Fixed-Rate Card Helps Boost Card Penetration Rate to 53%

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NEW HARTFORD, N.Y.-Choice and low rate are responsible for 53% credit card penetration at Utica Gas & Electric FCU.

The 2,550-member credit union saw a significant increase in its number of credit cards-accounting today for about one-third of its total 1,330-card base-when it added a fixed 9.9% APY Visa five years ago.

"For years we had 13.75% Classic and Platinum cards with rewards," said COO Lori Brown. "To appeal to members who wanted a lower rate and no frills we added the 9.9% card and it took off."

The $44-million credit union made the addition after members began asking for a low-rate card and transferring balances away. The rate has not changed since the move, and UGEFCU promotes that the rate has not wavered. That, and the simplicity of the 9.9% card, have played well during the recession, pointed out Brown.

"Because it is simple, members know what this card is about. Last year, when the banks and credit card companies changed their rates, members came to us in significant numbers without any advertising."

A Bit of Help From Banks

The "solid deal" is what attracted the business, Brown said. "I heard members come to our front line and say they received a notice from their bank, which they had been with for many years, that their credit card rate was going up. They were upset, concerned, and turned to us for help."

During 2010, UGEFCU increased its total credit card credit lines by $1 million."

Ultimately, it comes down to offering choice, insisted Brown. "When we get new members we explain that we have two options, one low-rate card that's simple, and one with rewards for a higher rate and let them make the choice. The Platinum and Classic cards are really convenience users looking for points. The 9.9% card carries our largest outstanding balances-averaging about $3,100 compared to $2,000 for the Platinum and Classic."

CEO John Deecher believes serving a single SEG, the local office of National Grid, a northeast U.S. power company, has helped too. "It's an advantage over banks," said Deecher, a former banker. "I've been on both sides of the fence, and I know. There is loyalty to our credit union, which helps all lines of business, including credit cards."

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