Credit card penetration percentages tell a story. Fundamentally they tell a credit union or other financial institution the number of cards members are using compared to the total theoretical market for those cards, the entire membership base. Credit unions can see not only how well membership has adopted the product but also how much room the product has to grow.
Below is a leader table of the top 20 credit unions in credit card penetration, all with at least $20 million in assets as of Sept. 30, 2013.
LEADERS IN CREDIT CARD PENETRATION
Data as of September 30, 2013 for Credit Unions over $20M in Assets
Callahan Associates | www.creditunions.com
| Credit Union | State | Credit Card Penetration | # Of Credit Card Accounts | Members | Assets | |
|---|---|---|---|---|---|---|
| 1 | Taupa Lithuanian | MA | 60.1% | 746 | 1,241 | $21.1M |
| 2 | Houston Police | TX | 59.2% | 14,337 | 24,223 | $524.3M |
| 3 | Entrust | VA | 55.8% | 5,553 | 9,947 | $71.6M |
| 4 | O.A.S. Staff | DC | 55.7% | 3,019 | 5,419 | $156.5M |
| 5 | Napus | VA | 53.9% | 14,032 | 26,028 | $276.3M |
| 6 | San Diego Firefighters | CA | 51.7% | 1,869 | 3,613 | $85.2M |
| 7 | Houston Texas Fire Fighters | TX | 51.2% | 8,217 | 16,061 | $231.7M |
| 8 | First Financial | CA | 50.6% | 16,726 | 33,078 | $423.0M |
| 9 | KUE | KY | 50.5% | 1,788 | 3,543 | $38.3M |
| 10 | TruWest | AZ | 50.5% | 31,342 | 62,124 | $819.5M |
| 11 | Florida Baptist | FL | 48.9% | 1,110 | 2,271 | $23.6M |
| 12 | Digital | MA | 47.6% | 193,410 | 406,689 | $5.1B |
| 13 | School Employees Lorain County | OH | 47.1% | 5,535 | 11,753 | $140.1M |
| 14 | Purdue | IN | 47.0% | 29,995 | 63,833 | $786.0M |
| 15 | Earthmover | IL | 46.2% | 10,863 | 23,516 | $223.5M |
| 16 | Los Angeles Firemen’s | CA | 45.6% | 13,637 | 29,934 | $847.7M |
| 17 | Pentagon | VA | 45.5% | 571,737 | 1,256,260 | $16.5B |
| 18 | Schlumberger Employees | TX | 45.0% | 12,350 | 27,459 | $573.3M |
| 19 | Motorola Employees | IL | 44.1% | 17,277 | 39,215 | $866.9M |
| 20 | Alabama Rural Electric | AL | 43.8% | 1,603 | 3,662 | $31.2M |
Source: Callahan Associates’ Peer-to-Peer Analytics
Coming in at No. 14 is Purdue Federal Credit Union ($786.0M, West Lafayette, IN), whose ranking is the result of hard work and unwavering commitment, says Brian Musser, vice president of finance and chief financial officer for Purdue Federal.
The credit union’s membership base includes students of the university, alumni, and faculty and staff. Back in 2006, Purdue Federal wanted to grow its roster, strengthen member relationships, and develop lifelong credit union members by securing the contractual rights to the Purdue Alumni Association’s official affinity card. When the association awarded the contract to Purdue Federal in July of that year, credit union staff knew the institution would have to increase its commitment to its credit card portfolio to keep up with desired and projected growth.
We knew when we went after [the affinity card] we’d paid up for that card program, and we had to generate volume, Musser says. It became a primary initiative within the credit union team. That team has been on it constantly since then.
Purdue Federal’s credit card portfolio has grown since taking over the affinity card contract. According to Musser, it has gone from, an average credit union card program to a credit union where this is one of our primary products.
Credit card penetration has increased from 40.1% in September 2006 to 47.0% in September 2013, according to data from Callahan Associates’ Peer-to-Peer analytics. The number of credit card accounts increased by 31.7% during this seven-year period, when the credit union added more than 7,200 new credit card accounts. As of September 2013, it had nearly 30,000 accounts in its portfolio.
Credit unions face many hurdles while building their credit card portfolios. Encouraging initial adoption is one. A larger challenge, however, is finding the best way to move the card to the top of members’ wallets. After all, the most effective way to build a long-term, primary relationship with members is to have them actively use the institution’s card. Purdue Federal is driving such usage moving its card to the top of members’ wallets and growing its credit card portfolio 156% from $25.0 million in 2006 to $64.0 million today. By comparison, its asset-based peer group of $500 million to $1 billion averages $24 million in total credit card dollar balances. So how has the credit union achieved a balance that is more than double its peers? One part commitment; one part simplicity.
How To Commit
As it has grown, Purdue Federal’s credit card has become a primary relationship builder.
[It’s] a primary transaction tool for members, Musser says. It helps to keep them related to us.
An in-house strategy team and card specialist work together to develop a plan for how the credit union will market the card. They work with an eye on keeping the card relevant and useful to members, which, hopefully, will move it to the top of their wallet.
We meet monthly as a group, says Nikki Gaylord, vice president of consumer lending. We constantly talk to the staff about it. There’s always some kind of marketing program out there for our members to see. It’s in front of our members’ faces at all times.
For members who have the card but don’t often use it, Purdue Federal has a retention team that tracks individual member usage and encourages those who have the card to actively using it. The team contacts members when they open a card but do not activate it. It also reaches out during a period of conspicuous inactivity between transactions.
We have a pretty good success rate to get them reactivated, Gaylord says. The key here is we have a team that is constantly focused on it, we’re constantly talking about it to staff, we’re training on it constantly, and we’re promoting it constantly to our members.
Simplicity Beyond
Purdue Federal keeps all its product offerings simple, including for its credit card.
We essentially have one product, Musser says.
The credit union does not offer different product features for different cards. Instead, it tailors each credit card to the credit risk in which the individual falls. For example, most Purdue students can qualify for a credit card with a 17.50% rate with a $1,000 limit.
We keep our products simple, Musser says. There’s not a whole lot different that our sales staff has to remember. It’s just here’s a card,’ and we do different things around it.
Keeping it simple is key, agrees Gaylord.
The card offerings might be simple, but maintaining the strong portfolio takes consistent, collective effort on the part of the credit union. Hard work pays off.
It’s not just going to happen, Musser says.
She advises other credit unions to make their card offering an organizational-wide initiative and constantly work on it to make it grow.
There are too many competitors out there, Musser adds. There are too many features and the industry is changing all the time.
Janet Lee contributed to this article.
