If you’re thinking about engaging members and increasing wallet share, you might begin by rethinking your credit card portfolio. Credit unions that sold their card portfolios a few years back — along with those whose portfolios are languishing from lack of attention — now have the opportunity to grow revenue and member loyalty with an established, proven product. “People use their credit cards every day,” says Carlton Howard, vice president of Coastal Federal Credit Union in Raleigh, N.C. “They may not drive the most revenue, but they might be the stickiest product we have.” ALL SHOOK UP Americans are attached to their credit cards — and the reasons go beyond practicality. When credit card companies began raising rates and fees and cutting credit lines a few years back, consumers became insecure. The crisis hit everyone, even consumers with good credit. According to one FICO survey, 14 percent of the U.S. credit population saw a reduction in their credit lines between April 2009 and October 2009. Of these, four percent had a risk trigger — a late payment, collection or adverse public record. But 10 percent had no such risk trigger. This group posted a pre-reduction average FICO score of 757 and had low utilization ratios. The credit shakeup of the past few years has done more than change the way consumers view and use credit cards. It’s created an opportunity for trusted credit unions to extend a welcome. With revolving debt on the downswing and credit requirements still strict, this is not a chance for credit unions to get rich quick. Rather, offering card programs with reasonable terms and fees and strong member service — in short, programs that make solid financial sense — shows members that your credit union is in their court. GOOD FOR YOU That said, there are several organizational advantages to expanding your credit card programs. These include:
- Interchange income that is not affected by current legislation.
- An adjustable-rate loan product in a fluctuating rate environment.
- A new connection point for prospective members.
- Increased wallet share.
- Access to behavioral data about members.
- Cross-sell opportunities monthly via statements.
- Opening to serve underserved and newly credit-impaired consumers with secured card products.
- “Halo effect” from providing a fair product.
- Emotional attachment. According to Robert D. Manning, author of Credit Card Nation, consumers hold their first time card accounts for an average of 15 years.