RALEIGH, N.C. – A $514 million North Carolina credit union hasbecome a hero to North Carolina heroes through an unusual cardprogram. In an innovative affinity debit card program, members ofthe North Carolina Local Government FCU who are also members of theNorth Carolina State Firemen's Association are able to designate50% of the interchange generated by their credit union issued debitcards to the Association. The NCSFA uses the funds to conducttraining and help local fire services in North Carolina purchaseneeded equipment. The credit union reported that in the 18 monthsthe program has been established, the 1,128 enrolled firefightersand their family members have generated almost $18,000 for theassociation, $6,000 in the first quarter of 2004 alone. So calledaffinity programs, in which a card issuer will designate a specialcard for an association, alumni group, or non-profit organization,have long been popular among credit card companies. Credit cardholders who use affinity cards are expected to be more highlymotivated to use their card, to choose their affinity card overother cards and to be less inclined to switch from their affinitycard to other cards which might offer a lower rate. But thebenefits of an affinity debit card are less obvious. Peoplegenerally don't have more than one debit card so there is no realcompetition to win among debit cards in a wallet. In addition, thegenerally low value sales that characterize debit transactions makethem less attractive vehicles for fund raising. “I think that maybe part of the reason people have been discussing affinity debitcards in theory for a while, but we may be the first CU in thecountry to actually offer one,” said Michael Spink, marketingeditor for the credit union. But Maurice Smith, CEO of the creditunion, said Local Government had found the affinity debit programhad brought some definite benefits that might be harder to quantifybut remain nonetheless real. For example, although he couldn'tquantify the exact number, Smith is confident that the program hasbought the credit union more members as firefighters have opted toget and use a card which supports their efforts. “Because a debitcard is generally attached to a checking account and a checkingaccount is the sign that the credit union has become the member'sprimary financial institution we are sure we have gained newmembers from this program,” Smith said. He also noted that eventhough there might not be any competition among debit cards in awallet, the affinity program has also played a role in increasingdebit card usage among card members who hold the card. “Frankly,our biggest issue is education,” Smith said. “We have a lot ofmembers who are familiar with affinity cards as a credit cardconcept and the notion that the association will benefit from aportion of the finance charges, but nobody understood the conceptof interchange or merchant transaction fees.” The upside is thatonce firefighters understood that the affinity card was a debitcard and not a credit card, Smith explained, it became morepopular, particularly among young firefighters who were juststarting out and didn't want to take on additional debt. But Smithadded that the program had a special place in the heart of many ofthe credit union staff because it was more than interchange andcross selling and new members. “I believe, and I know others dotoo, that someday in the future a firefighter is going to go hometo his family because of some training or some equipment that hewas able to have because of this program,” Smith said. -

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