Ignore Your Portfolio and It Will Go Away

By Glen Lee

If there’s one lesson credit union card issuers have learned during the past few years, it’s that they can’t leave credit cards unattended. Credit card issuers simply won’t succeed if they don’t invest the resources to continuously promote credit card use, activation, retention, and new-account activity.

Here’s my advice for ensuring success:

• Product. Analyze risk, and reward lower-risk members with credit limit increases or upgrades. The result in either case will be that your best members will have a more robust tool at their disposal. Credit unions that have done this have seen significant increases in outstanding balances.
• Price. Too many credit unions apply a one-size-fits-all annual percentage rate (APR) to each type of card, across all cardholders. Through risk-based pricing, you can reward lower-risk members while pricing appropriately for moderate- and higher-risk members.
  At one of our client credit unions, this analysis helped create designated risk levels with different APRs. The credit union rewarded 70% of existing cardholders with better APRs, encouraging use and card retention in lower-risk groups. Appropriate price levels and the application of late, over-limit, and cash-advance fees also can help build member loyalty and encourage growth.
• Promotion. Many credit unions neglect this area because it requires frequent, consistent marketing contact to acquire new cardholders or increase card use. Hit-or-miss promotion accomplishes little, so it pays to have a well-planned annual program using many different member contact points.
  Besides the obvious tools, such as statement inserts and in-branch applications, a promotional campaign can use convenience checks, special balance transfer offers, upgrade offers to gold or platinum cards, or temporarily lower APRs to stimulate use and retain the cardholder base.

Glen Lee is senior vice president of sales and marketing for TNB Card Services, Dallas. Contact him at 800-422-0733.