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Assessing the health of your credit union's credit card program

The average penetration rate for credit unions is less than 15 percent.

Between cash back, travel programs, and the myriad of other rewards incentives, a credit card program can be a leading attraction for credit union members.

Not only is it a way to bring in interest accruing revenue, but a good credit card program has the potential to be an institution's top revenue generator.

Credit card information is becoming more thoroughly protected and integrated into our technology, signaling its staying power. No matter the size of your credit union, properly positioning and selling a credit card program to your members can be largely beneficial for all of your products.

The importance of credit card program
The good news for credit unions is that they foster more intimate relationships with their members. Thus, crafting an attractive program structured around the needs of your  members should be less of a challenge. Developing strategies to cross-sell products and compete with larger institutions, though necessary, should take a backseat to the former.

To better formulate your branch's strategies and identify business goals, Credit Union Times suggests studying the tried and true practices of major card networks. Though credit unions should indeed keep an eye on the competition, Credit Union Times also advises taking advantage of flexible nature of a credit union, and using it to shape a program that is unique to both the market and your members.

Card Services for Credit Unions, emphasized the importance of credit union card programs' evolution, in a brief titled "A Credit Card Program Can Be a Credit Union's Highest Earning Asset," lest they be pushed out by more accommodating, and larger, institutions.

"Banks have unloaded their non-profitable customers and are now trying to bolster their portfolios by going after the most profitable credit union members," said Bill Lehman, vice president of consulting services for CSCU, in the brief.

"The top third of credit unions average a penetration rate of 27 percent."

To keep their valued member base, credit unions need not be shy about venturing into unmarked territory. Remaining risk-averse can cost far more in opportunities.

CSCU Senior Portfolio Consultant Ed Jesionowski noted how two credit unions differed in operating their credit union programs and the results they yielded.

"Two of my credit union clients are in the same city, five miles apart," Jesionowski told CSCU. "One instantly issues a credit card and debit card when an account is opened; members can imprint the cards with photos of their kids or the family dog. This credit union has a 51 percent penetration rate. The second credit union has a totally different mindset and doesn't take full advantage of what their program can offer - here the result is a penetration rate of 8 percent."

Analyzing your credit card program
According to CSCU's research brief, 85 percent of a credit union's members are not cardholders with their institution, while top credit unions' penetration rate is only 27 percent - that leaves much room for growth.

The key to increasing market share, according to CSCU, is allure. A recent survey found that the average credit card relies on six fees. Though you can't avoid late payment or cash advance fees, eliminating the foreign transaction fee for travel cards can be step in the right direction.

Teaser rates, charged for a low, temporary period have also become very popular in recent years. 

A  man and woman sit before a computer screen as the woman holds a yellow credit card.Reward programs and introductory rates are popular signing incentives among many card issuers.

Perhaps more important than what your credit union is offering is what is being seen. CSCU Senior Consultant Barney Moore told CSCU of a credit union that displayed its credit card program as a loan. To appeal to the psychology of your members, it's important to highlight the benefits that their business brings for your institution, community and their personal needs, underscoring the influence of their buying power.

The pressure to implement an effective credit card program can be too much for some credit unions - so much so that they are outsourcing their programs, according to If you suspect a third-party would aid your branch in deploying a successful credit card strategy, first consider how strides will be measured and how you can best utilize the member information you already have.