DuPage Credit Union: Effective Card Portfolio Management
At year end 2007, DuPage Credit Union had a credit card penetration rate of 45.2%, surpassed by only 25 other credit unions. Since the introduction of the Visa Classic card in 1983, the program has grown to become an integral part of the credit union' success. Currently the card program comprises 20.7% of their total loan portfolio, nearly four times the proportion of the average credit union. And for the past several years the card program has ranged between 18%-23% of the total loan portfolio. The credit union views the card as a relationship product and uses it as a key way to reach members with promotions.
From the introduction of the Visa Classic in 1983 with a rate of 16.88% (about two percentage points below the prime rate at the time*), the card has continuously evolved based on internal analysis and member feedback. Gold and Platinum cards were added, subtracted, re-introduced and had their terms frequently changed. Rewards were added and eliminated. In 1998 when the Platinum card was introduced, rewards were attached to that card.
One driver of the strong performance of their card program is the rewards, which members hugely embrace. Originally 20,000 points (1 point per dollar spent) would be worth one round trip ticket within the United States. Several years ago, however, that ratio was no longer fiscally responsible for the credit union and was changed to 30,000 points per round trip ticket. As the program moves forward, new features will be introduced but ultimately depend on an assessment of members wantsâ€™ and credit union feasibility.
Diane Shelton, Sr.VP of Sales and Service, finds it difficult to pin their success on two or three points. Yet one thing that has made a difference is the credit union team. The management team has worked together at the credit union for over 15 years, allowing them to understand the program in its totality. This team actively engages all departments to make the program a success and isnâ€™t afraid to try new things. In the mid-1990s in fact, the credit union considered selling their portfolio, however after thorough analyses and research ultimately decided to retain the product to drive member value and relationships.
Actively managing their program includes utilization of benchmarking data, both internally and externally. The credit union receives monthly reports from both their card services provider (CSCU) and Fidelity. Internally generated reports compare the performance of the five different cards offered. These documents are used within the credit union to discuss trends and areas for improvement. The organizational focus has brought change to the product, and Shelton is careful to say that their credit card is "not the same product it was 25 years ago". She credits the coordinated effort from all teams - collections, member service, lending, operations, and marketing as driving the continued success of the program.
Ensuring "Top of Wallet"
An application for membership to the credit union includes sections to add a credit card as an option, and a summary of credit terms are included within the membership application as well. Cross-selling the product to new members is strongly encouraged and part of a larger tracking system.
With five individual cards, the credit union guarantees that almost all members will find an ideal fit. They also make an effort to reach members that other credit card providers may dismiss, including those members who are re-building their credit and a "Bank on Your Own" card designed for members 17 - 22. As the rewards card comprises most of the portfolio, the generous rewards program drives activity. But for inactive cards the credit union runs monthly promos promoting usage of the card and offering double rewards points on balance transfers, aggressively courting members who may be interested.
Setting the Foundation for Future Success
With a recent web redesign in the third quarter of 2007, the credit union has focused on their core products - mortgages and credit cards. With active promotions and brand marketing throughout the website, the credit union has taken another step to ensure continued success.