Total card assets in the industry grew almost 14%, from $24.2 billion last year to $27.5 billion in 2007. Meanwhile, credit card assets reflected as a percentage of total CU assets increased from 4.34% in September, 2006 to $4.67% this year.

One critical impact of the shift has been a slowing of the trend where credit unions would sell their card portfolios to banks and enter into agent agreements with them. Analysis from both Asset Exchange and Brookwood Capital, a leading CU card portfolio broker show CU card portfolio sales this year lag last year's and would need a very strong fourth quarter rise to the same level as last year. Card processing CUSO's such as TNB Card Services have kept up a steady pace of purchasing card portfolios.

But improving CU card performance is not the only reason credit union card portfolio sales have slumped. Asset Exchange gained a significant amount of industry attention this year when it released research which indicated that a surprisingly large percentage of credit unions that had sold their card portfolios reported being unhappy with their agent issuing partners.

Asset Exchange CEO Willie Koo explained that his firm had surveyed CEOs, chief financial officers, chief lending officials with 224 credit unions that had sold their portfolios and entered into agent relationships with the buyers between one and five years prior. Koo said he would have been happy with a response rate of 5% and was surprised that, by the end of the survey period, that 23% of those surveyed had responded.

The survey found that 46% of the executives surveyed were unhappy with their partner's product offerings, 71% with their partner's service levels and 63% with their partner's pricing. Koo stressed that service and pricing were both very broad topics and could reflect everything from successful call center response to ease of making payments in service to interest rates and fee levels in pricing, but all contributed the overall dissatisfaction some credit unions were reporting.

Other evidence that credit unions have started valuing their card programs more is the number of CUs which formerly sold their portfolios that have decided to let their agent agreements lapse and get back into issuing again. As of the end of 2007, as many as six CUs that formerly partnered with banks could formally started issuing again, and CU card consultants reported a marked increase in attention from other CUs which, consultants said, are contemplating the move and may come back to card issuing in 2008.

In a continuing trend from last year, the number of credit unions that handle all or most of their credit and debit card programs in house continued to drop, according to card processing CUSO's. Executives in the CUSOs credited their organizations' stronger rewards offerings and, especially, assistance with card fraud protection as reasons for the increased processing interest from CUs who formally processed their cards in house.

All these trends seem likely to continue in 2008 and should contribute to the overall trend of credit unions tailoring their card programs to fit their own specific needs, analysts say.

Previously, many card programs–not only among credit unions but other issuers as well–were treated more or less alike and did not differ too much. This contributed to the impression that credit cards were little more than a commodity, an attitude which helped facilitate portfolio sales. Analysts say that many CUs responded to the growing similarity among cards by managing their own card programs more efficiently and changing them to make them more distinctive–either through increased rewards or card offerings, better marketing, or repositioning card programs to became more central to the CU's business plan.

"I think a lot more CUs now see their card programs as relationship vehicles and their cards as an important element of their overall strategy," remarked Ondine Irving, a noted card consultant.

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