Less for You to Pay. That’s the Credit Union Way. (part 2)

After a student banker finds herself in the midst of credit card troubles she seeks credit union alternatives on her road to financial recovery.


Earlier in the week, I wrote about my bank cancelling my credit card and destroying my credit score (read part 1). Generation Y may be looking for convenience, competitive rates, and online options, but we’re also looking for security. And credit unions might be the right option. A June 7 CNN Money article talked about a Harvard study that found credit unions were more likely than banks to have better rates and lower penalties. Not surprising. Following my credit card troubles, I decided to look at alternatives for the student banker. I began my search at my mother’s credit union, MCT Federal Credit Union ($409.7M, Rockville, MD) and found a Student Visa with a relatively low interest rate and an attractive credit limit notification feature. MCT gives every new member a credit card tutorial and complimentary booklet on how to manage credit. This service was lacking with my previous card provider. A secured credit card is another option, especially as I have limited – and now a poor – credit history. I can link this card to my savings account; therefore the credit line cannot exceed the amount in my account. With many students suffering from credit card debt, these are exactly the type of cards we need to stay smart and financially in control. Before, every time I spent money on my credit card, the bank increased my credit limit in hopes I would spend more money than I have. 

In order to see both sides (credit union versus bank), I also researched top banks such as Citibank and Capital One. Their student-targeted products have similar offerings, yet the fine print was ambiguous and the interest rates started around 19%, which is significantly higher than most credit unions. With interest this high, every minimum payment only covers the costs of interest.

I have learned my lesson. I have smarter credit options that will actually support my early financial endeavors, not destroy them. I think becoming a member of a credit union will help me get my life started in the right direction. If the economy can be on the rise, so can I!


June 17, 2010


  • The prgaaon of understanding these issues is right here!