July 31, 2009


  • My advice to credit unions during this time is to "stay the course". If your card program has been generating $75-$100 annual net income per account, you will be in good shape. This is not the time to hit your members with the SAME changes banks are making: variable rates, increased APRs, increased fees, cash advance fees, etc. You would be surprised at the number of inquiries I've been receiving regarding the variable rate structure. Keep in mind, "rate" is only one part of the income stream: 70% finance charge, 15% interchange and 15% fees. Fees and usage must also be balances. If you have had a huge amount of overlimit fee income in the past, this is one category that needs to be reviewed. Make sure you know beyond the card program ROA (ie net income per account) before making any drastic rate changes to your program.
    Ondine Irving