The $1.2 billion Chartway Federal Credit Union has decided to promote its own credit card program while big bank issuers are losing ground.
“We saw a greater number of consumers waking up to how the bank card issuers are treating them, and we saw an opportunity there,” explained Ron Burniske, CEO of the Virginia Beach-based credit union.
“Like everyone else, I watched the “Today Show” piece last week on bailed-out banks boosting the interest rates on their credit cards. I can tell you that I'm appalled. These big banks are treating average consumers unfairly. They're already struggling during this tumultuous economic period,” Burniske added.
Chartway offers both Visa and MasterCard cards, but primarily a Visa Platinum card, Burniske explained. According to the credit union's 2008 year-end Call Report, it held over 23,000 cards in its portfolio that carry an average balance of $3,176. The highest rate charged by the credit union, according to the report, is 9.99%, but Burniske said the credit union's cards run from 5.99% to 18.00%, the highest rate CUs are allowed.
Burniske said Chartway cut the rate on all of its cards above 10% by 10 basis points, a fractional cut that could seem more symbolic than not, but one that cardholders-particularly those with heftier balances-will still feel.
Chartway has also chosen not to lower member credit lines or impose any balance-transfer or cash-advance fees-in excess of 5% at some financial institutions-and has prided itself on working one-on-one with members struggling to stay afloat, the credit union said when announcing the rate cut.
“If Americans are tired of this ridiculous mistreatment, maybe it's time that they consider opening an account with Chartway or at their local credit union,” Burniske said. “Credit unions put their members first, something that big banks certainly aren't willing to do.”
The CU recounted a moment in the past holiday season when a member called to request funds to help with expenses. A Chartway customer service representative offered the member a Chartway credit card, reducing her rate more than four-percentage-points below her previous card. In the end, the member received a credit card with balance transfers, funds for Christmas and $700 left on her limit for future use, Chartway recounted.
Burniske said Chartway's card program was also unusual in that its primary card rewards program does not let cardholders earn points but instead receive cash back for their purchases. Credit unions have often steered clear of cash-back rewards on their card programs because it tends to be more expensive. However Burniske said Chartway, which does offer a points-based rewards program, found the points programs were far more trouble to administer.
“We figured out that our biggest card headaches came from members who were calling because they couldn't get a flight they wanted or a schedule they wanted,” Burniske said. “They would want to travel on Easter or on spring break with their kids or over a holiday but find out those dates are all blacked out,” he said.
The cash-back program lets members get cash they can use to make their own travel arrangements and pay for them however they choose to, he added.
While he acknowledged that credit unions generally have trouble marketing their card programs, Burniske still didn't favor any generic advertising campaign for credit union-issued cards. The problem with trying to adopt a program like, for example, the California Milk Processor Board's famous “Got Milk” campaign to credit union cards is that the milk campaign is selling one commodity whereas credit card programs vary widely.
“There really aren't two credit union card offerings that are going to be just alike,” Burniske observed. “And the cost of any sort of steady, widespread campaign is liable to be so high that it would just be prohibitive, even for a group of credit unions.”
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