In Bid to Strengthen Relationships, Oregon's Biggest CU to Start Offering Cards
PORTLAND -- The $2.6 billion OnPoint Credit Union has decided to start issuing credit cards. The CU, an auto lending leader, has joined PSCU Financial Services to get the program started.
"Credit is a natural complement to our other lending products, lead by our robust auto financing business," said Robert Stuart, OnPoint 's CEO. "We feel the timing is right to enter this market with member-friendly card products that will deepen our member relationships."
The card program will initially consist of two cards, a platinum program and a platinum rewards program, according to Mary Jane Campbell, senior vice president with the CU.
OnPoint received its charter in 1932 as the Portland Teachers Credit Union and grew quickly to have 1,100 members and over $190,000 in assets by the end of that decade. The CU continued to grow through its educational roots, with some geographic expansion, until 2006 when it received a community charter, which expanded its potential field of membership to include the residents of 10 Oregon counties.
The CU applied for and received an additional charter expansion in 2007, adding parts of Clark and Skamania counties, fast growing Washington State counties contiguous with the state line and counties where the CU is already active.
Campbell explained that the charter change helped emphasize the CU's need to look past the products where it had previously excelled, primarily indirect auto lending and mortgages for first-time home purchasers and cards were on the list.
"I wouldn't say the leadership was necessarily opposed to cards before," Campbell said. "But like sometimes happens, the leadership wanted to focus the credit union on what it did well first until we finally mastered it before moving on to something else."
The card rollout to members is anticipated for the third or fourth quarter of 2008 and members have not been officially notified, Campbell said, emphasizing the details the CU still has to put in place. These include deciding how the cards' risk-based pricing structure will function, how the cards and rewards will be handled within the CU (for example whether members will be able to trade card rewards for things like lower interest rates on other CU loans), and even the design of the new card.
Campbell also explained that OnPoint had put its card focus first on its debit card program. According to NCUA data, roughly 63% of the CU's 185,000 members have share draft accounts, if all of those have debit cards that gives the CU a hefty debit card portfolio, which Campbell explained also helped the CU decide to start issuing credit cards.
"As the debit card has steadily grown in popularity we have begun to get a lot more questions about why we don't offer a credit card," Campbell said.
As Stuart pointed out, OnPoint appears poised to leverage its card program off of the already successful auto loan program, an approach that other credit unions have used successfully often by tying the underwriting of the two closely together. This approach will allow them to offer credit cards to members who already have auto loans, for example, and give the CU an opportunity offer the card when the member would be most open to initiating a card account.
The CU chose the First Data card platform and PSCU as a processing partner because of the ability to tailor the program more easily to fit existing structures, suggested a press release from PSCU.
"Like other institutions, this credit union selected our credit platform because it is designed with the member in mind. OnPoint Community can design the front-end experience to enhance their member relationships and then employ any combination of our growth and portfolio management tools to offer personalized promotions and risk management strategies," said PSCU Financial CEO David Serlo.