ST. PETERSBURG, Fla.-Good and bad, the recession has handed down lessons to CEOs about managing the credit card portfolio.
Many credit unions learned that they need to more closely monitor the portfolio, and to be prepared to make tough business decisions. But they also discovered there is opportunity to build the portfolio at the banks' expense.
Tom Gandre, group executive at PSCU Financial Services, said that despite MasterCard and Visa numbers showing a softening in credit card usage in 2009, credit unions did not see a decline. "PSCU had almost 6% growth in credit card transactions. Some of the falloff you saw across the market you did not see as much at credit unions because they continued with activation and usage programs. Many focused on their existing card base and took business away from banks. Credit unions are excited about 2010 and how their competitors are reacting to regulation and are feeling optimistic about gaining market share."
The $3.6-billion Pennsylvania State Employees CU in Harrisburg, Penn., grew its credit card portfolio by 22% last year. "We moved up from the 46th largest card portfolio in the country to 39th," shared CEO Greg Smith. "One of the lessons we learned is that members really appreciate a card that offers value and one they can trust."
PSECU only charges a late fee and its card carries a 9.9% APR fixed rate for all borrowers. "We keep our card simple and a good deal. Our members know that they don't have to read the fine print," Smith said.
Mark Fenner, SVP at the Dallas-based TNB Card Services, concurred that CU credit card portfolios have fared well during the recession when compared with banks'. "Credit unions found that their member-friendly philosophy is right for economically challenging times. CU card programs have experienced strong growth while big issuers have been hit hard."
