Card portfolio analysts working for Card Services for Credit Unions say that, on average, roughly 15% of a credit union's members carry the credit union's credit card, leaving most credit unions with plenty of room to grow their programs further.

“Return on assets, fee income, interest income and overall profitability are all higher for credit unions that have a credit card program, compared to those that do not,” said Bill Lehman, vice president of portfolio consulting services for CSCU. “Credit cards are a very effective way to improve the loan/share ratio.”

Tampa, Fla.-based CSCU is an association of credit unions which process payments with FIS.

Lehman's remarks appeared in a research paper the association released titled “A Credit Card Program Can Be a Credit Union's Highest-Earning Asset” in which Lehman laid out how much a strong card program can benefit a credit union.

For example, a 40,000-member credit union might have 3,600  credit card accounts (9% penetration) with 1,980 of those accounts active (55% activation) with an average balance of $1,500 and 5.5 transactions per month.

A portfolio with these performance attributes could generate in excess of $400,000 in annual revenue (finance charges, interchange and fees) Lehman observed. If the credit union increased penetration to 13.5%, average balances to $2,000 and activation to 60%, along with utilization to seven transactions a month, this portfolio generates an incremental $330,000 additional in total revenue for the credit union, he argued.

If this is so, why aren't more credit unions improving their card programs?

The paper offers several reasons, among them the fact that some credit unions have boards of directors with a culture that leaves them uncomfortable promoting card programs or use.

“Some credit unions have difficulty getting upper management to buy into a credit card program,” said Michael R. Chenderlin, a senior portfolio consultant for CSCU. “Often this is because there isn't a full understanding of the benefits of credit cards and how they help create a stronger offering across all products to deepen relationships and drive profitability.”

Chenderlin added, “Two of my credit union clients are in the same city, five miles apart. “One instantly issues a credit card and debit card when an account is opened; members can imprint the cards with photos of their kids or the family dog. This credit union has a 51% penetration rate. The second credit union has a totally different mindset and doesn't take full advantage of what their program can offer—here the result is a penetration rate of 8%.”