My Personal Finance Journey

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In Praise of Our Credit Union's Credit Card

Contributed by mm | August 7, 2006 2:00 PM PST

My oldest account in my credit report is the credit card from my credit union. Seemingly unattractive in today's standards -- it requires $40 annual fee to join an optional reward program -- I came to appreciate the multiple benefits of the card over the years.

1. Helps to Establish Credit History

This credit card is the first unsecured credit line I received when I came to the US. Then, I had a hard time not to pay a deposit with my utility company, but my credit union was generous enough to give me a $2,500 credit limit. Without this trust, my credit history would have been shortened by at least a few months. (Of course, the credit union does have an affiliation with my employer.)

2. Improves Credit Profile

Over the years, my credit limit of the card has been raised to $5,000, then to $13,000. Although I seldomly use the card, the high limit helped a lot when credit agencies try to calculate my credit utilization (especially when I hold on to 0% APR balance transfer deals exceeding $20,000 lately).

3. Emergency Cash Pool

One noteworthy benefit of my credit union is it does not charge a balance transfer fee when I move funds from my credit card to my checking account. Therefore, I see the $13,000 credit limit as part of my emergency fund when I park my short-term cash in other better yielding institutions like EmigrantDirect Savings Account (currently paying 5.15%). Even better, no interest is charged as long as I pay the monthly statement balance in full before the grace period ends. (I do know I can exploit this in almost the same way as another 0% balance transfer, but it will require too frequent transactions.)

4. Money Laundering

I can count on my credit union as my accomplice when I take advantage of other financial institution's generousity of offering 0% balance transfers. One challenging part of the 0% APR BT deal is you have to transfer the balance to another loan, and when last time I chose MBNA to be the receipient institution even, MBNA noticed what I was doing and almost closed all my accounts ("Close Encounters of The Third Kind"). Thanks to the no-balance-transfer-fee policy, I can take out a sizeable fund from my credit union's card first, and then issue the 0% APY BT from Citi or MBNA to replenish that card. No one has asked any questions since I deploy this money laundering tactic.

5. No Extra Fees for Foreign Purchases

Last but not least, I also appreciate the fact that my credit union never charges the foreign transaction fee that can run up to 4% in other issuers. No wonder my credit union will leave a voice message every time after I started an international business trip to warn me about potential suspicious activities (read: I only use the credit union's card for my personal expenses when I travel abroad). One added benefit: they never freeze my credit card even with all these callings.

Does your credit card offer these "hidden" perks?

This Post Has Received 4 Comments. Share Your Opinions Too.


Rich Slick Commented on August 8, 2006

Well don't keep us in suspense, which credit union is it? I use two credit unions and neither has these "features."

Of course if it's limited to the West coast then I probably won't qualify :(


Rich Slick Commented on August 8, 2006

Well duh. I feel dumb now. there is a link to it in the post!


Amy Commented on August 16, 2006

This kind of seems to good to be true. Just kidding , but don’t keep us in suspense because I am very curious what union gives you all these benefits.


Amy Commented on August 16, 2006

Indeed, so do I. Sorry for the misreading.


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