Credit unions are facing intense competition for credit card customers as the
market matures and becomes more saturated. Although the U.S. credit card industry
has experienced an annual growth rate of 5.2 percent over the last four years,
the credit union industry underperformed the average, rising only 2.2 percent
over the same period.
With 80 percent of households reporting they have a credit card and an average
of 7.6 payment cards per cardholder, the credit card market is approaching saturation.
The challenge is no longer about getting your card into a consumer's wallet,
but about gaining the majority wallet share as the preferred card.
Credit unions have three key levers they can utilize to promote their card
programs: rates, rewards, and relating their marketing message.
Consumer surveys note that attractive rates significantly influence a customer's
decision in choosing their primary credit card. Attractive APRs, low introductory
rates and balance transfer rates generate interest and shift customer loyalty.
The good news for credit unions is that, on average, credit unions are actually
already more competitive than other credit card issuers.
| Comparing Credit Card Rates
|Avg Purchase APR
|Avg Penalty APR
|Grace Period Days
|Late Payment Fees
|Cash Advance Fees
|Balance Transfer Fees
Cardholders actively seek programs that will provide tangible rewards for
usage. Air miles, cash back, or merchandise reward programs are all effective
means to incentivize credit card usage.
According to two recent payment studies by leading consulting firms, a consumer's
preferred credit card is their reward-based card. Determining the right program
for your field of membership is important, but developing an attractive rewards
program is a necessary and expected component of a successful credit card program.
A credit card program with competitive rates and strong rewards will not
grow without a robust marketing program. If you have a strong product, it is
your responsibility to inform your members.
Leveraging the trust and recognition members have for your products can give
credit unions an advantage over their competitors. In fact, Brookwood Capital
found that the credit union response rates on direct mailings can be three to
five times better than those of national issuers.