Another Gold (or Platinum) Opportunity May Be in the Cards
Perhaps it's time to get a whole lot more enthusiastic about plastic.
The recently passed Credit Card Accountability, Responsibility and Disclosure Act (Credit CARD Act) focuses on tightening up card regulations, especially rates. While it will be interesting (perhaps "galling" is more fitting) to watch how some issuers will get around the rules and expose loopholes, the more intriguing issue lies in what credit unions might be able to do to really take advantage of a gold card opportunity.
How about championing a common, plain English, clear and concise monthly statement that all CU card issuers could share? The nation's media has already laid the groundwork among consumers, with coverage recently focused on how confusing many bank card statements are. Multiple rates on various balances. Asterisks. Hidden fees. Flyspeck fine print. APRs only a Soprano would love.
Surely a PSCU or CSCU or other processor could take the lead on a credit union statement that's as simple to read as an iPod.
Your charges this billing period.
Your balance before recent charges.
What you currently owe.
Your interest rate on this balance.
Your minimum payment.
Your annual fee for using your credit union credit card.
The amount of interest you have paid this year.
And so on. Such a statement could become the standard for responsible lending (and borrowing) and would further burnish the credit union reputation for acting in the best interests of consumers, not to mention helping them to act in their own best interests, as well.
But like anything related to credit cards, there's always a catch, and for some CUs it will be that their card portfolios are throwing off nice income right now and they don't want to do anything to change that. There may even be a few CUs embarrassed to remind members what their rate or fee is. If you're one of them, it may be time to rethink your reason for being.
Many folks within CUs don't seem to have noticed, but all the down economic news and government responses have made for some attractive presents to credit unions on their 100th anniversary. This opportunity is yet another that should not be left unwrapped.
Other items from the Reporter's Notebook: In Savannah recently for the Georgia CU Affiliates' annual meeting, where Robert Braswell, commissioner of the Georgia Department of Banking, said examiners in his department have been told not to downgrade credit unions as a result of having to pay for the recapitalization of the corporate CUs. In short, he reassured, examiners should treat the CU's income statement as if the corporate assessment had not been paid.
Meanwhile, although participation loan-related losses have not been significant in Georgia, he urged CUs to treat every participation as if they had underwritten the original loan.
"Make sure you are pricing your products and servies from a position of knowledge and risk," Braswell advised. "Look at non-interest income and don't just put fees in place if employees are going to routinely wave them."
He added the regulator does have some concerns over mismatches and CUs going longer to chase yield. "If you do go longer you can expect to hear from examiners and you should prepare for a stress test," he said.
At the same meeting, NCUA Region III Assistant Regional Director Tim Hornbrook said the agency is focused on many issues, including the operating expense ratio. "When we see a credit union in trouble it's the first thing we look at," Hornbrook said. "The good news? There is a lot of fat to cut. Efficient credit unions are going to do just fine. Those that are not efficient are going to need to get there or find a merger partner." He also offered a caution about some of those commerical/business loan apps CUs are seeing; not all are the result of spiteful bankers refusing to make loans. "If they couldn't get a loan at a bank, there might be a good reason."
Some of the best insights at the meeting were served up by GCUA President Mike Mercer. Noting the meeting had been themed "Full Speed Ahead" and had used a racing motif, Mercer observed, "Why preach full speed ahead? It's hard right now, and credit unions have reacted to the economy in three ways. They've hunkered down. Some are being opportunistic. And some have essentially given up and assumed the only opportunity is to merge. "At times like these leadership really matters a lot," he continued. " I think Full Speed Ahead is about rededication to purpose. Credit unions are really good at understanding and helping members. Full Speed Ahead is about doing more of that."
Frank J. Diekmann can be reached at firstname.lastname@example.org.