A Co-Branded Credit Card That Makes The Grade

I criticized co-branded credit cards on a previous post for failing to negotiate better terms for their members/customers. My complaint is that the sponsoring organizations don't seem to care how badly these cards reflect on their brand. If you read the comments on that post, you'll see that some agreed with me, and others basically said "caveat emptor, it's all about making money."

What I neglected to point out was a "good guy" example that has defied the traditional model: the Union Plus Credit Card which is available to some 13 million union members. Union Privilege, the group that provides benefits to union members through unions across the country, has worked long and hard with the issuer (first Household Bank and now HSBC Bank) to negotiate and maintain a card with strong protections for cardholders. They also offer a secured card and rewards card.

Here's how the Union Plus credit card stacks up against the competition:

Punitive Rates
Other Cards

• Increase interest rates if cardholder pays late or for numerous other reasons.
• The average default rate is 25%; many issuers charge 32% or more.

Union Plus

• No increases above the members' standard APR, which is capped at 19.99%
• Promotional rates may rise to the member's standard APR, but only if they are 30 days late on the Union Plus card. That's almost unheard of in the industry.

Universal Default
Other Cards

• Most cards charge "universal default" interest rates based on alleged missteps with another issuers but involving no missed payments to the credit card company itself. This includes other credit card bills, mortgages, auto loans…even utility bills. Even a change in your credit report such as refinancing your mortgage can trigger a higher rate.

Union Plus

• No universal default

Grace Period
Other cards

• Grace periods have been getting shorter -- typically 20 days for many major cards.

Union Plus

• 25 days.

Raise Rates Any Time for Any Reason
Other Cards

• Credit card company contracts currently claim the right to change terms for any reason, including what often seems like no good reason at all!

Union Plus

• Terms can change only if Union Privilege agrees.

Mandatory Arbitration
Other Cards

• Force consumer to waive his or her right to a court trial as a condition of using a credit card. These mandatory arbitration clauses have been criticized as biased in favor of the issuers, and Class Action lawsuits are not allowed.

Union Plus

• No mandatory arbitration clause

Protecting Members
Other Cards

• No special protections for members facing financial hardship. If you want any kind of protection, you’ll have to purchase expensive disability or unemployment “insurance” type coverage.

Union Plus

• Special protections for members facing financial hardship, including:
• Lifeline Trust provides grants to cardholders who experience a significant loss of household income due to a long-term illness or prolonged disability ($100,000 in grants distributed)
• Free consumer credit counseling program with Money Management International which offers free budget analysis
• Disaster Relief Fund provides grants to members affected by a natural disaster ($400,000 provided to cardholders impacted by Hurricane Katrina)
• Layoff helpline assists members who have been laid off with reduced rates or fixed payment plans
• Skip payments (up to 4 per year) assist members on strike or facing other economic crises
• Full-time member advocate that works for Union Privilege to help members with concerns that are not addressed by the bank
• Union Privilege looks out for union consumers every day. Negotiates a contract with bank and oversees and monitors program.

Lest this sound like a commercial for the card, I want to point out that card programs like Union Plus should be the standard, not the exception. Organizations with large membership or customer bases should be similarly fighting for a good deal for consumers who carry cards with the sponsor's name on them. Yes, card programs must be profitable (and this one is) but at a time when long-term loyal cardholders are hard to come by, sponsors and issuers should be looking at ways to build loyalty through strong member benefits -- and by treating the customer well.

Comments

[credit card oner]

Ooo it is very important criticism about negotiation! As about so-brended cards i like gasoline cards for ex. BP rewards cards by Citibank. " No increases above the members' standard APR, which is capped at 19.99%" it is very high! I use Amex Blue Cash it offers 13.24 APR% for life and 0% APR for 6 month!

Well now you are wrong, I just received notice from Union Plus that they are changing finance charges to variable rates (prime + 15.99%! YIKES), adding default charges, increasing late fees, account fees, return payment fees, over the limit fees.

So now they are in-line with all other credit cards!

[Screwed By Union Plus]

Union Plus AFT credit card (HSBC Bank) sent out 200,000 letters this weekto its customers announcing arbitrary APR rate increases. Customer service's response is "the economy is bad". Even if you have a perfect payment record with them you are being punished for their poor decisions. AFL-CIO and AFT must drop HSBC immediately!!!

[Debby]

Please stop endorsing Union Plus Credit Cards! I too was never late with a payment, and received notice that low FIXED interest rate was being SIGNIFICANTLY INCREASED to a VARIABLE RATE!! People need to be warned to stay away from this company!

[Pamela]

Like the others I received my interest increase notice recently too!! At almost 25% for never paying late on this or any other card I've carried. Cancel your cards people and stay away from this company - let us show them as a union we hold more power than they do!!

[Gerri Detweiler]

Currently the default rate is 19.99% until the new terms take effect Jan 27 – which means you couldn’t get hit with a 24.99 default rate until at least April 2009.

Here are the triggers for default, which did not change:

· Pays their bill 3 or more days late twice in a rolling 12 month period
· Exceeds their credit limit twice in a rolling 12 month period
· Pays their bill 3 or more days late once and exceeds their credit limit once in a rolling 12 month period
· Exceeds their credit limit once and pays their bill late twice in a rolling 12 month period

So if you have not done any of the above, you are fine. But if you have any questions or problems, they encourage you to contact Union Plus at 1-800-472-2005.

I understand how frustrating it is to get any notice of a rate increase, but I can tell you that their policies are a lot better than the major card issuers we're seeing, who are hiking rates into the 20% plus range for no reason at all. (And they can't even cite a specific reason if you ask.)

[Jeff Hawkins]

Worst credit card company around, they used to be pretty good.....now they will "shark" you! Stay away from them or cancel your account soon!

[John Serling]

What a joke. The Union Plus card is administered through HSBC Nevada, which is the name of the old predatory Household International. It's a horrible company, and it's ridiculous that the AFL-CIO, through its Union Plus program is in bed with these creeps.

[lisamosc]

I like Union Plus in general, but twice now they have taken in upon themselves to, umm, protect my morals by preventing me from buying a DVD or two from 'certain' merchants. What happens is that they shut it down and I can't even buy office supplies on line from Staples. What's up with this? Are they owned by the Legion of Decency or something?