While many companies talk about treating employees like family, one credit union is offering a special credit card product that, in effect, treats family just a little bit like a business.
Government Employees CU was chosen by TNB Card Services to pilot MasterCard's Family Account, which puts a familial twist on the longstanding corporate credit card. The Family Account is designed to let the primary cardholder set up sub-accounts with a variety of levels of control. In the corporate credit card world, the sub-accounts go to employees. With Family Account, sub-accounts could go to children, siblings, parents or even household help.
One of the primary selling points: it can be used as a tool to teach children how to handle credit responsibly, and the card can "grow" with the child, offering different levels of responsibility as the child matures.
"Sure, parents could always give a child a credit card before the Family Account was created, but this is really unique," said Glen Lee of TNB. "When a child becomes a young adult and is ready for the full responsibility of his own credit card separate from mom and dad, the account can be 'delinked' from the primary account while keeping the same account number all the way through."
The parent account is where the credit line resides, and it is up to the parent to determine what portion of that credit line will be allotted to the subaccount. In the first step of the program, both the parent and the child receive statements, with the parent responsible for payment. In the second step, statements are still sent to both parent and child, but the child begins to pay the bills. Eventually, the parents stop receiving statements on the child's transactions, the child is making the payments, and the account is delinked from the parent's account.
In most cases, when a parent wants to get a child a credit card, they may or may not get separate statements, but it is the financial institution that makes the decision about how big the credit line should be. The Family Account gives parents more control over the whole process.
GECU brought 800 Family Accounts on board in less than nine months during the 2003 pilot of the program.
"The versatility of this product really appealed to us," said Jesus Medrano, card services manager. "It can be tailored to a consumer's needs, and we felt it met a need that was not being fulfilled, especially in a family-oriented city like El Paso."
GECU worked with TNB to develop a pre-approved list to which the CU sent a mass amiling.
"We did well, considering this wasn't just aimed at the average cardholder," Medrano noted. "There were criteria that needed to be met, specifically that the account holders had to have dependents."
GECU found that the family aspect of the program had a strong allure and allowed the CU to reach out to members who hadn't been interested in the CU's credit cards before.
"This is essentially a credit card with training wheels, and people see those benefits," Medrano offered. "There will always be those in this city's culture who resist a credit card, but so many people, once they see the intent of this product and how it can be used, are in favor of it."
Initial promotional efforts were aimed at families with college-age students, but GECU has found there has also been interest among members who wanted to establish sub-accounts that "went up the family tree" to aging parents, for example, or laterally "through the tree" for siblings.
"It can become a household management tool," Lee suggested. "You can create an account for the nanny, the housekeeper. There are a lot of uses for this program."
