MADISON, Wis. — A new credit card law designed to restrict certain predatory lending practices, and bankers' reactions to it, present an opportunity for credit unions.
That's the message in a new white paper issued by the CUNA Lending Council. Since, overwhelmingly, credit unions eschew the lending practices the legislation restricts, their revenue streams won't be affected as banks' will, the paper asserts. CUs can continue offering solid, consumer-friendly credit card products.
More importantly, author Judy Dahl argues, it is an ideal time to highlight the credit union difference: credit unions have always offered credit cards that truly provide value to members, with fair pricing, and they'll continue to do so.
A well-structured credit card program can significantly boost credit unions' bottom lines, the paper suggests, before noting that CUs with successful card programs target their products to members' needs and analyze the programs at least annually.
However, despite the product's potential, for some credit unions plastic cards have become a burden, with escalating losses and lackluster revenues, the paper notes. The author states that chances are these credit unions began offering cards as nothing more than a member convenience and may not have reviewed cardholders' credit histories or credit limits in years. Such product offerings are likely outdated, the paper concludes, and the credit unions don't have employee resources properly focused. The result: many consider selling or sell their portfolios.
