Waking Up to the Potential of Credit Cards

Turning around a card portfolio is possible. As Community First Credit Union highlights, devoting time and energy to a program can deliver results.

Credit union card portfolio sales increased in 2004. According to Brookwood Capital, credit unions sold $459 million in card balances, up 9.5 percent from 2003 and 61.1 percent since 2002. Portfolio sales continued in 2005 with $255 million in balances sold by June. This trend suggests that credit unions continue to critically evaluate their credit card portfolio and assess its place within the organization. What these trends fail to illustrate, however, is the number of credit unions that are able to breathe life into their card program just by refocusing their efforts and resources.

Case Study: Community First Credit Union of Florida (Jacksonville, FL with $920 million in assets)

In 2002 Community First Credit Union of Florida considered selling their credit card portfolio, even entering into discussions with a card broker. In the end, however, they reached the conclusion that as a credit union they owed it to their members to try to do a better job. Working with their card processor, Community First reevaluated their card program and according to Marlene Scott, administrative president of electronic services, really started to beef it up.

Marketing Efforts
Within the past year Community First has more than doubled the number of card campaigns, conducting nine in the past year. Taking into account general member habits, the credit union took a life-style approachto its marketing strategy. For example, recognizing member needs post-holiday season, the year began with a balance transfer promotion. In the summer Community First related the campaigns to popular pastimes like travel and home improvement.

The credit card team is careful to highlight that while most of the campaigns had great returns, some actually were not profitable. They do not, however, view this a failure, but an opportunity to learn. Every promotion provides lessons and insights thathelp the team learn and develop a better campaign next time.

Community First has seen a major turn-around in their card portfolio, experiencing remarkable growth in both credit card loan balances and number of accounts. As the graph below illustrates, its member penetration ratehas increased significantly.

April 28, 2016

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