Like previous Pew reports, “Two Steps Forward” compared 12 credit union and 12 bank issued cards in a survey that allowed the organization to include 90% of cards issued in the U.S., the organization said. Further, also like previous reports, the report documents that credit card fees and practices at the surveyed credit unions remained less expensive and more consumer friendly than at the surveyed banks. But the latest survey found fewer differences among issuers than previous reports.

For example, the organization found that both banks and credit unions had increased their annual percentage rates, but that the surveyed banks had increased theirs more than had the credit unions. Bank rates, on average, increased more than 30% between December 2008 and March 2010, while APR's on surveyed credit union issued cards only moved up 17% over the same period.

Significantly, the survey found that while no banks had retained fixed interest rates, two credit unions had preserved their fixed rates, which are very popular with consumers.

The report also found that both banks and credit unions surveyed had largely abandoned the use of over-limit fees.

“Late fees remained a nearly ubiquitous feature of credit cards,” the report said. “However, the presence of over-limit fees decreased sharply. Less than one-quarter of all cards in the survey included over-limit fees, compared to approximately four out of five in July 2009,” the report added.

One area where the survey found a good deal of difference between credit union and bank card issuers came in the area of rewards, and particularly using the loss of rewards points as ways of penalizing cardholder behavior, such as making late payments or going over the limit.

“For the first time, we collected data on loyalty rewards programs, specifically on how rewards may be used to penalize cardholders for late or over limit behavior,” the organization wrote in the report. “Five banks and 23% of surveyed bank cards disclosed restrictions on the ability of a cardholder to collect rewards while in penalty status.

At least one issuer may withdraw already issued rewards for cardholders who are 60 days or more past due. No credit unions disclosed using rewards programs as a penalty mechanism.”

But even as differences between bank cards and credit union cards have narrowed, they haven't gone away entirely. CU card consultants said credit unions still need to market their card programs with those differences in mind.

“The CARD Act and its regulations have narrowed the gap somewhat between bank and credit union cards,” said Chris Joy, director of Advisers Plus, a division of PSCU Financial Services.”But credit unions should keep on pressing their service as one of the things they do much better than bank card issuers,” he said. “Credit unions offer the same product that banks do, including rewards, usually at a better price point, but what they do really well is offer the kinds of service that can help cardholders manage and use their cards to their best advantage.”

Bill Lehman, vice president for portfolio consulting services for Card Services for Credit Unions agreed about the CU service advantage, particularly when it comes to cards, but also noted that while the credit union advantage on cards had narrowed, credit unions still need to emphasize the better value their cards offered for cardholders.

“Credit union cards still offer lower APRs and fees than bank cards do, even if banks have stopped their most abusive practices,” Lehman said. “Credit unions need focus on that better value as well as the stronger service. After all, every credit union cardholder is a part owner of the institution that issued that card,” he added.

Lehman also noted that credit unions need to start paying more attention to cardholder retention as well as acquiring new card accounts. “There are signs that bank mail solicitations are on their way up again, and we know they are aiming at the highest quality cardholders and that usually means credit union members,” Lehman said. “Credit unions need to start understanding that their cardholders are walking around with big targets on [their back] and start managing them more efficiently.”

Lehman recommended credit unions start reviewing their card accounts more often to make sure they are growing as the member's needs grow and remaining in close contact with members about their card needs.

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