Credit unions’ credit card issuing programs are undergoing something of a resurgence. Many credit unions are seeing growth opportunities in credit card issuing, and some are reevaluating past decisions that deemphasized or sold card portfolios.
Bill Lehman, vice president of portfolio consulting services at Card Services for Credit Unions (CSCU) is interviewed in this article regarding trends in the credit union issuer market.
On the glass half-full side, credit union cards, overall, have never been better managed or marketed or carried a better reputation with consumers. And this is what helps him see a brighter future looming. On the glass half-empty side, Lehman maintains, far too many credit unions still fail to market their cards to reach their potential, despite consistently making up between 5% to 7% of an average credit card-issuing CU’s loan portfolio.
The reality Lehman acknowledged is that while credit cards represent among the best performing, if not the best performing, credit union loan assets, they can also be among the most time consuming and complicated. Unlike, say, an auto loan that can be made and then require minimum servicing, unless it falls into delinquency, a credit card is more of an ongoing relationship than merely a static loan.
For example, Lehman pointed out merely getting a member to apply for and then receive a credit union-issued credit card is only the first step. Then, a card-issuing CU has to get the member to activate the card and then make the CU card top of wallet.
Also noted is a similar viewpoint from Tom Chandler, director of AdvisorsPlus Strategic Consulting for PSCU Financial Services.
Like Lehman, Chandler pointed out CUs are feeling more confident about their card offerings, both that their cards represent a better deal for consumers and that credit cards can play an essential role in member households.
“Credit cards are definitely moving up on the list of different loan offerings credit unions make to their members,” Chandler remarked. Historically, credit cards have tended to be among the last loan product that a CU might offer members, and some credit unions didn’t really offer them at all, he said. They merely had one in case members asked, but they really didn’t market their credit card actively. But now, more credit unions feel comfortable making the case that their card is member friendly and a very good deal, Chandler said. “They can say they have a credit card that is worth opening and worth using to pay off balances on other cards,” he added.
Mercator is currently completing research for a report on the small credit card issuer market, which will evaluate the strengths of smaller bank and credit union issuers, and the firms that provide processing and outsourcing services to support these issuers.
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