Unions are now offering credit cards, but that’s nothing new, right? Not as far as credit unions are concerned (they’ve actually been known to offer some of the best cards on the market), but when it comes to labor unions, it’s another story entirely.
After the financial hit that major labor unions took as a result of the Great Recession and all of the donations they made during the 2008 presidential election (a union’s got to lobby, after all), some began their own consumer lending programs, offering credit cards and loans to members. The problem? Not only could the terms of these offers lead many to conclude that unions are turning into the types of predatory lenders that they railed against during the height of the financial downturn, but union leadership also appears to be getting a bit too cozy with the big banking institutions they’ve disparaged for years.
Take the Service Employees International Union (SEIU) Rewards VISA Credit Card, for example. It offers 1% cash back and a 12.24% - 22.24% APR, which are decidedly average terms, according to WalletHub’s Q1 2012 Credit Card Landscape Report. What’s more, if you miss a payment, your interest rate for future transactions will jump to 27.99% and will remain at this high level until you’ve made six consecutive on-time payments.
The American Federation of Labor and Congress of Industrial Organizations (AFL–CIO), an umbrella organization for 56 U.S. unions, also offers a number of different “Union Plus” credit cards, which are offered by Capital One. The terms for each individual offer aren’t listed online, but you can expect an interest rate somewhere in the 7.99% – 21.99% range, depending on your creditworthiness.
What do the unions get from all this? A kickback for each account opened and a percentage of each purchase made, which sure comes in handy when it’s time to replenish depleted coffers and fuel future campaign contributions!
Talk about hypocrisy. And it doesn’t even end there.
For example, the AFL-CIO held hundreds of public anti-big-bank protests during the downturn, calling for taxes on banking executive bonuses, among other things. SEIU’s website is also filled with anti-big-bank rhetoric. Not only does it have a page titled “Stop Big Bank Greed,” but there’s also another that lays out all of the ways JPMorgan Chase “hurts everybody,” including its customers, homeowners, taxpayers, and workers, while directing union members to demand a meeting with Chase CEO Jamie Dimon.
The SEIU and the AFL-CIO, it seems, have a shared disdain for Chase, in particular. “JPMorgan Chase Chairman and CEO Jamie Dimon’s hubris in overestimating his ability to manage the financial risk posed by speculative trading demonstrates the need for independent regulatory oversight,” said AFL-CIO President Richard L. Trumka in a statement released May 15.
It’s therefore curious that both the SEIU and the AFL-CIO actually do business with Chase and recommend the bank’s services to their members. Both unions hawk Union Plus loans to members, at least 80,000 of which have been brokered by Chase as of yet.
This merely underscores how the positions of union leadership seem to change based on what serves their own needs best. When public support for banks was low, the unions publicly lashed out against them, increasing membership support in the process. Now that things have cooled down and disposable income is at a premium, the banks suddenly aren’t so bad. In fact, they’re good enough to do business with.
At the end of the day, though, consumers choose their own financial products, and those who use their allegiance to a given company, organization, or cause as the driving factor in their decision are destined for a bad deal. It’s important to compare all credit cards, loans, etc. in search of the best possible offer, no matter how it is branded. Branding should only be used as a tiebreaker.