Credit unions have benefitted as banks have pulled back from credit cards. Bank card balances grew 5.9% annually, which is less then half the growth rate of credit union card balances. Similar to the strong real estate lending activity, credit cards are benefiting from their position as balance sheet lenders.Credit unions reported approximately 300,000 more active accounts at midyear versus June 2007. The 12.7M accounts carry an average balance of $2,441, which is up 10.7% over a year ago. The penetration rate among credit union members has held steady at 14.2%.
According to June 30, 2008 data, the credit union loan portfolio increased 7.3% annually to $555.3B. The credit card portfolio was a strong point for credit unions - credit card balances grew 12.7% year-over-year totaling $31.0B in the second quarter of 2008. This credit card growth is due to new member accounts and the increased usage of cards. Credit cards are a valuable relationship product for your members plus, credit unions are helping members save money during a time of need through member friendly card programs.
Helping Members Save Money
As compared to other financial institutions, credit union members are saving hundreds in interest and fees. For example, a member with a Platinum Rewards Card has a $2,000 credit card balance for the entire year and has good credit. However, the member made one late payment last month. Take a look at the annual cost incurred to this member (including interest and fees) at Andrews Federal Credit Union ($816M in Suitland, MD) in relation to major banks:
Annual Cost of the Credit Card
Major Bank 1 – $558
Major Bank 2 – $438
Major Bank 3 – $398
Andrews Federal Credit Union - $263
Your Credit Card Program for 2009
Is your credit card program another way to help members? As members are looking for ways to save money during the current economic conditions, it is important for credit unions to step out of the crowd and show the value of your organization and card program to current and potential members.