As consumer spending rises, so does the need for credit cards.
It’s not just the holidays that have consumers spending more these days. According to this report on NPR, both spending and the debt that goes with it have been on the rise for several months now. This may spell opportunity for credit unions looking to expand member relationships and increase revenue via credit card accounts.
What’s behind the spending increase?
A FICO survey found two areas of growth for credit-based spending: affluent consumers loosening their purse strings and regular folks spending out of necessity – and needing credit to cover their purchases. When card issuers began closing accounts and cutting credit lines a few years back, the resulting contraction caused consumers to tighten up. Now, after years of deferring expenses, the need for credit is intensifying.
At the same time, credit unions that sold off their card portfolios are now reconsidering their options. And those that have continued offering credit cards are looking to increase usage. The timing couldn’t be better. Not only are credit unions casting about for ways to improve revenue, but they are also newly determined to enhance their relationships with members. Beyond the basic convenience credit cards offer, there’s a level of trust implicit between cardholders and issuers. For credit unions looking to break through the primary financial institution barrier, credit cards create familiarity.
In the new, post-recession economy, a new relationship to credit may be emerging. While consumers do seem to be warming up to credit, they don’t seem to be growing more enthusiastic about wanton debt. This month, TransUnion reported that credit card delinquency rates have reached a 17-year low – and that delinquencies are projected to drop further through the end of 2012. The average consumer debt that Americans carry is also down, which may indicate a new, more conservative approach to borrowing.
Credit unions that want to expand their credit card offerings – or look at ways to process credit card payments more efficiently – can combine their credit and debit processing services through CO-OP Financial Services. By capitalizing on their existing relationships and technology, credit unions can expand their services painlessly and create economies of scale in the process.
To find out more about choosing the right processing services for your credit unions, click here.