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BIDDEFORD, Me. – When it comes to charging fees for their credit cards, most credit unions have a great story to tell. The problem is that so few of them think outside the box enough to begin telling it, card experts said. One credit union that has started to carry the message is the $107 million St. Joseph’s Credit Union, headquartered in Biddeford. After comparing different ideas for ways the credit union could differentiate its card program from those of its competitors, particularly the large issuers, the credit union decided to drop all fees from its credit card program. “We have a strong capital position and we considered this was a good way to serve our members as well as helping them find their way away from the high-cost, high-fee cards issued by some of the big issuers,” explained Luke Labby, CEO of the credit union. Labby explained that he had run-ins with one of the big issuers soon after graduating college when he had been on an automatic payment plan – the issuer had changed the due date on the payment. The changed due date and the automated payment plan meant that suddenly Labby found he was late with a payment, even though he had had the automatic payment plan in place for months and had never been late with payments. Then, to add insult to injury, the fact he had been late with payments meant he not only had late fees but also faced a higher interest rate. “Thinking back it just dawned on me that we have a real difference in a credit card program which doesn’t do those things,” Labby said, “and we should tell people about it.” The move to advertise the credit union’s fee-free offer moved into the family when the photographer that the credit union used to help prepare the campaign came up with an old photo of Labby’s son, aged 18 months, with a very unhappy face. “That face and that expression was just perfect for our campaign,” Labby said and the credit union began moving forward with the effort. And there are signs the message is slowly sinking in. As of June 30, the credit union’s Classic and Platinum card portfolio had just over 3,000 accounts and $3 million in receivables, but it was up 5.4% in the number of cards since December 2004 according to the credit union’s 5300 reports. Steve Egan, vice president with Certegy, said the card processor was tracking St. Joseph’s effort and added that he viewed it as a natural outgrowth of a situation many credit unions share. “Many of our credit unions are already fee-free or almost fee-free in their card programs,” Egan said, “but they just don’t talk about it a lot or market on it, so that’s what’s new.” Part of the reason may be because the credit card world waxes and wanes on fees in ways that credit union cards have not generally had to do, he explained. “I think the big issuers really got serious about fee income when they had to make up for falling margins from the aggressive low interest rate offers,” Egan said. “Credit unions generally haven’t made those sorts of offers and haven’t seen that kind of pressure.” Sue Chrzan, spokeswoman for Card Services for Credit Unions, the association of credit unions that process their card transactions with Certegy, observed that a degree of entropy on the part of many credit unions may be part of the problem. “It just doesn’t occur to them that the fact that they have very low fees or no fees at all should be something they should use to market their card program,” Chrzan said. “We often go from executive to executive in our card workshops and they all say that they have low fees or no fees but that they don’t market those. I think that credit unions have a problem with the idea of marketing their card program – it’s almost like they pick up the idea more quickly if it’s put in the context of member service and making sure their members realize that about their credit union card.” Chrzan said the only thing that may turn the trend around is more CUs starting to market their fee-free cards and other CUs seeing them do it. “I think it may be one of those things that it takes someone from outside to suggest,” Chrzan said. [email protected]

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