Boost Portfolios With Proven Techniques

By Michael Gulledge

Boosting your credit card portfolio’s profitability is much easier than credit union executives might expect. A crucial first step is for one of the credit union’s executives to actively champion the program and monitor its progress.

Suncoast Schools Federal Credit Union, Tampa, Fla., recently grew its outstanding balances 35% to become the fifth-largest credit card issuer among credit unions, as listed in the Nilson Report’s Top 50 Credit Card Issuers in the United States.

Suncoast Schools Federal and other PSCU Financial Services member-owners have proven that the following techniques can boost outstanding balances $10 million to $50 million:

• Offer transaction-level processing (TLP) and balance consolidation promotions to boost balance transfers;
• Issue credit line increases;
• Provide a platinum card; and
• Launch a rewards program.

TLP and balance consolidation solutions can boost balances in as little as two months as members take advantage of special low-interest offers for balance transfers.

Examine cardholders’ credit reports and reward good borrowers with higher credit lines. Platinum programs can retain better borrowers by rewarding them with a lower interest rate and other advantages. A well-structured rewards program will enhance the member relationship while improving revenue for the credit union through increased transactions and interchange income.

Credit unions also can boost performance through risk-based segmentation and account treatment strategies. Behavior scoring and credit bureau scores can be employed as part of powerful predictive tools to understand the future behavior of an account and improve account management. Dynamic pricing strategies can enhance retention, and automated decision tools can enhance credit line management programs (both increases and decreases) and reissue strategies.

Credit cards represent a vital link to members. With a little effort, strengthening that link can generate impressive dividends.

Michael Gulledge is director of credit services for PSCU Financial Services, St. Petersburg, Fla. Contact him at 727-571-7904.