Affinity Credit Card Draws in New Members
It’s rare that a novice credit union member signs up for his or her CU’s credit card right off the bat. The first account is usually a savings or share account, often followed by a checking account for the debit card. Sometimes if there is an indirect lending program, new members join to obtain the favorable rates on auto loans. But credit unions have often had to cross-sell members their credit cards, almost as an afterthought.
But this has not been the case at the 40,000-member, $264 million University of Illinois Employees Credit Union, which has seen a small surge of new members attracted by the CU’s affinity card linked to the University of Illinois Alumni Association.
The CU has issued the card since August 2010, when it won the contract after the association's previous card vendor, Bank of America's FIA Card Services, declined to renew it.
Susan Toalson, director of affinity services for the credit union, said getting the contract had been an exercise in education as the CU worked hard to educate the association both about credit unions generally and about their credit union specifically. But once the credit union had the contract, she reported that the relationship has flourished.
“I am really convinced that part of it is because we are right on campus,” Toalson said. “We are right at the heart of everything going on at that school, and that gives us a good profile.”
Another strength has been the CU's affiliation with the school's popular athletic programs as well as the alumni group. That association has meant that the credit union's name and logo have been a part of many of the popular athletic teams and sports venues, further enhancing the profile, Toalson explained.
But neither the CU's location nor sports affiliations have likely been as influential as the trust the CU has built up with the alumni group, she said.
“With the help of our Card Services for Credit Unions consultant, we met all our ambitious corporate goals, including saving current card holders more than $500,000 in interest and fee reduction,” she said. “The personalized and sincere relationship between a member and the credit union is what differentiated us from the associations current and ultimately awarded UIECU with the associations’ trust.”
Card Services for Credit Unions is the association of credit unions that process their card transactions with FIS.
That trust has helped bring the CU the kinds of endorsements that other financial institutions only wish they had. For example, as a condition of the association's contract with FIA, the credit union was forbidden from marketing its new affinity card to association members who held the FIA-issued card, but Toalson said the association stepped up with an ad campaign alerting all 650,000 association members that the card issued by FIA no longer earns the association any income whereas the credit union-issued card brings in additional revenue.
Toalson acknowledged that the CU had also benefited somewhat from the explosion of enthusiasm among consumers about credit unions in 2011.
“We wanted to bring the best available offerings to our alumni association, and through the credit union, we knew we had a solid offering that would meet the alumni’s love for their alma mater and their financial needs,” said Joe Rank, vice president of the University of Illinois Alumni Association. “Not only did a partnership with UIECU make fiscal sense, their dedication to our university helped provide a sense of pride and community not often found in the financial world.”
And the affinity card has meant more than just the 2,000 new members that have joined since August 2010, Toalson reported UIECU has booked $2.5 million in additional loans of all types over the same period as well as adding 4,000 affinity card accounts. Toalson also acknowledged it would be difficult to attribute how many of the other loans came about because of the card program, but she felt confident the relationship had helped pave the way.
Robert Hackney, president of CSCU, cited the UIECU experience as an example of the kinds of synergy affinity relationships can provide for all the parties in the relationship.
“The partnership between UIECU and UIAA creates a win-win-win between the UI alumni association, the UIECU and the cardholder,” Hackney observed. “This relationship opens the door to quality offerings and greater opportunities, maximizing the successes of all involved.”