Visions - July 2005Click a headline below to view articles:
Capturing The Value In Your Credit Card PortfolioWhen managed and promoted, credit cards represent a tremendous asset to a credit union. Taking time to evaluate your credit card portfolio’s performance can provide a very attractive payback as many of our member-owners have discovered. It’s important to look at credit card products as a line of business, separate from other loans. The key to determining current and future performance of a credit card portfolio starts with the Profit & Loss Statement. An average attainable return is in the 3-5 percent range. CU Member Averages Credit Card Households Non-Card Households
What are the drivers of P&L?All the line items on the P&L represent indicators that can be measured and used to improve performance. These indicators include gross active accounts, outstanding balances, interest and interchange income. Each line item needs to be viewed three different ways: in total, as a percent of return and on a per gross active account basis to provide real insight into the performance of the portfolio. Getting to the bottom line involves taking interest income, less cost of funds, to arrive at net interest income. Then non-interest income (fees/interchange) and any expenses are factored in to produce net income. Launching platinum cards with lower interest and higher credit lines is also an excellent way to drive gains in interest and interchange income. Monthly charge volume averages $888, 50% higher than Standard and Gold cards. Credit lines for Platinum cards average $17,000, 41% higher than Gold cards and 70% higher than Standard cards. The average revolving balance for a platinum card is $2,105, almost double the average balances of $1,340 for standard and $1,385 for gold cards, according to TNS Global. Credit Promotions Can Yield Dazzling ResultsMany PSCU Financial Services member-owners have combined one or more promotions to produce dazzling results. Here are just a few recent examples:
Don’t Forget Interchange IncomeInterchange income also contributes to the bottom line and is worth attention. Rewards programs that encourage members to designate your card as top of wallet are extremely important drivers of strong interchange income. According to TNS Global, a rewards program is the number one reason for opening a new credit card account and it is also the most important reason for achieving primary card status with the cardholder. We’ve seen it. Credit cards with the CURewards program from PSCU Financial Services average an additional 23 transactions a year, adding about two more transactions per month over cards without a rewards program. Exceptional Results Are Within Your GraspWhile competition is intense, credit unions that focus on driving higher profits from their credit card portfolios can boost performance with very little financial investment. It’s worth noting that savvy credit union credit card managers have produced exceptional results:
If you would like to follow in the footsteps of these industry leaders and get great returns from your credit card portfolio, please contact your Account Executive today. Hundreds of FIs Now Using PayLynx 4.1More than 260 financial institutions representing over 280,000 subscribers are leveraging the new look and enhanced functionality of PayLynx 4.1, the industry leading bill payment system, to ncrease subscriber growth and activity. Consumers Love Online Calendar, Same & Next Day PaymentsSchools Financial Credit Union, California served as the pilot for PayLynx 4.1 Single Sign-on, which provides for integration of the bill payment system into the credit union’s host processor and eliminates multiple log-ins. “We were pleased with the overall functionality offered by the upgrade including the seamless transition of the member’s data,” commented Nathan Schmidt, Schools Financial Vice President of Marketing. “Subscribers are delighted with the new design including the central page to view and administer all of their bill payment activity. The online calendar tool, the earliest available payment date, and the same day and next day payment options also appear to be popular features.” Schools Financial is adding value to their bill pay program by offering PSCU Financial Services’ electronic statement solution, StatementSource. By offering their credit card statements electronically through PayLynx, Schools members will have even more reasons to visit the credit union web site. Good Planning, Execution and Teamwork Made for Successful UpgradeAdvance preparation was key. “The Marketing Tool Kit and the training that PSCU Financial Services provided helped make this an extremely smooth transition,” said Jennifer Pace, Project Manager at Andrews Federal Credit Union, Maryland. “Our staff had an opportunity to become familiar with the changes well in advance so they were prepared to answer subscriber questions. We notified our members of the pending upgrade via our website and posted a 4.1 online demo for the subscribers to preview. The broadcast messages sent to the current bill payment users kept our members informed. I didn’t get ONE inquiry or complaint from members or staff – incredible! In fact, all that I have heard are compliments on the new features, especially the consolidated payment center and the payment alerts.” Promotional Materials Build AwarenessTo educate members and promote the new PayLynx 4.1, credit unions can download, at no charge the new Getting Started 3-panel brochure that is easily customized with credit union brand imagery. This