Too Few Master Credit Card Basics
Despite widespread recognition of their importance to an overall loan portfolio, credit cards remain far too mysterious to far too many credit unions, according to consultants that work with credit unions on credit card management.
Too few credit unions have a grasp on such basic concepts as being aware of what makes their card portfolio profitable, how to adequately but not excessively account for risk, how to manage and set credit lines and how to best understand and plan for fraud losses, the executives explained. They added that while none of these faults were sufficient to drive an otherwise healthy portfolio in the red, they were enough to keep them from performing as well as they could.
That plays into the second broad credit card area that the consultants believe too few credit unions adequately understand, risk in their credit card portfolio and how best to manage it.
“Understanding risk is key, because not adequately controlling or pricing for risk in the origination of a card account can lead to ongoing problems that can take a long time to work out,” said Chris Joy, director of Advisers Plus, a credit card consultancy that is an affiliate of PSCU. But with that said, he added, he believes too many credit unions remain unreasonably risk averse in their card programs.