If you are trying to obtain a credit card or loan from a credit union, interest rates are definitely a key factor in your decision.
You should know that the National CUA Board determines the rate of interest federal credit unions may charge on credit cards and other types of loan accounts.
The most that credit unions may charge is an 18% Annual Percentage Rate (APR).
Additionally, credit unions often offer higher savings rates and lower loan rates. This may mean that your savings may grow faster while your loan costs less. Credit unions also tend to require lower deposit balances while charging lower fees than other financial institutions.
One exception is for loans made under NCUA’s Short-Term Loan Program offered by federal credit unions. With this type of loan, credit unions may charge an APR of up to 28%. NCUA designed this program to allow federal credit unions greater flexibility in providing loan options for credit union members.
According to MyCreditUnion.gov, federal credit unions may offer Short-Term Small Loans with an interest rate up to 28% under the following conditions:
- Principal Amount: $200-$1,000
- Term: One to six months
- Application Fee: $0-$20 (based on actual costs)
- Eligibility: Member for at least one month
- Amortization: Fully amortized (no balloon payments)
- Rollovers: Prohibited
For more information about credit unions and loan interest rates, call us or visit one of our branches to speak with an associate. You may also visit our website for additional details.