Credit cards are likely going to continue their expansion intothe credit union industry in 2013 as more credit unions start toissue cards and credit unions that already issue them expand theirprograms.

In an era of steadily shrinking noninterest income, improvementsin fraud detection and protection, combined with better, moretargeted underwriting and card portfolio management will continueto make credit cards an important part of credit union's loanportfolios.

But there will be some shifts within the credit union cardissuing industry. Credit union card reward programs, often offeredthrough deals with payment CUSOs, may be overhauled andmodernized.

More 2013 Watch

• Dec. 28, 2012 Marketing in the Year Ahead
  
• Dec. 27, 2012 Gen Y in the Year Ahead
  
• Dec. 27, 2012 Member Investments in the YearAhead
  
• Dec. 26, 2012 Member Business Lending in the YearAhead
  
• Dec. 26, 2012 Human Resources in the Year Ahead
  
• Dec. 21, 2012 Credit Union Taxation in the YearAhead
  
• Dec. 20, 2012 CUSOs in the Year Ahead
• Dec. 20, 2012 NCUA Board in the Year Ahead
• Dec. 19, 2012 Mortgage Lending in the YearAhead
• Dec. 18, 2012 Low Income Service in the YearAhead
• Dec. 18, 2012 Bank Conversions in the YearAhead
• Dec. 17, 2012 Student Lending in the YearAhead
• Dec. 17, 2012 Auto Lending in the Year Ahead

Many credit union card reward programs still rely on a catalog,whether in paper or digital format, filled with merchandiseeligible for purchase with rewards points to drive their cardreward programs. But affinity rewards are moving forward at a rapidrate, and credit unions will begin to offer other forms of rewardssuch as cash back and slashes in interest rates as part of theaffinity reward mix.

Instant issuing of both credit cards and debit cards willcontinue to elbow onto the scene. Instant issuing, studies show,sharply increases card activation and member satisfaction asinstantly issued cards can often carry artwork personal to thecardholder. In addition, instantly issued debit cards also providefor instantly issued PINs that the cardholders is able to selectthemselves, leading again to greater member satisfaction.

Next year will also likely see the interchange rate on creditunion-issued debit cards continue to drop, but debit card usagewill only continue to expand, blunting the impact of lowerinterchange per transaction on overall credit union income fromcredit union interchange.