That misunderstanding resulted in a wave of credit unions selling their card portfolios to banks or CUSOs, a trend that only recently has showed signs of ebbing. In some cases, credit unions that had sold their card portfolios to an agent issuing bank have allowed the contracts to lapse and climbed back into card issuing.

Hackney didn't dwell on the difficulties of previous years but made clear in a presentation that credit union card portfolio management has begun to turn around. In terms of return on assets, for example, credit union card portfolios average 1.83%, according to the Raddon Financial Group, compared to 1.23% for home equity credit lines, 0.70% for mortgage and 0.32% for auto loans.

Improved credit union card performance translated into a strong 2007 for the association. As of the end of last year, CSCU member CUs had 13 million consumer accounts and transacted $36 billion in purchases for a total of 690 million in transactions. All this activity brought $402 billion in distributions to member credit unions, including a patronage dividend worth 100% of CU membership fees in 2006, essentially making participation in CSCU free.

The improved card performance also appeared in better card metrics as well, most notably in a sharp improvement in the average outstanding balances of CSCU member credit unions. In 2003, on average, CSCU reported its members' outstanding balances lagged the industry by $775, with the industry posting an average of $2,654 that year while CUs only posted $1,879. But by 2007, that gap dropped to $254, with the industry overall posting $2,751 and the member CUs posting $2,497 on average.

However, Hackney made it clear that the association still had plenty of work to do. Despite Visa making it significantly easier for credit unions to move their classic and gold cards to platinum programs, for example, more than half of CSCU's overall card portfolio is still in classic cards. This means that these 57% of CSCU's cards generate only 41% of the portfolio's total volume, 38% total outstanding balances and 38% of total revenue.

By contrast, even though platinum cards account for only 27% of member CU portfolios, they account for 39% of total volume, 44% of total outstanding balances and 43% of total revenue.

Hackney also took time to plug rewards programs for cards, which he said too many CU card issuers still do not use despite their proven track record of driving usage.

The prospects for this year's returns to credit unions also appear to be good. Even though CSCU will return 18% of its income to members in the form of patronage this year and not the 100% from the year before, Hackney announced that the CSCU board had voted merely hours before to return 100% of the $28.9 million the association received as its share of the proceeds form Visa's initial public offering of stock.

He also made the point that while the CSCU returned 18% and not 100% of its net income to their members in the form of a patronage dividend this year, that still reflected well on CSCU, which generally gives member CU's a bigger percentage of its smaller income than does it competitors.

While the association might pass a smaller percentage of its income back to member CUs this year than it has in the past, Hackney made it clear that the CSCU board wanted to continue its focus on giving member credit unions more help and training in card portfolio management.

The two big new tools are a sharply expanded portfolio analysis services and a new approach which will let member CUs get their card management services from FIS at a greatly reduced price.

CSCU already began a portfolio consulting service with two staff members that tended to focus on responding to member CUs seeking help. Hackney announced at the meeting that CSCU was increasing the staff focused on portfolio consulting to seven. Further he announced that the service would remain free to member CUs and, in a later interview, explained the consulting approach would be proactive rather than reactive.

Essentially, unless you are a member CU that opts out of the consulting program, you will be scheduled for a portfolio consultation and analysis once the program gets up and running, Hackney explained.

The actively managed portfolio program will allow member credit unions to participate in the folio of popular card marketing and management tools that FIS offers more easily and cheaply.

"Our goal here is to provide credit unions an easy and inexpensive way to sign onto these programs. How easy can we make it to add these programs in one stop–a one and done approach," Hackney said. He also estimated the AMP program will allow CUs to add the programs at roughly 50% savings.

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Economist Says Now Is Time for CUs

FORT LAUDERDALE, Fla. — An economist advised credit union card executives that now is an ideal time to make inroads with banking customers.

"Most banks are more worried about their capital positions now than they are about holding onto their customers," Donald Ratajczak, an economist with the Morgan Keegan investment firm told credit union card executives at the CSCU conference. "But you have to offer them some business, something more than giving them another savings vehicle and a car loan. You need to offer them something distinctive that banks cannot or will not."

Ratajczak also discounted the impact of the most recent round of federal economic stimulus because of the costs of oil and gas. "We will get some impact," he said. "We will see a little lift off but not too much. We probably won't see any good news until July."

But the higher energy prices will mean the consumer likely feels week and that, combined with housing foreclosures, is liable to keep the economic anemic but out of recession, he added.

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CUs Should Capitalize On Cardholder Ire

FORT LAUDERDALE, Fla. — Chip Filson, president of Washington, D.C., consulting firm Callahan & Associates, told CU card executives at the CSCU conference that consumer anger at major card issuers combined with increased card regulation make this an ideal time for CUs to market their card programs.

Filson outlined how consumer outrage at the card management practices of major card issuing banks had both driven Congress to seek more card regulations and had chased some consumers away from cards altogether. Filson said this combination had left CUs with a challenging opportunity to explain to consumers both how their cards are managed differently and how much of a better value they are to CU members.

"Like anything else, no change is going to move a market overnight," Filson explained after his presentation, "but we are starting to see a change in how CUs present their cards programs and how they explain them."

Filson described how credit unions face a challenge of helping their members get to a level of financial literacy where they can distinguish between the types of cards major issuers' practices might have tainted and those that CUs offer. "Consumer financial literacy is at a level now where too many consumers think all cards are the same. CUs need to change that," he said.

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