Cards: Missed Opportunities, User Traits and Competitive Choices

Stephanie Schwenn Sebring Photo
Contributing Writer
Fab Prose & Professional Writing

2 minutes

In “Creating Card Contenders,” appearing in the November 2016 issue of CU Management, experts and credit unions discuss what makes a successful CU card portfolio. How many products should you offer? What’s more important: rate or rewards?

Here our experts share more tips for creating a competitive card portfolio.

Missed Opportunities

CUES Supplier member Advisors Plus, St. Petersburg, Fla., identifies these missed credit card opportunities:

1) No business credit card or using a substitute consumer product for business needs (creates two problems: missed interchange income and a lost branding opportunity).

2) Lack of competitive rewards on the credit side. 

3) Credit line assignment methodology lacks intuitiveness or is too conservative (Do not be reckless, but do be competitive.)

4) Not examining what’s occurring in the marketplace in regards to what products other lenders are offering and the methodology other lenders use in granting or increasing lines of credit.

5) Underutilizing technology for credit card sales – online and in the branch. (Technology can include utilizing core systems and the contained member information to identify non-cardholders and make a pre-qualified credit card offer.)

6) A lack of automation in granting or increasing lines of credit. Speed and time are critical components in getting a member to apply for a card.

Card User Traits

Raddon Financial Group, Lombard, Ill., identifies key credit card user traits:

1) Transactional Users – Prefer an easy-to-understand rewards program, no annual fee and easy redemption. A competitive rewards program is the value proposition. This segment pays off their balance monthly; the interest rate doesn’t have to be as attractive but in its place rewards should be competitive. Raddon Financial Group sees about two-fifths of a CU’s membership falling into the transactional category.

2) Balance Rollers – Focus is on a low-interest rate and savings. The card’s rate is the key to the value proposition. This segment is apt to respond to balance transfer promotion using an attractive rate central to the offer. Raddon Financial Group sees about a quarter of a CU’s membership falling into the debt or balance roller category, carrying strong balances. High balances help offset rewards costs of the transactional user and drive overall portfolio profitability.

3) High-Charge, Convenience Users – Often a slightly older demographic, an opportunity to market loans, equity lines and wealth management offers. A strong demographic profile to complement the transactional user segment.

4) High-Balance Rollers – A little younger demographic, beneficial to market vehicle loans, other lending opportunities, first-time home buying.

Competitive, Not Complicated Choices

Tim Kolk, president of TRK Advisors, Peterborough, N.H., recommends offering these baseline card products:

  • rewards card via a Signature (Visa) or WorldCard (MC) product;
  • low-rate card with very few “bells and whistles” (tiered rates based on risk-based pricing);
  • credit-builder product, perhaps transitioning an old classic card for this niche; and,
  • business card, if it’s relevant to your membership.

Stephanie Schwenn Sebring established and managed the marketing departments for three CUs and served in mentorship roles before launching her business. As owner of Fab Prose & Professional Writing, she assists CUs, industry suppliers, and any company wanting great content and a clear brand voice. Follow her on Twitter @fabprose.

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