Noninterest income has been a pillar of support for many creditunions living in a persistent low interest rate environment, butwith rates now likely headed up and more eyes turned toward lending, credit unions can't getdistracted and let noninterest income programs slip away –especially for credit and debit cards, pros said. Here are fourstrategies they said will help keep noninterest income strong in a rapidly changingeconomy.

1. Take a hard look at recurring payments.

Being “top of wallet” for members' day-to-day purchases isobviously important for credit union card issuers who want morenoninterest income. But don't overlook members' recurring payments– they can generate a steady flow of income, TMG Financial ServicesProduct Manager Connie Thienes said.

The trick is reminding members which card to use when they'reattaching a card to all those shopping websites and automatic billing programs in their lives.

“Talk to your card members about 'card on file' as often as youpossibly can,” Thienes advised. “Include that in welcome kits, inearly-month-on-book campaigns and maybe in marketing campaigns. Bythat I mean remind new card members to be sure to add their newcard number to Netflix, Amazon and iTunes, and all the differentplaces now that we keep our card number on file so we can enjoythat convenience of instantaneous purchase.”

2. Get the marketing team focused on effectivemessaging.

Card programs can significantly bolster noninterest income – ifcredit unions can get members' attention and make a compellingargument. That's not always easy.

Jan Southern, who is a senior consultant at income advisory firmJohn M. Floyd & Associates, said direct mail and statementstuffers are probably the least effective ways to go, forexample.

“It's costly and sometimes they're read, sometimes they're not,”she said of stuffers. “If it's not going to be read, it's betterthat it's just printed on the statement. People have a tendency toread what's on their statement versus maybe not read what's stuffedin there.”

Websitebanners and even text messages can pack more punch in terms ofreminding people at the right time, she said.

Jen Davis, who is vice president of SmartGrowth at CO-OPFinancial Services, said whatever form the message takes, be sureto get it out there within the first 90 days of opening theaccount. And be sure it has a strong call to action that makes iteasy to take the offer, she added.

“In today's world, you just can't rely on statement inserts toget your message across, because so many people don't get paperstatements,” she said. “A lot of people don't even look at theirstatements, so you have to think about all the different possibleaudiences and how they like to get their communication.”

3. Make sure rewards programs arecompetitive.

Rewards programs are why many members use their debit and creditcards, according to a 2016 U.S. consumer payment study by theColumbus, Georgia-based payments management firm TSYS.

“Rewards continue to be a powerful incentive, and were onceagain ranked as the most attractive card feature on consumers' mostpreferred credit cards. While many things change with paymentofferings and features, consumers still rank rewards as the mostattractive feature and a key influencer for using one card overanother,” it said. “The percentage of respondents who selectedrewards this year was nearly 60%. Cash rebates were almost doublethe next closest ranked rewards type, and cash rebates are redeemeda few times a year by 30% of our survey respondents.”

Many predicted debit rewards programs would die after the adventof Dodd-Frank, but “peoplewere just wrong,” Southern said.

“It's definitely a what's-in-it-for-me generation,” Davis added.“Having rewards is a good way to drive utilization of anything. SoI don't think debit rewards are gone or dead. I do think that theycan play into a betteroverarching strategy. I think for it to really make adifference, you'd probably want to look at more of anenterprise-wide rewards solution where it can play into your creditcard and maybe even other accounts within your organization.”

4. Find a way to form more merchantpartnerships.

Strong rewards programs typically involve strong merchantpartnerships. Some are merchant-funded loyalty programs targetingnational or local retailers; others are homegrown, Thienes noted.In either case, the objective is to increase card use.

Thienes' organization, the Clive, Iowa-based TMG FinancialServices, recently partnered with an insurer to launch a cell phoneprotection plan program for members who hold credit union cards inthe ATIRAcredit program, for instance. In exchange for usingspecific cards to pay their monthly phone bills, members get freedamage and theft insurance for their cell phones. And the creditunions that issued the cards get more recurring revenue.

Thienes said the insurance coverage competes with similarproducts from other credit card issuers – many of them national –though her company's product typically has a lower deductible andcan supplement other coverage. The returns can be substantial.

“We're finding that our average ticket size for cell phonepayments is $150, so you would multiply that by the amount ofinterchange,” she said.

About 2% of existing cardholders were using their credit cardsto pay a cell phone bill when the program launched in February. “Wewould be ecstatic if we could get that up to 10%,” she added.

The credit unions tell the insurance carrier how manycardholders used a card to pay a cell phone bill in the priormonth. They also pay the vendor a negotiated per-transaction fee,she said.

“As our program grows, our revenue is going to grow and so isthe revenue of our partner that's providing the insurance,” shesaid.

The program is just one of a multitude of ideas spawned by noninterest income's persistentrole in credit union success.

“I don't know that I've really heard of a bad idea,” she said.“I think totally ignoring recurring payments and card on file isthe worst idea, because these are types of payments that aregrowing. I think they'll continue to grow in importance and if youcompletely ignore that and don't include that in developing yourspend strategy … I think that would be a big mistake.”