockholders as banks do. Credit Unions have "members" (you!), so any profits are returned to the members in forms of reduced loan rates and increased savings rates. Banks have stockholders to answer to-credit unions have their members to answer to (You!). And we all know what a FINE job the banks have been doing the past several years!
  2. Credit Unions DO NOT PAY THEIR EXECUTIVES MILLION DOLLAR BONUSES!!!
  3. Credit Unions do not saturate the market with extraordinary marketing expenses. Do you remember the time when pre-approval offers where showing up in droves in mail boxes? Their marketing costs are much lower, as they mostly have a loyal group of members. Credit Unions are not interested in being the BIGGEST, but are interested in being the BEST! The marketing expenses are a FRACTION of what banks have.

Credit Unions do need to generate a certain amount of income to cover their expenses for offering a card program: Card Processing Costs, Charge Offs/Loan Losses, Fraud, Marketing, Insurance, Salaries, etc. So in all honesty, they do need to make some money.

Typically the revenue generated by a credit union card program is as follows:

70% Finance Charge Income

15% Interchange Fee Income

15% Fee Income

Whereas, the typical credit card revenue for a bank card program:

55% Finance Charge Income

10% Interchange Fee Income

35% Fee Income

See the difference here? Banks receive a GREAT DEAL of their income from FEES, which is why so many of you are seeing increases in your APRs and other fees the past several months, BEFORE the Credit Card Act takes effect in Feb 2010. The fact that the Overlimit Fee is going away with some issuers, is a bit misleading, as the banks will get you in other ways: higher APRs and higher fees are becoming rampant!

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