Expanding reach and attracting new members: How credit cards can benefit credit unions

In 2023, American credit card debt broke records, increasing beyond $1 trillion (Boston Fed). As cardholders deal with increasing levels of debt, many are looking for more cost-effective options. This presents an opportunity for credit unions to expand their reach by offering and promoting a cost-effective, member-first credit program.

How a credit program can foster credit union growth

Credit cards continue to be a popular payment choice for Americans, making them an important part of any credit union’s portfolio. They appeal to most age groups and younger consumers are showing increasing interest in their use, particularly Millennials. In fact, Millennials with super-prime credit scores were most likely to open new credit cards in the first half of 2023 as they sought to increase their purchasing power (NerdWallet).

Credit unions have a rate and fee advantage that can help their credit programs compete in the marketplace. Smaller financial institutions, like credit unions, not only tend to offer lower rates than the largest issuers, but their fees are 70% lower as well (CFPB). This gives credit unions an advantage considering interest rates are the top factor considered by Americans when selecting a credit card (The Ascent). Credit unions can stand out from the noise with competitively low rates and fees even as they add another source of income to their portfolios.

Rewards and promotions can help further enhance interest in a credit program. Introductory and balance transfer promotions with firm deadlines can add further incentives for members and potential members to apply for a credit card. Working with local merchants to offer community-based rewards or options that allow cardholders to donate to their favorite charities when they shop are other ways to make your credit program distinct and encourage sign-ups and usage.

Marketing your credit program

Clearly communicating the benefits of your card program to your targeted audience is vital. Some best practices include:

Research:

• Start with general market research on trends. What demographics show the most interest in credit cards? What features, services, and rewards are most popular?
• Compare market research to current member data collected via direct interactions like surveys or indirectly through transaction data and engagement with your communications.
• Look for patterns to gain insights and a more complete understanding of who is interested in a credit card and what promotions or rewards they might want.

Effective messaging and reach: Building interest in your program requires reaching audiences with the right messaging at the right time, place, and frequency for them. To do this use:

• Multi-channel marketing: Use your research to develop and share a unified message over multiple channels (email, social, direct mail, website), optimized for the platforms (e.g. Facebook, WhatsApp) and devices (e.g. desktop, mobile, tablet) your audience prefers.
• Multiple touchpoints: It often takes several messages via multiple channels to build awareness and convert interest into credit card applications. The average is eight touchpoints, so start with that in mind and adjust as you learn more about your own audiences’ preferences.

Personalized customer service: This is where credit unions shine, so be sure to highlight in your marketing messages the quality of your credit union’s service. Find ways to boost and enhance service as well. New technologies like AI or digital spaces like social media can help you connect more easily and efficiently with members and cardholders. Offering services and tools for financial wellness can also create positivity around your brand. These can include:

• financial literacy resources and training
• credit counseling
• flexible repayment options
• debt consolidation loans
• financial assistance programs
• card-connected budgeting apps
• purchase round ups for deposit into member savings accounts

Strong customer service creates satisfied members who can be encouraged to help spread the word about your credit program.

Conclusion

When combined with effective marketing practices, a credit card program can help credit unions stand out in a competitive financial market. Credit unions are well-positioned to help people address the widespread pain point of rising credit card debt in a responsible and mutually beneficial way.

Envisant is an award-winning CUSO here to help your credit union expand its reach with a competitive credit card strategy. To learn more, contact the Envisant sales department at 1-800-942-7124 or visit www.envisant.com.