More Implications From the Shift Towards Credit Card Use.

by Sarah Grotta 0

As many financial institutions experience a shift in card use that favors credit cards over debit cards, the impact is having downstream implications.  As CU Times reports, some financial institutions are beginning to see greater non-interest income coming from credit card interchange than from overdraft fees.  This article focuses on the impact to credit unions, but the same could be said for other types of financial institutions:

Financial institutions are now making more in credit card interchange than they are in overdraft fees, and experts said it’s a sign that it may be time for credit unions to take a harder look at how much revenue weight their card programs should pull.

This is a major shift in how depositories have collected fees for decades,” Moebs Services Economist and CEO Michael Moebs said.

About 10 years ago, in 2006, overdraft revenue was 53.2% of all service charge revenue; credit card revenue was only about half of that, Moebs said. Today, credit card interchange is the largest source of service charge revenue.

 For those financial institutions experiencing this trend, budgets and resources are being altered to rely less on overdraft fees and shift resources toward the development, maintenance and promotion of credit card businesses.

Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group

Read the full story here