According to NCUA records, the CU grew its card portfolio only slightly, from 2,767 accounts in September 2007 to 2,864 accounts in September 2008. At the same time, the CU's card balances climbed more than $1 million, from $2.93 million to $3.95 million.
Over the same period card loans grew from just under 8.0% of the CU's loan portfolio to 8.5% as the credit union grew its overall loans by roughly 20.0%, according to NCUA records.
Linda Thomas, vice president of lending for U.S. Employees Credit Union, credited CEO Russell Neuenschwander with refocusing the credit union's attention on lending and seeing the credit union's "untapped potential."
"It's not that the credit union was stagnant," Thomas said, "but I think we were a little bit unfocused and in need of a morale boost. The new CEO really provided that and that attitude trickled down to card management as well."
Part of the problem might have been that the long-standing card program (U.S. Employees had offered cards for more than 21 years) had sort of fallen through management cracks. Thomas credited the turn-around, in part, to designating one staff member to be responsible for the card program.
Once Neuenschwander's encouraging attitude began to infect the staff, Thomas said she attended a September 2007 event sponsored by Card Services for Credit Unions, which brought home the value of changing the card program from a standard classic and gold card offering to a platinum offering.
The credit union decided to offer a "fresh start" platinum card for members who had poor credit scores or no credit history, a regular platinum card and a preferred platinum card. Credit scores determined which card members were offered, Thomas explained.
"I was really skeptical at first about how much difference changing to a platinum card could make," Thomas said. "After all, why would a consumer care about what color their credit card was? But, it really made a difference in their card use."
In addition to switching to a platinum program, Thomas said the credit union had also started a balance transfer offer, which gave members a 2.99% APR on balance transfers for six months. The CU also began to offer staff incentives to open new accounts as well as initiating a credit line increase program as well.
Thomas acknowledged that U.S. Employees said it has benefited to some degree from drawing its members predominantly from the postal service and other area federal employees, along with some employers who work closely with the federal government. This has given the CU a membership somewhat insulated from the economic conditions.
Thomas added the CU had not offered any rewards yet, though it is studying the possibility of launching a rewards program.
"One thing we did was to invite a consultant, and she advised us to grow the portfolio a bit before we really considered bring on a rewards program," she said.
U.S. Employees went with consultant Ondine Irving, founder of Card Analysis Solutions, because, in part, the CU had relatively few staff with a great deal of card management experience.
"Even though we had the program for years, our most seasoned card management employee only had three to four years of card management," Thomas said. "Bringing in a consultant who could guide us through our portfolio and point out places where we could save money and how we could better market our cards was a real help."
Part of Irving's advice was to scrutinize things like the number of inactive accounts, sometimes as high as 40.0%, Irving is on record as saying, which is a steady drain on profitability. Thomas said the CU has since begun the work of cleaning up its card base.
Thomas said the credit union has set a goal of 9.0% growth for its card portfolio this year, a goal Thomas said the CU should meet.
"Overall I would urge credit unions not to take the card programs for granted and to put some energy into managing them. Our experience has been that the time and effort we put into cards has paid off," she said.