Credit card programs are labor intensive, have a high compliance burden and carry an element of risk, but credit union that previously sold their card portfolios should still consider getting back into issuing again.
That is the bottom line of a recent white paper produced by the CUNA Lending Council which found credit union's need for additional lending, combined with different approaches to mitigate some of the compliance burden and risks, make credit card lending worthwhile.
“In the current environment characterized by relatively low loan demand and extremely
low rates, there aren’t a lot of places for credit unions to put their money to work,” the council wrote in “Back In Business: The Pros and Cons of Re-Launching Credit Card Programs and Other Options to Boost Card Revenue.”
“The strongest case for an in-house program may be that credit cards could help fill that gap,” the council wrote.
The paper noted that credit unions have the standing with consumers to make them a good source of credit card loans and room to grow in the crowded credit card market where they only have roughly a 5% share.
The council also said it recognized that credit card programs require a great deal of work, but also noted that existing third-party firms can offer expertise and card management efficiency.