For the past seven years, Truity Federal Credit Union ($795.9M, Bartlesville, OK) has been turning on and off an automated credit card pre-approval program that generates new card accounts when needed and limits card growth when priorities change.

The Oklahoma credit union pulls credit reports every other month and assigns non-card members to tiers based on a combination of credit score, bankruptcy indicators, and Reg Z ability to repay criteria. It then typically emails members in the top tiers with an offer to open a credit card account. 

Members who click “yes” visit a “congratulations” page where they verify basic information, such as their address, and indicate whether they want a cash advance. 

Amy Grose, VP Marketing, Truity FCU

There’s little friction in that user experience, and members have taken note.

“One of our members, who works for a credit union league, told me it was the easiest acceptance he’s ever seen,” says Amy Grose, Truity’s vice president for marketing.

For members who already have a Truity credit card, the credit union has an easy way for them to access more credit. Twice a year, it reviews current card holders and sends eligible members an offer for a credit line increase. If accepted, those members qualify automatically and the credit union sends a confirmation for when the additional funds — typically in the $5,000 to $10,000 range — will be available.

Truity kicked-off this automated pre-approval program in 2012 as a way to nurture its consumer lending. It’s an easy process for members, yet a human still reviews who has clicked to accept, so fraud has remained low. In the past six years, Truity’s card portfolio has steadily grown and is now above average for its asset-based peer group. Its ratio of credit card loans to total loans has also increased.

Click the tabs below to view graphs.

CREDIT CARD LOAN GROWTH

CREDIT CARD LOAN GROWTH

FOR CREDIT UNIONS $500M-$1B; OKLAHOMA CREDIT UNIONS | DATA AS OF 09.30.18

After peaking in 2016, Truity’s credit card loan growth dropped sharply as the credit union shifted emphasis to deposit growth and stiffened credit parameters as delinquencies grew.

CREDIT CARD BALANCES

CREDIT CARD BALANCES

FOR CREDIT UNIONS $500M-$1B; OKLAHOMA CREDIT UNIONS | DATA AS OF 09.30.18

Truity’s credit card balances of $41.7 million in the third quarter of 2018 were nearly twice that of the $21.7 million on average for credit unions in its asset band.

CREDIT CARD LOANS TO TOTAL LOANS

CREDIT CARD LOANS TO TOTAL LOANS

FOR CREDIT UNIONS $500M-$1B; OKLAHOMA CREDIT UNIONS | DATA AS OF 09.30.18

Since it began its pre-approval program in 2012, Truity’s ratio of credit card loans to total loans has been consistently higher than its asset-based and state peers. The credit union has discovered offers specific to travel-related expenses, like gas and hotels, resonate more with members.

CHARGE-OFFS AND DELINQUENCIES

CHARGE-OFFS AND DELINQUENCIES

FOR CREDIT UNIONS $500M-$1B; OKLAHOMA CREDIT UNIONS | DATA AS OF 09.30.18

Truity has tightened its lending criteria and boosted charge-offs in response to a spike in delinquencies in the past year.

Although the credit union pulls the reports and calculates rankings bi-monthly, it doesn’t always send the email promotions on the same schedule. Those communications hinge on Truity's larger priorities. For example, because the credit union was more focused on deposit growth in 2018, it didn’t send the first credit card outreach until May. 

Because of this controlled growth, the credit union opened 575 new card accounts in 2018. That’s well below the average openings Truity has racked up since the pre-approval program began in 2012.

“In 2011, we put out 629 new cards,” Grose says. “Since we began this promotion the next year, we’ve sent out anywhere from 1,056 to 2,031 new cards each year. Each time we do a promotion, our average new cards sent out for that month triples.”

That’s a substantial jump, and a shift to deposit growth isn’t the only reason for pumping the brakes on new card growth. Rising delinquencies has spurred Truity to tighten lending criteria and raise its charge-off frequency.

“The more cards and higher limits you have out there, the greater your chances of fraud and losses,” Grose says. “We’ve pulled back on our pre-approval pool as a result. And, like everyone else, we’re tightening our monitoring and internal systems.”

But when the need arises again to charge up the charge cards, Truity knows the formula.

“Make it easy,” Grose says. “You’ll get results.”

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