Analyst: No Reason To Fear Portfolio Sales

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Credit union fears over sales of their card portfolios are unfounded, according to one analyst.

Speaking to TNB Card Services' Executive Conference in Scottsdale, Ariz., analyst Rick Spell of Morgan Keegan said that the common apprehensions-cross-selling by the portfolio partner, loss of identity and control, and increased card rates-are not based on fact.

As far as cross-selling, Spell noted that it is prohibited by contract. "The credit union does not lose its identity or control, since its name remains on all credit cards and marketing materials, and the credit union has final approval over marketing materials sent to its members and potential members," Spell said.

He further suggested that many, if not most cardholders get a better card rate than they had before, and added that card rates will not jump as the result of a portfolio sale.

In light of that, Spell claimed this is a good time to sell portfolios, as premiums have been high and the agent issuer is in a better position to expand the portfolio, since the issuer is focused solely on increasing card revenue and the number of cardholders.

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