CSE decided to work with Irving and see if it could really turn the program around and Barnes reported no regrets for having done so, even though that meant the CU donning metaphorical overalls and plunging into the nitty-gritty of the card program details.

These included things like discovering and knocking down the number of accounts the CU has closed because they were lost or stolen but still existed in several different processing and security lists. Finding those and taking them off those lists cut program costs by $50,000 per year, Barnes said.

Then there were the Falcon alerts. Falcon is the popular card security program that warns card issuers about potentially fraudulent transactions in time to perhaps prevent them or shut down the cards before others can be made. In CSE's program, as with many others, Falcon was set to send the CU a warning notice, for a fee, whenever a card transaction of about one dollar or less was made. Card thieves often make these sorts of transactions to discover if a card account is active and that their fraud will work.

But the Falcon parameters were set before the era of purchasing music over the Internet, a type of transaction which is often as small as a dollar or less and generated a lot of unnecessary fees for Falcon until the CU changed the parameters to reflect the real situation.

All these changes have seen results, since the end of 2004, the CU has seen its card accounts increase by 30%, its active billed accounts increase by 47%, its average credit line grow by 14%, and its card interchange increase by 30%.

Further, even though its membership rose by 5% over the same period, CSE said its card penetration increased by 3%, a real triumph since card penetration generally lags credit union membership since cards are not usually the first CU product or service that members seek.

"Many credit unions don't understand that the real management of the card program is in the details," explained Irving. "Once the CU gets going with it, it is easy to do but they have to learn how to do it."

In addition to changing many, if not all, the details of its program management, CSE also made the big changes that many CUs seeking to strengthen their programs make.

For example, the old program consisted of two cards, a classic Visa and a Gold Visa, neither one offering a rewards program. CSE scrapped those two cards and replaced them with two Platinum cards, one that offered rewards and one that did not. The credit union also adopted risk-based pricing on its cards, ending the flat 12.25% rate for both of its old cards and replacing it with a flexible rate of between 8.25% and 18% on the new cards.

The change in pricing gave the CU an average rate of 10% on its card portfolio and paved the way for the expansion in card accounts that CSE had hoped to see.

But even more effective than changing the program details or offering new cards, Barnes says, has been a fundamental change the CU made about how its cards fit into CSE's lending strategy.

"We really looked at our lending philosophy and took steps to take away some barriers we had to lending," Barnes said. The CU reinforced an attitude with staffers that discouraged loan requests from members who did not have the best credit, for instance. While keeping the underwriting guidelines prudent, the CU also adopted a stance that encouraged staff to make more loans, he explained. The CU allowed staff that approved a member for a car loan to also approve the member for the CU's Visa card if the member did not already have one, for example.

Barnes also echoed Irving's philosophy that raising wholesale card income meant little if the revised card program could not also raise net income as well. In order to improve that card bottom line, CSE also took steps to increase income from card fees. Among other things, the credit union started assessing fees for card payments that were made later than its already generous grace period. These and other changes helped CSE raise its card fee income by 286% from late 2004 through the end of 2007. and, while card program expenses rose 25%, net income per active account rose 39%.

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