FORT LAUDERDALE, Fla. — As banks continue to clamp down on credit card balances and ratchet up credit card interest rates, credit unions have the opportunity to make inroads into market share while truly helping their members.
"Thirty-seven percent of cardholders report their credit limits were lowered. Fifty-three percent of cardholders report their interest rates have increased this year," said Bob Lehman, VP-Portfolio Consulting Services with Card Services for Credit Unions. "We're seeing this every day. In my eyes, this shows we have a lot of opportunity. Your cardholders are getting letters from banks and limits are being reduced."
One example Lehman cited is Chase bank is tacking on a $10 monthly fee to accounts of consumers who have carried a large balance for more than two years.
"We have some opportunities we can take advantage of from these members who are getting these letters," he said.
Lehman said this is the perfect time to attract members to your CU's cards.
"We care about members," he said. "We care about our relationships. When surveyed, people are saying they're more engaged with [credit unions] than with banks. We have an opportunity. We can be taking advantage of it with our credit cards. Now is the time to put a marketing plan together."
Lehman noted some myths pertaining to credit cards in today's economy: "Consider selling the portfolio. Stop approving and issuing credit cards. Discontinue all portfolio growth strategies. Lay the hammer down on all delinquent cardholders. - These are all big mistakes."
Instead, Lehman advised, this is what credit unions should be doing: "Don't sell - it's your highest-yielding loan asset. How would you replace its ROA? Issue, but issue with proper precautions. Stick to your strong underwriting principles. Let's be careful with our underwriting policies and procedures. Review and make sure you don't have the same policies and procedures from 10 years ago, and get your cards in the right people's hands. Assign appropriate limits-good and bad. You might have to give a member bad news and reduce a limit."
He also noted that credit unions should continue with their growth strategies.
"We currently have an excellent opportunity to grow," he said. "Banks are squeezing their cardholders with lower limits, higher rates, higher fees. Steal those accounts from banks."
Collection is very important at present, Lehman added. "Be practical in early intervention. See if we can help them."
