The holiday season is upon us--let the spending commence! According to the National Retail Federation, consumers expect to spend an average of $749.51 on gifts, decor, greeting cards and more this year, up slightly over last year. How can you make sure your credit card program grabs its share of the holiday haul?
1. Give them choices. Is your card program truly a superior alternative? As consumers return to using their credit cards, give them a reason to choose yours. An attractive rate is just that, attractive. Consider widening your market so that you can use those rates to win new accounts. Remember that most people don't know what rate they're currently paying on their cards. If yours is a good one, play it up.
Offer a range of programs: One size doesn't fit all. And consider "credit bruised" consumers who may have experienced difficult times during the recent economic downturn. Do they pay bills on time, even though they're underwater on their homes? Did they have a one-time setback due to a job loss? This segment of your membership may be underserved-and less of a risk than they appear at first glance. Bonus: Credit unions built their names on serving this type of member.
2. Give them credit. Extending credit can be risky business, but finding the right (read: new) balance between risk and reward will help you create opportunities this holiday season and into the new year.
Can you offer members a credit line increase without incurring undue risk? A surprise credit bump makes a great holiday gift-and an excellent way of reminding members that they can spend with you. Remember, however, to keep in mind provisions of the Card ACT related to a consumer's ability to make the required payments.
Bear in mind also that some members may want to keep their spending far below their limits-say, at 30% of their overall lines. If that's the case, they may benefit from a line increase even if they aren't close to reaching their limits.
3. Let It Be Known. Promoting your card program isn't just a good idea; it's necessary. Card spending has been conservative in recent years. Without encouraging members to overspend, you can (and should) remind them of the benefits of using their cards to holiday shop-and explain why their CU card works for them. Remind them, too, that carrying a card is safer than walking around town with a pile of cash. MasterCard and Visa may offer price and warranty protections, too.
4. Offer a rewards program. Not only is this the prime time to remind your cardholders, but it's also a perfect moment to incentivize spending-everywhere or with particular merchant categories.
5. Make it easy. Credit cards are all about convenience, but if your security features aren't optimized to ensure hassle-free usage, your cards may be more buzzkill than buzz. Kill the fraud (but not the fun). Everyone appreciates instant fraud detection. False alarms? Not so much.
6. Consider an authorization "pad." You don't want cardholders to run wild, but you might give them a little leeway to go over their limits (say, $50), so that a small miscalculation doesn't turn into an embarrassing decline. And unblock cards for holiday travel (or tell members how to contact you in advance of going out of town).
7. Keep it going. The holidays don't last forever, but the value of a robust card program is evergreen. Keep the momentum going:
When the holidays are over-and members are assessing the financial damage-balance transfers are an ideal way to capture business. If you didn't extend a credit line increase in time for the holidays, consider offering one now. For credit unions, the new year is an excellent time to evaluate card programs. Your card processor should be helping you tailor your offerings and and market your cards successfully so that they stay top of wallet. A processing check-up may be the place to start.
Jennifer Kerry is VP-Credit Issuer Processing at CO-OP Financial Services and can be reached at jennifer.kerry@co-opfs.org and 800-782-9042, ext. 7022.
