BEAVERTON, Ore. — Rivermark Community CU here cut rates on its credit card offerings by an average of 3.2 percentage points as part of a larger move to consolidate its cards program.
Marketing leader David Noble said that the consolidation was one of the CU's business initiatives, in part because it had several different kinds of credit cards and pricing structures, some of which dated as far back as the late 1980s.
With the new structure, Rivermark has implemented risk-based pricing and cut its card portfolio down to two offerings - a basic card that begins at 6.9% and a rewards card with rates as low as 7.9%. The ceiling on both cards is 17.9%.
"All of those cardholders who had older cards were essentially priced into our current two-card system, so we were able to get rid of all the old cards and things associated with that," said Noble.
Of the 11,000 cards that were repriced, 9,700 had their rates lowered. Some 1,300 kept the same rate, and no one's rate went up.
"There was obviously a business initiative, which was to consolidate our products," said Noble. "It's good for our employees as wellthey don't' have to remember all the card types. It's a simpler, cleaner way to get everybody on the same card platform. But ultimately, in the process of doing that, we were able to lower rates for a lot of our members."
Getting Members To Use The Card
The 64,000-member, $574-million asset credit union is also hoping that with the new rate structure, some members with old or inactive cards will begin to use them more. Rivermark is also running a promotion encouraging cardholders to refer new members to the credit union. If the new member is approved for a credit card, both members receive $100. The CU opens an average of 200 new credit card accounts each month, and Noble said they expect to see a 15% lift as a result of promotional efforts and lowered rates.
Rivermark does not have plans for recouping the interest income that would be lost as a result of the prepricing; rather, it hopes that members will use the cards more as a result of the lower interest rates.
Noble emphasized that the lower rates only affect new purchases. Many members also saw their credit limits go up as a result of the new pricing structure.
"The $22.4 million in existing balances is not directly impacted; however in the past month, our members made over $5.6 million in new credit card purchases at their lower rate," he said. "We anticipate saving members even more by transferring higher rate credit card balances from other banks."
Rivermark is not currently planning to cut rates on other products, and there is no cross-selling initiative built into the program. Because not all members had their rates lowered, the CU used specific direct mail pieces to reach out to members to let them know about the new pricing and if any rates were cut or credit limits increased.
"The focus of this is an opportunity for the credit union to give back to its members," said Noble. "It's a great benefit for the holidays.... One of our key focuses is to lower our members' costs of debt, and that's something we do really well at Rivermark."
