TUKWILA, Wash. — Aaron Bresko, VP of lending at the $8.6-billion BECU, and vice-chair of the CUNA Lending Council, is among those who believe credit unions will largely avoid increases in how they price their card products.
Rich Jones, VP, marketing with the $921-million Elevations CU in Boulder, Colo., agrees.
"I have not seen [credit unions] trying to get ahead of the legislative curve," Jones said.
Instead, noted Bresko, "What we're doing-we're changing our fixed-rate cards to variable-rate cards."
Bresko said the words "variable rates" tend not to raise red flags with members, but it's still important for credit unions effectively market any such changes. "I think we just need to tell our story-where we came from," he said. "We're still there to provide the best value for our membership. This is an opportunity for us to spread our market share."
Telling that story has not been a credit union strength, admitted Bresko. "We're very mild, and we need to be more aggressive and show communities what we have, and be more out there," he said.
BECU portfolios its 160,000 cards, and at present has a risk-based pricing strategy, which it is looking to change to variable rates due to the Card Act.
Anne Legg, VP-marketing with the $193-million Cabrillo CU in San Diego, and chair of the CUNA Marketing & Business Development Council, sees the need for a similar marketing strategy.
"I see this as an opportunity for credit unions to promote the advantages of their cards, such as low or no fees," Legg said. "In addition, most credit unions do not change the rate based on late fees or other actions. In the case of larger credit card issuers, it has been common practice to raise rates to the possible highest rate if the user makes a late payment. Credit unions traditionally don't do this, and now is a great time to promote that."
Legg believes the effectiveness of such promotions varies. "Each credit union is going to have different markets based on their business model," she said. "Are they focusing on serving the community or a SEG or something else? In focusing on these markets, how competitive is their credit card? How cluttered is their marketplace? So it is difficult to say. But I think as a whole, credit unions offer great products and services and are doing a decent job marketing to the audiences important to their growth."
Advice for Growth
As for any advice, Legg shared, "I have heard wonderful successes with affinity marketing of credit cards to SEGs. For example, a credit union has a large manufacturer as a SEG and the credit union is able to create plastic with the company's branding. And recently, there is technology available to allow members to customize the image on the plastic. Since the credit card — and the debit card for that matter — act as mini CU billboards in a member's wallet, it would be a great advantage to give the member another reason to show it off and use it."
Legg questions why the average credit union would need to price up its card APRs.
"Why would credit unions raise their rates when they don't have to? Of course, as a member of the financial community, credit unions change their rates to be competitive, but as a whole I think there is a strong case that credit unions are traditionally a better value to consumers."
