Launching a Credit Card Push at Your Credit Union

People can fall into a cash shortage at various times in their lives. While some may prefer the all-cash or debit card method, most will choose a credit card to alleviate their financial burdens.

Use this opportunity to market your credit cards as a middle-ground solution. By building relationships, providing financial education, and rewarding both your members and employees, you can stay competitive in an oversaturated credit card market.

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How to Make Your Credit Cards More Competitive

The market for credit cards has become increasingly oversaturated, and for good reason. Forty-five million Americans are living without a credit score due to insufficient credit history, according to CNBC.

Amazon Credit Builder: Amazon unveiled a secured credit card called Amazon Credit Builder to cater to lower-income families. The theory is that these consumers have less time to shop at brick and mortar stores, but can shop online (specifically Amazon) 24/7.

Uber Visa: The Uber Visa may give consumers a convenient way to pay for their ride to work or the airport, but its rewards and benefits are unique. They include four times the points on dining (including UberEATS), $100 cashback if you spend $500 in the first 90 days, and cell phone insurance of up to $600 if you pay your bill with the Uber Visa.

Apple Card: Just recently, Apple joined the credit card game with the release of the Apple Card. Apple partnered with Goldman Sachs to use artificial intelligence algorithms for the application process.

Using your iPhone, you can complete the approval process in just four steps. With a decision in a matter of seconds, you can use the virtual card immediately at any merchant that accepts Apple Pay (about 70% of the market). There are no fees; however, Apple's APR can rise to 22% based on your current credit score.

Apple amps up its features with a fast user interface, generous cash rewards that can be transferred to your bank account (similar to a PayPal transfer), and face or fingerprint security.

For credit unions to remain relevant, they should follow demand trends such as by following in the footsteps of corporations like Amazon, Uber and Apple. Consider the following upgrades to your current mobile banking:

Design a clean user interface that resembles a mobile wallet.
Simplify the application process and make it mobile-friendly.
Monitor your members who are iPhone users – do they have the Apple Card?
Cater rewards to a younger audience.
Advertise your lower APRs as they compare to Amazon, Apple, etc.
Market unique services such as auto loans and home loans.

Invest in Technology

To compete with the mainstream, your credit union needs to invest in credit cards that offer up-to-date tech benefits. A few considerations include:

Online account access (payment, statement and activity);
EMV chip (faster checkout, eliminates signature requirement);
Near Field Communication (the communication of two devices nearby, i.e. Apple Pay and Samsung Pay);
Fraud alert protection;
No foreign transaction fees;
No balance transfer fees; and
Rewards (cash back or points system).

As security becomes increasingly difficult to manage, plastic cards are on their way out. Look for NFC payment processes to become the norm.

Offer Options and Increase Benefits

According to a 2017 FDIC report, 68.7% of households had a credit card from Visa, MasterCard, American Express or Discover. Make your credit union's credit cards stand out by offering lower fees, promotional rates, reward incentives and secured credit card options.

Lower Fees: Since credit union credit cards generally have 20% lower fees than mainstream credit cards, members are enticed to choose these cards for debt consolidation. They will be able to save money by taking advantage of lower interest rates and fees, allowing them more discretionary income to place in additional credit union services such as a savings account.

Promotional Rates: Running a free annual fee as a promotion for first-time members can allow credit unions to compete with other no-annual-fee cards. Plus, you can pass on lower interest rates. This is especially beneficial for enticing new members who are currently only paying the minimum on their credit card balance every month. They can benefit from the lower APR and you can benefit from the interest each month.

Rewards: Reward credit cards are best suited for higher-tier spenders and those who frequently pay off their monthly balance. With bonuses like a promotional period for double reward points, no balance transfer fees and 0% APR for the first year, your credit card can easily compete with the top mainstream reward cards.

Plus, the standard rate is much lower than a mainstream credit card, so users who have opted to use the credit card for debt consolidation will be more likely to feel comfortable applying (regardless of their amount of debt).

Secured Credit Cards: According to an extensive 2016 study from the Financial Health Network, over 100 million consumers had inadequate credit scores to secure affordable credit from a quality source. Unfortunately, people are turning to high APR credit sources, payday loans and debt management agencies to borrow money.

You can change this by prioritizing your credit union's marketing efforts on secured credit cards. Tailor each secured credit card to the community you are serving or the target market you are seeking. For example, start with a low $100 deposit or allow members to directly upgrade to the secured card when their credit improves.

Once the new member has established their credit and their deposit can be returned, instead of giving them a digital statement credit or sending them a check, reach out to them directly. Congratulate them on how well they are doing financially and take the opportunity to kindly offer additional services such as a savings or checking account.

Provide Sales Incentives for Credit Union Tellers

Keeping up with technology is important, however, it is often the relationship that employees build with members that makes the difference.

Year-end bonuses and holiday parties are both adequate ways to show employee appreciation, but going beyond the corporate base requirements will help you decrease turnover, encourage employees to generate internal referrals and incentivize the offering of additional services to members.

Top credit unions offer reimbursement for gym memberships, internal loan rate discounts, additional paid vacation time, credit union blood drives, free management training and even food truck Fridays.

Match Services to Your Target Market

Market to specific neighborhoods within your community. Lower-income communities have less access to financial education and some even have a fear of financial institutions.

Partner with community relief organizations that can work alongside your credit union. Consider referral incentives and provide free educational tools to promote member inclusiveness. Add hashtags such as #financialliteracy to your credit union's social media posts. Education should center around how to budget, how to use a credit card responsibly and the benefits of having good credit.

By taking the time to treat your new members more like humans and less like numbers, you can help them accumulate multiple accounts within the credit union. Once a member has multiple accounts in place, it is less likely that they will switch financial institutions.