Payment Industry Insider

In a recent article on CreditUnions.com, the impact of declining rates and credit unions’ ability to compete in the marketplace is discussed.

One of the main topics of the article is a counter-intuitive, but good point. In a declining rate environment, while others are cutting interest rates on their cards, credit union cards are remaining relatively flat. So when the large issuer cuts their interest rates, how might this be good for credit unions and their ability to compete? It’s not an easy positive to see!

In my mind there are two advantages to the current rate environment:

1. Many banks are lowering their rates while increasing their fees and penalties to keep net income high.
2. Your current rate is still competitive in the marketplace so you can keep your spread high and still be competitive.

The big question with both of these is still, “Ok, so how do I compete?”

Emphasize Your Stability

Make it a point to emphasize that while large issuers are constantly changing their rates and fees, the credit union (typically) is not making those same frequent adjustments. Fees and penalties are the bane of many consumers so tell good stories about how your rates and fees compare to other issuers. Be an open book for your members with nothing to hide; make it evident that you won’t be taking advantage of them when rates start to climb. Better yet, guarantee that you won’t change your rates or fees for at least two years (or some other extended period of time).

Provide Education on Your Programs

The point is to make sure you are providing the education about your programs that your member needs to hear. Educate your staff on how to effectively communicate the value of your card and the potential traps that are out there. Teach your staff and your members how to compare different card offers.

Market Your Card Programs

Finally, remember that most often your card program is your highest returning asset. Just because it’s not the largest part of your lending portfolio, don’t forget to market it as heavily as you would an auto loan. Every dollar that is lent out on a card returns double the same amount of an auto loan!