Portfolio reviews reignite dormant credit card programs

Credit card portfolios can be a credit union’s most lucrative asset, generating up to a quarter of the cooperative’s net income. However, dormant card programs are an all too often occurrence.

When left in a status quo position, credit card portfolios cannot reach their full potential. A portfolio review can uncover illusive information to help credit union card teams maximize their return-on-investment and build best-in-business card programs.

As demonstrated by examples that follow, credit unions undergoing a portfolio review discover:

  • Small changes that yield big results
  • Hidden opportunities for growth
  • Resources to get their cards to front-of-wallet positioning

Small Changes Yield Big Results

Iowa-based Financial Plus Credit Union’s credit card products remained unchanged for years. President and CEO Dave Cale could see the potential for the program to provide even more value to members, so he engaged TMG, the credit union’s credit-card processing partner, in a portfolio review.

TMG portfolio experts showed Cale how even small tweaks could both lessen necessary man hours and create a more compelling card program. “We were excited to see that some small changes could yield positive results,” said Cale.

In addition to making program tweaks, the credit union’s product suite will change as it explores the addition of an affordable rewards card and the consolidation of other products that today require too much management for little benefit. “I would recommend every credit union take the opportunity to undergo a performance review,” said Cale. “It’s a valuable process to either confirm you are headed in the right direction or to make adjustments.”

Hidden Opportunities for Growth

SAC Federal Credit Union engaged in a review of its dormant credit card program after its agent issuer left the credit card business. At that time, the portfolio was at just over $9 million, and roughly 3 percent of the credit union’s membership were cardholders. Julie Bruning, the credit union’s vice president of consumer lending, was confident she and her team could grow the portfolio and turn it into a profitable asset.

And she was right. The program today sits at nearly $13 million and has penetrated 9 percent of the cooperative’s membership.

In addition to setting forth an intense internal marketing and growth plan, Bruning engaged TMG in a review of its program to reveal other opportunities for achieving the cooperative’s growth goals.

TMG’s portfolio review revealed opportunities for enhancement in the cards team’s compliance strategy. The review also noted that the portfolio may benefit from loosening its underwriting criteria.

In each area, simple steps the credit union could implement were outlined. Bruning referred to the changes as a small investment for a significant reduction of risk.

A credit card portfolio review can seem like an overwhelming task given all the other duties you and your team manage day-to-day. The review itself will take time, as will understanding the tweaks – or 180-degree turns – your findings necessitate. For this reason, some issuers find it helpful to ask a partner or advisor outside the credit union to take a look. Consider investing in an outside perspective, one that can take your card program from good to great.

To learn more about optimizing credit card portfolio, download the white paper “Getting the Most Out of Your Credit Card Program.”

Jennifer Davis

Jennifer Davis

Davis is vice president of SmartGrowth™ for payments processor TMG, which offers clients across North America a full-suite of products from credit, debit and ATM to prepaid and digital wallet ... Web: www.tmg.global Details