Three R’s for Succeeding in a Saturated Credit Card Market

In the competitive credit card market, creating the right incentives to become the preferred top of wallet card for your members is critical


Credit unions are facing intense competition for credit card customers as the market matures and becomes more saturated. Although the U.S. credit card industry has experienced an annual growth rate of 5.2 percent over the last four years, the credit union industry underperformed the average, rising only 2.2 percent over the same period.

With 80 percent of households reporting they have a credit card and an average of 7.6 payment cards per cardholder, the credit card market is approaching saturation. The challenge is no longer about getting your card into a consumer's wallet, but about gaining the majority wallet share as the preferred card.

Credit unions have three key levers they can utilize to promote their card programs: rates, rewards, and relating their marketing message.

Consumer surveys note that attractive rates significantly influence a customer's decision in choosing their primary credit card. Attractive APRs, low introductory rates and balance transfer rates generate interest and shift customer loyalty. The good news for credit unions is that, on average, credit unions are actually already more competitive than other credit card issuers.

Comparing Credit Card Rates
  Credit Unions Banks
Avg Purchase APR 12.29% 12.11%
Avg Penalty APR 19.80% 25.40%
Grace Period Days 25.0 21.5
Late Payment Fees $25.00 $39.00
Over-Limit Fees $17.90 $33.60
Cash Advance Fees 1.83% 3.20%
Balance Transfer Fees 2.00% 3.00%
Source: CardWeb

Cardholders actively seek programs that will provide tangible rewards for usage. Air miles, cash back, or merchandise reward programs are all effective means to incentivize credit card usage.

According to two recent payment studies by leading consulting firms, a consumer's preferred credit card is their reward-based card. Determining the right program for your field of membership is important, but developing an attractive rewards program is a necessary and expected component of a successful credit card program.

A credit card program with competitive rates and strong rewards will not grow without a robust marketing program. If you have a strong product, it is your responsibility to inform your members.

Leveraging the trust and recognition members have for your products can give credit unions an advantage over their competitors. In fact, Brookwood Capital found that the credit union response rates on direct mailings can be three to five times better than those of national issuers.




Sept. 5, 2005


  • Good information to have for planning strategy for promoting credit card products and developing a pricing structure that both benefits members, but provides some profit to the credit union.