Avoid The Union Plus Credit Card

Update 3.14.2011: The card has made a few updates that we think are great. Now the card has no annual fee, (instead of $0 to $39). Kudos to HSBC.

We are appalled at the popularity of the Union Plus Credit Card, issued by HSBC. The UnionPlusCard website states that nearly 2 million people carry this card, but after analyzing the terms, we are perplexed as to why anyone in their right minds would apply for the card.

Since the card is geared toward union members, and specifically offers discounts and benefits for union members, we can only imagine that the card is popular solely because of clever marketing.  Much like card companies make a killing offering sub-standard credit cards for college students by aggressively marketing on campuses, Union Plus and HSBC probably work with union leaders to target their members.  And much like most college-branded student credit cards are intrinsically flawed, the Union Plus Credit Card is not the best deal for most union members.

The bottom line

If you qualify for this card, then you qualify for a better card somewhere else. Never sign for a card simply because they claim to have your best interests at heart; do some research to find what’s actually best for your own lifestyle.

• If you pay off your balance every month, you should be earning rewards to the fullest extent possible. You can score an awesome rewards credit card, which will effectively get you something like 2% rewards. The Union Plus pays no rewards.
• The main perk advertised by this card is access to “exclusive discounts”, yet most other issuers offer similar, if not better, discounts through their own online credit card malls.
• If you don’t pay off your balances every month, you can find a low interest card geared towards your own level of credit.
• Either way, you can get a card with no annual fee, instead of this card’s annoying $0-$39 annual fee. “Apply first, we’ll tell you later”, seems to be UnionPlus’s mantra.

Here’s our beef

• The Union Plus card earns no rewards. Even many tiny neighborhood credit unions offer rewards. This means by using this card, you’re losing out on rebates of at least 1-2% on every dollar you spend.
• Instead, you get Union Plus benefits that can be found almost anywhere. Like access to a coupon center. See for yourself.
• The UnionSafe hardship assistance advertised here really has nothing to do with your credit card, and is a benefit that almost any union member can apply for, as far as we can tell.
• In our opinion, the website appears to violate US consumer protection laws by not showing a “Schumer Box” detailing pertinent information about rates and fees. We’re not lawyers, but this is probably a breach of the Truth In Lending Act of 1988. If you want to find out what’s going on with the card before you apply, check page 11 of this PDF. Chances are, most applicants won’t find this before clicking “Apply Now”.
• The listed annual fee ranges from $0 to $39, but you don’t find out what you’re going to be charged until you apply. This strikes us as odd, because it’s not only bad business, but it’s bad marketing. That’s not a common combination in the credit card market.
• The upfront balance transfer fee and cash advance fee of 4% are very high. These fees are generally 3% or less at other banks. Fees of 4-5% are the exception, not the rule.
• The interest rates are off the charts, and you can be charged up to 23.24% interest, but the actual rate isn’t specified until you apply. Your cash advance APR is also guaranteed to be atrocious – it’s 23.99% no matter how good your credit is. Meanwhile, if you’re looking for a credit line rather than rewards, you can get 0% on balance transfers for 21 months with a few credit cards right now.

It’s not all bad

• The foreign transaction fee of 1% is actually pretty decent.
• Many other banks charge 3%, and since networks like Visa and MasterCard charge 1% fees of their own, very few credit cards charge less than that.

Unfortunately that’s not nearly enough of a benefit for us to recommend this card.