Think Before You Sell Card Portfolio
Not all credit card portfolio partners are created equal.
In what was almost a throw-away line in the Feb. 16 Editor’s Column, it was suggested that the agent credit card portfolio at NIH Federal Credit Union’s "illustrates the credit union difference and should make credit unions think long and hard about what could happen when selling their credit card portfolios."
Managing a credit card portfolio is an important aspect of the credit union’s business, and credit unions cannot afford to leave a nonperforming asset on their books. Especially in the post-CARD Act era, selling portfolios has to remain a viable solution. The rules are changing and credit unions face increasing pressures from rate and risk compression, as well as tightening resources. And, let’s not forget, that CARD Act changed the rules of the game for all issuers.
All of that said, for some, selling their portfolio to a valued partner is the decision that best serves their membership. Luckily, we provide a credit union-centric solution.
As we have partnered with credit unions across the country, it should be noted that none of the credit unions took the decision to sell their portfolio lightly. And, while portfolio sales have slowed significantly in the past 18 months, credit unions are still actively examining their options–including selling.
We cannot control what our competitors do after they buy a credit card portfolio. What we can promise is that we are committed to providing a product that credit unions are proud to call their own.
So, yes, credit unions should think long and hard about whether selling their credit card portfolios is right for them. But, let’s not make a blanket statement that it isn’t right for anyone. Just make sure you choose the partner that is right for your credit union.
TMG Financial Services
Des Moines, Iowa