ST. PETERSBURG, Fla. – As the credit card industry overall has become steadily more competitive and credit cards more and more resemble commodities, credit unions around the country have continued to work to upgrade and expand their programs. Some of those that have had some of the most success innovating and growing their cards have won recognition from Card Services For Credit Unions, the association of credit unions that process their card accounts with Certegy and, of those, some attended CSCU's annual conference this year to share their success with a record 364 fellow credit union card executives in attendance. The $402 million Arkansas FCU was among the winners, reporting how it found that investing a relatively small investment of resources into reviewing card opportunities could provide some very strong rewards. Faced with falling outstanding balances in its program and a falling number of cards, the credit union decided initially to have a loan officer review the loan accounts of recently closed loans to see if the credit union had failed to either offer other loan products, offer to increase credit lines or otherwise missed an opportunity. Loan accounts which were thus identified were sent back to the credit union branch manager for review with a loan officer and, when applicable, the credit union sent the member a letter offering the member a chance at the loan or a line increase which had not been offered before. "Essentially, they figured out that if they were going to pull the member data for one loan product already, why not offer others as well, including their cards," explained Sue Chrzan, spokesman for CSCU and administrator of the annual awards. Soon Arkansas FCU found that reviewing the loan accounts worked so well that it expanded the scope of the work to include its second tier of borrowers. Now, on a rotating basis, one of its loan officers was detailed to review loan accounts for missed opportunities and, this time to call the member and not just send a letter. Soon, the credit union reported, it had hired an additional loan officer to help with the rotating work load since it had made the loan review approach a fixture of its loan and card operation. Over the course of the effort, Arkansas FCU reported that it added $9.7 million to outstanding card balances and reversed the trend of falling card accounts. The $813 million Greylock FCU won an award, in part, for stumbling into a better approach to card marketing than it had had before. The credit union knew it needed to expand the number of card accounts but had found the direct mail approach it used on its own to be needlessly expensive and cumbersome. So in 2003, they had opted to try to Certegy's turnkey product, ProDirect, and managed to open 513 new accounts with an additional $1.5 million in outstanding balances. Defying conventional wisdom that advises more spacing between direct mail programs, the credit union decided to take the same approach in 2004, this time segmenting the card offers according to credit score. Members with the lowest credit scores were offered a Classic card with 4.99% interest rates, the next tier of members were offered Gold cards at 3.99% and the best tier of members were offered Platinum cards at 0%. In all three cases, the introductory rate lasted six months and then reverted back to the higher rates, but the credit union reported that the new money in the accounts has remained. And like in 2003, the results were very strong, with the credit union adding 114 Classic cards, 257 Gold cards and 159 Platinum cards to the portfolio, with an additional $1.4 million in outstandings. The $34 million Consumer's Choice CU, headquartered in Saginaw, Michigan, could have won the award for going against the industry prevailing wisdom. After reviewing its card program, the credit union decided they wanted to draw new Visa accounts but that they didn't want to spend the money expanding their card portfolio from its current "vanilla only" offering to a platinum program. After determining that they could cut their interest rate from 12.6% to 8.9% without taking too much of a hit to their income, they also figured out that an increase of 100 new card accounts at the average spending in the portfolio would more than make up the cost of the interest rate cut. So the credit union decided to turn its "plain vanilla" card, which the industry considered a liability into a marketing asset, adopting a "plain vanilla" marketing theme for their card inserts and flyers as well as a vanilla ice cream give away in the branches. Thus with a very small investment of $800 as well as cutting the interest rate, the credit union increased its card portfolio by 113 accounts and its outstanding balances by 32%. The $104 million O Bee Credit Union, headquartered in Tumwater, Washington, would have been another to win an award for the most frugal use of resources. The credit union has just over 14,000 members of whom 5,500 have card accounts. The credit union had a problem though, it only offered ATM cards and no debit cards and that channeled members into transactions which offered no interchange income, were inconvenient for members, and sometimes expensive since there were not always surcharge-free ATMs available. The credit union decided to start migrating ATM card accounts over to debit card accounts, targeting at first the most likely 900 of its cardholders. The credit union chose the most promising accounts to be those which used their ATM cards at least twice a month and wrote at least six checks per month, as well as having no outstanding delinquencies and had their checking accounts for at least 90 days. These cardholders received a letter describing the benefits of having a debit card and 40% of the account holders took advantage of the offer, the credit union reported. Their switch to debit now brings O Bee almost $600 per month in interchange and the credit union reported that made back the just over $800 that the program had cost for envelopes and paper, labor and postage in two months. [email protected]

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