Optimize Your Card Portfolio: Four Steps

As credit unions seek to build solid, sustainable credit card programs, they should focus on four areas: Risk tolerance, card activation and use, inactive accounts management, and promotional programs.

That’s what Brian Scott, vice president of sales at The Members Group (TMG), writes in the TMG white paper, “Credit Card Portfolio Best Practices for the Modern Payments World.”

He advises credit unions to take four steps to optimize their credit card portfolios.

1. Recalculate your risk tolerance

Avoiding all risk is inherently risky. If less than half of your cardholders don’t regularly incur finance charges, your credit union might be might not be extending credit far enough.

Scott advises card managers to look beyond A-paper applicants and examine their approval policies to make sure they’re not automatically excluding consumers with less-than-perfect credit histories.

“By making actual conversation with an applicant into a distinct and important procedure in the application process, issuers can more easily justify nontraditional approvals,” Scott says.

If changing your approval process isn’t in the cards, consider increasing credit limits, at least for cardholders likely to take advantage of this. Cardholders generally stop using their cards once their balances reach 30% to 40% of their limits, TMG reports.

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