Over the past four years, credit balances among credit unions have had minimal
growth because of credit unions selling their credit card portfolios and choosing
to gain a short-term earnings increase. However, on a Callhan’s
webinar this past Wednesday, three credit unions showed that credit card
programs can be successful if a credit union can develop innovative marketing
strategies and is willing to put in the legwork necessary to increase credit
card penetration among members.
Orange County Teachers Federal Credit Union wanted to grow credit card balances
in 2003 and get their card to the front of their members’ wallets. Their main
tactic was to offer a 5.9% rate for the life of a member’s credit card balance.
In addition, they also offered different promotions ranging from balance transfers
to summer travel. Each quarter they saw consistent credit card growth, the highest
increase occurring in the 4th quarter when credit card balances increased by
$12 million. Thus, their key to success was consistent marketing throughout
Consistent marketing was the theme for Northeast Credit Union’s presentation
as well. The way this credit union distinguishes itself from others though is
that it rewards its members for having multi-product relationships. For instance,
a member can get a 0.25% discount on most loans if they are a credit card holder.
They also have no minimum balance requirement on their checking account if they
hold a Platinum Visa. Opportunities like these have resulted in the credit union
having their credit card penetration increase to 42% of their members.
Like the other two credit unions, Napus Federal Credit Union consistently had
a strong credit card program over the past five years. However, they noticed
recently that both credit card loan balances and penetration rate were declining.
To counter this, Napus developed a three phase strategy. In the first phase,
they offered promotions to encourage current credit card users to upgrade their
cards. They then offered line of credit increases of $2,000 based on a number
of criteria. Finally, members were offered the chance to transfer their credit
card balances to their credit union with a 2.9% APR for nine months. As a result,
credit card penetration soared to 66.42%.
To learn more about successful ways to market credit cards to your members,
please take a look at our webcast, Successful Credit Card Strategies. Click
here for more information.