The majority of credit unions have seen their credit cardprograms largely unchanged by the implementation of the Credit CardAccountability, Responsibility and Disclosure Act, and many cardprograms have received a boost from consumers seeking credit cardsthey feel they can trust.

The new law had relatively little direct impact on credit unionsbecause most never did many of the things the CARD Act'sregulations were meant to correct, according to industryexecutives. This left credit unions with having to comply with thedisclosure regulations and make changes to the informationcontained in cardholder statements. And many CUs also chose to stopcharging members for exceeding the credit limits on their cards,though that fee rarely generated significant income.

“We did have to spend a little time thinking about how to changethe disclosures, but we have some pretty smart people and they wereable to figure it out,” said Kevin Moyle, assistant vice presidentfor the $712 million USE Credit Union, headquartered in SanDiego.

The credit union has a credit card portfolio of roughly 16,000accounts that carry balances, according to the NCUA's statisticsfrom last year, and an overall portfolio balance of roughly $55million.

USE revamped its credit card statement to reflect the CARD Actrequirements, make them even clearer for members and highlight thecard's benefits to consumers. Among those benefits, Moyle said, wasthe decision to keep the card portfolio at a fixed rate after anintroductory lower rate on new cards. Feedback from consumers andmembers reflected a strong preference for fixed-rate cards, hesaid.

Member feedback and consumer interest in the card has grown inthe wake of the CARD Act, Moyle said, but the interest has onlytranslated into a 1%-2% increase in the number of cardaccounts.

The CU has also seen such a reversal in the charge off rate inits card portfolio that it now considers the last quarter of 2009the bottom of that trend. USE ended 2009 with a charge off rate ofroughly 11% but saw that number shrink to 7.5% in the first quarterof 2010.

Much like USE, the Heartland Credit Union, in Madison, Wis.,experienced a “negligible” impact from the Card Act on its creditcard portfolio, according to John Wagner, vice president of lendingfor the credit union. Heartland issues only MasterCard and as ofthe end of 2009 had a portfolio of about 2,200 credit cards withbalances of roughly $3.2 million, according to the NCUA'snumbers.

Like USE, Heartland stopped charging an over limit fee and sawonly a small dip in income as a result, Wagner reported. ButHeartland differed from USE in that it changed its fixed-rate cardportfolio to a variable rate to cope with the CARD Act'seffects.

“We weren't really pleased to do it, but we calculated that tomeet our costs and protect ourselves if interest rates rose, wewere going to have significantly raise those rates,” Wagner said,adding that the CU blunted some of the resistance to the move bytelling members they would be able to keep their current rates, atleast for the immediate future. “We explained to them that theywould actually do better with the variable rate than if we kept therates fixed,” he said.

But while USE had not seen enthusiasm for its card programtranslate into strong growth, Heartland reported a surge in itscard program, at least in part because of the CARD Act and theincreased consumer attention to cards.

Wagner reported that Heartland has seen a 270% increase in thenumber of new card accounts issued in the first quarter of thisyear versus the same time period last year. Additionally, thecredit union has seen its balances increase 12% over the sameperiod, an impact Wagner called “incredible.”

Richard A. Casamassa, vice president for member serviceoperations for the $1.6 billion Municipal Credit Union,headquartered in New York City, affirmed what other CU cardexecutives reported. The CU, which has a portfolio of roughly46,000 cards with balances of about $118 million, also felt littledirect impact from the CARD Act.

The credit union has felt the CARD Act's indirect impact in itsbalance transfer program, which, Casamassa reported, has moved upsharply since the first of the year, increasing from $200,000 inJanuary to $300,000 in February and $600,000 in March.

“We have seen a great deal of growth in our balance transferprogram as news about our card program has gotten out,” Casamassasaid.

Nic Peterson, director of operations for the $1.3 billionAffinity Plus Federal Credit Union, said the CARD Act had littleimpact on Affinity because the credit union had already made a lotof the changes the new law mandated.

Affinity has a card program with roughly 32,000 card accountswith balances worth about $75 million overall.

About three years ago, Peterson said, Affinity reviewed all ofits products and services to make sure they were all as good formembers as possible. As part of that review, the credit unionchanged some of its card program's features. For example, Petersonsaid, the CU set up its over limit fee so that a member wouldalmost have to intentionally send his or her card over limit totrigger it.

“We obviously couldn't have known the CARD Act was coming,”Peterson said, “but it turned out we were ahead of it.”

Peterson reported that Affinity had only one card, a platinumrewards cards, and kept its fixed-rate card after determining thatit was best for its members. It had already also been applyingpayments to members' highest balances first, thus anticipatinganother CARD Act requirement.

Since the CARD Act came into effect and drew increased attentionto Affinity's card program, Peterson reported the credit union hasseen new accounts double and credit card balances increase by $10million.

“Some of that is bound to include purchases too,” Peterson said,“but I think overall it was about 60/40 balance transfers.”

But not all credit unions have emerged relatively unscathed bythe new law.

Michael Poulos, CEO of the $550 million Michigan First CreditUnion, headquartered in Lathrup Village, reported that his creditunion had seen little but expense from the CARD Act. Much of theexpense had come from hiring legal consultants to rewrite thedisclosures, and the CU also had to cut back on its student creditcard since few parents wanted to co-sign on a card for their son ordaughter.

Michigan First also had not seen any of the indirect benefitsseen by other CUs, Poulos said.

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