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Elan Credit Cards: The Man Behind the Curtain

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No one carries an Elan credit card—or do they? If you apply online for a credit card with a small community bank or credit union, chances are you’ll be redirected to the Elan Financial Services card application. They’ll process your application, make the physical credit card and handle most of the customer support services. While their terms are not always the best for consumers, Elan enables small lenders to lower their costs and, therefore, pass savings on to their customers.

Outsourcing the marketing and manufacturing of credit cards

Elan Financial Services offers a suite of Visa credit cards, from the Signature to the College to the Platinum Business, and handles everything from processing applications to taking care of balance inquiries to handling lost or stolen cards. Basically, once you’ve been approved, Elan handles your card from there on out.

In addition to covering customer services, Elan provides marketing help to its client banks and credit unions. Its marketing toolkit boasts, among others, direct mail marketing (those giant, overstuffed envelopes you get all the time), branch promotions (win a free car wash!) and data collection on existing customers. Elan helps smaller financial institutions compete with larger banks that take advantage of economies of scale in order to cut down on fraud protection costs, have extensive marketing campaigns with deep pockets, and have their own customer service teams. Without an outside provider like Elan, a credit union with 20 employees would have to somehow find a way to provide 24/7 support for its cardholders without going broke.

Some credit unions sacrifice rates for efficiency

Elan sets the terms of its products: if you see a 13.99% APR on an Elan credit card, it’s the financial services provider that chose the rate, not your bank. Credit unions that use Elan tend to have higher rates than those who do not. The two standard credit union Elan Visa Signatures have interest rates from 9.99% to 17.99% for federal credit unions, which are legally barred from charging 18% or more, or 20.99% for state credit unions, which have no such restriction.

Credit unions that don’t use Elan, on the other hand, usually offer lower interest rates and have fewer (or no) “shrouded fees.” For example, Elan charges a 4% cash advance fee and a 3% foreign transaction fee. A number of credit unions have no cash advance fee, and either charge a 1% F/X fee so they don’t lose money or charge no foreign transaction fee and take a loss. These are the types of charges you don’t notice immediately and that banks can mark up quite a bit, so a credit union that forgoes them altogether is generally more trustworthy.

Non-Elan credit unions with lower rates and fewer fees

Pentagon Federal: The PenFed Premium Travel Rewards (also offered in a student edition) is one of the best gas credit cards around, with 5% uncapped rewards on the liquid gold, and its Promise Visa has a 9.99% ongoing APR for those with good to excellent credit. Even if you have average credit, you can still go for the Visa Gold, with an APR of 12.49%. All PenFed cards boast no foreign transaction fee, no cash advance fee, no balance transfer fee, and a lifetime balance transfer APR of 4.99%. For comparison, most banks will offer 0% balance transfer cards whose interest rate holds steady for 6-18 months, then skyrockets to as much as 20%. PenFed’s lifetime low balance transfer rate is great for shedding a large amount of credit card debt.

PenFed is one of the larger nationwide credit unions, and offers membership to:

  • US troops and their families
  • Defense-related federal employees (Homeland Security, Walter Reed, etc.)
  • Anyone who works at or volunteers with the Red Cross (yes, blood donations count)
  • Anyone who makes a $20 donation to the National Military Family Association
  • Anyone who makes a $15 donation to Voices for America’s Troops

Western Federal Credit Union: Western’s Visa Platinum has an APR of just 8.99%, while that of the Visa Gold, for average or good credit, is only 9.99%. That’s below the national average (11%) for excellent credit, let alone fair. Like PenFed, Western charges no cash advance fee, and its 2% foreign transaction fee is below the industry-standard 3%. Anyone can join Western with a donation to the Surfrider Foundation, which is dedicated to preserving coastal environments, or the Friends of Hobbs, a non-profit that helps to preserve the Hobbs State Park in Arkansas.