HOUSTON-Texas Dow Employees CU here has added a unique "family card" to its credit card product offerings.
The new options are just the latest for a credit union that has been aggressive and innovative in rolling out new card products and pricing.
The family card "begins with one cardholder and a line of credit," Ron Wright, VP-payment systems and lines of credit with TDECU told Credit Union Journal. "If the cardholder is a father with two children and he has a total line of credit of $1,000, the main cardholder can allocate a portion of the line of credit to each of the dependant cards."
Billing for the family card comes with two options. The primary cardholder automatically gets a master statement, regardless of how many dependant cards there are, and can be designated as responsible for paying the entire balance. A second option is the primary cardholder still gets the master statement with all activity, but the dependants receive a statement for activity only on their card and they are responsible for payment of their portion.
What makes the family card special, Wright asserted, is its ability to allow underage dependants to shape their credit file. If the dependant is less than 18 when the card history begins, when that person reaches 18 he or she can choose to "spin off" and form his or her own account.
"This is very unique and it is an excellent teaching tool," he said. "It allows parents to teach their children how to use credit cards. If a parent has a child in college, the credit line on the dependant card can be increased to allow payment of books or tuition."
The family card was created by TNB Card Services and TDECU is the first issuer to offer it, Wright said.
Another unique option is TDECU's student card, which charges a 0% APR until the holder graduates or withdraws from college. Members who take out a student loan through the credit union qualify for the card, as do those who get a "Parents' Survival Loan."
The student card has a low, $2,000 limit. Card users make regular monthly payments, but interest is deferred until six months after leaving school.
"To our knowledge, we are the first to offer this product," Wright said.
The products are only the latest expansions to TDECU's plastic card menu. As reported in CU Journal [Aug. 31, 2009], TDECU rolled out its "Onyx" card last summer, which Wright described it as a "hybrid card," to compete with high-end cards such as American Express.
There has been a flurry of activity in the credit card space in recent months as issuers scramble to comply with the many provisions of the CARD Act. Wright noted there has been pressure to avoid interest rate risk, but said his credit union is bucking the trend.
"Everyone is flocking to variable rates, but we are holding firm. We are keeping our fixed-rate portfolio in place and I don't see that going anyplace," he said.
TDECU's rates start at 9.9% for a 740 credit score; up to 17.99% for 619 or lower. Wright said the credit union believes keeping rates not only fixed, but low, is "the right thing to do."
"Members go out to shop thinking they have a 9.9% interest rate, and if tomorrow it suddenly is a 12.9% rate, that is not what we are about. We are trying to help members manage their money. Variable rates are more attractive to financial institutions, but the primary goal of our portfolio is not to make a profit, it is service."
With that said, Wright added TDECU was in the middle of a balance transfer campaign at the time of this interview-and it had doubled expectations in the early going.
"Only 12 days into it, we already have taken in $1.4 million in transfers," he reported. "The offer is 5.9% APR for the life of the balance, if the member has a checking account in good standing with us. We now expect this to bring in $3 million total, given how well it has started."