tool is designed to help existing subscribers learn more about the basic functions and benefits of the PayLynx 4.1. It can also be used as a sales tool to show members how quick and easy it is to pay bills online. The customizable brochure can be found online at www.pscufs.com in the Marketing Collateral section of MemberConnect along with the other promotional inserts. For additional information on the dynamic PayLynx online bill payment system, log on to www.pscufs.com and click on “Try the PayLynx Demo” or contact Leslie Reistrup at 800-621-7728, extension 2506. Processing Questions? Online Help Available 24/7While we are always available by phone to help service your card portfolio, the digital age offers an opportunity for online access for processing services information. Knowledge Base, an online credit union help desk, is available on MemberConnect—our secure members-only resource. Knowledge Base provides how-to information on a variety of subjects to include:
For quick access, Knowledge Base has its own search engine, a “quick links” topics listing and a spot to submit requests for procedures and topics to add to the online help desk. Simply log on to www.pscufs.com and click on MemberConnect. Enter your client ID, user name and password, then launch Knowledge Base from the Member Support tab. Simplify Cardholders Financial ManagementDon’t delay – time is running out! September 1, 2005 is the deadline to submit Annual Activity Summary enrollment forms to provide your cardholders an easy-to-read, concise and comprehensive summary of their 2005’s spending activity. The Annual Activity Summary solution, which organizes transactions into categories, with individual charges itemized in each category, can be tailored to meet your credit union’s specific needs. CURewards™ Exceeds 1 Million CardholdersMerchandise Specials Keep Loyalty Program Fresh There is proof in the numbers. The primary reason for opening a new credit card account – and the number one reason a card reaches “top of wallet” status – is the rewards program associated with a particular card. Nearly 40% of PSCU Financial Services member-owner credit unions, representing more than 1 million cardholders, benefit from our flexible CURewards™ loyalty program offered as part of our CreditAbility™ and DebitAdvantage™ processing platforms. Having a comprehensive and convenient rewardsprogram provides your credit and debit card programs their competitive position in the marketplace. Credit cards with a rewards program post an average of an additional 23 transactions a year, adding about two more transactions per month over cards without a rewards program. We’ve seen tremendous growth in CURewards as credit unions have promoted this rewards program, and in turn realized an excellent return on their investment. A New TwistOur product specialists know what drive consumer acceptance, and we’ve recently added CURewards Specials to help build awareness of the credit union reward card offering. CURewards Specials include an expanded selection of merchandise options, some of which are available at lower point thresholds. Items available in limited quantities will be pictured in the online catalog with a real-time counter displaying the number available. To find out how to build cardholder loyalty and increase your program’s return on investment with CURewards, contact your Account Executive or visit our Web site at Be Prepared – We Are!Last year PSCU Financial Services had several opportunities to implement our Business Continuity Planning process. Because of the procedures in place to ensure continuous operations of critical systems and business processes, we successfully weathered the storms of 2004 with no impact to our more than 500 member-owners or respective 8.5 million plus cardholders and 280,000 online bill payment subscribers. We pledge to keep you informed during an adverse situation via broadcast faxes, our toll-free Member Newsline (800-772-8639) that provides the status of operations, and the Internet. With your credit union’s permission, we can extend emergency credit line increases, increase the number of allowable card authorizations per day or offer skip a payment for any cardholders located in or traveling within the geographic areas that are potentially impacted. Regulatory Guidelines Issued to Address Information Security BreachesThe Federal Financial Institutions and Examination Council (FFIEC) recently published an interpretation of Section 501(b) of the Gramm-Leach-Bliley Act (GLBA) that addresses information security breaches. This interagency directive requires that every financial institution implement a response program to investigate incidents where a financial institution or its service provider may have experienced an information security breach.
Because the directive is an interpretation of existing GLBA requirements, an advance implementation period was not provided and the FFIEC has instructed financial institutions to implement programs as soon as possible. Top
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Initially Suzie Cook, Vice President of Marketing for DCCU, admits that she was a little concerned about offering the low rate for life of balance, as were other managers at the credit union. PSCU Financial Services’ AdvisorsPlus representatives recommended those terms because most national offers to consumers are for life of balance. In addition, industry results indicate that these promotions generate excellent returns since low rate balances are normally paid down significantly within six months.  |
