Increase Your Credit Card Market Share

Despite credit unions’ more-competitive credit card rate- and fee structures than most competitors, just one in three members who own credit cards has a credit union-issued credit card, according to CUNA/PSI Global’s Credit Union Members Today & Tomorrow report. But just as disconcerting is the fact that among credit union VISA/MasterCard holders, credit unions are attracting only about one-third of members' total balances (on average, $943 of the $2,837); the other two-thirds of these balances are on other providers' cards.

This low market share and tendency to attract lower balances from members combine to yield a situation whereby credit unions own just a 10% share of members’ VISA/MasterCard balances, or "share of wallet" for credit cards.

Credit limits on credit union-issued credit cards may be one of the culprits when considering both of the above patterns. A past CUNA study had revealed that members' credit union-issued cards carry credit limits that are, on average, about $2,500 below those accompanying bank-issued cards. "Many credit union marketing experts would argue that this difference is actually quite larger," notes Jon Haller, Director of Market Research at CUNA & Affiliates.

Given that the year-end 2000 charge-off rate for credit cards was noticeably lower for credit union cards than bank cards—1.8% versus 5.07%—it appears that some credit unions’ credit-limit-granting guidelines may be too conservative.

"Insufficient credit limits will deter some potential cardholders from joining your program altogether, and could relegate your card to secondary status among some of those who actually acquire your card," Haller says, "especially if they have the wherewithal to handle considerably higher credit limits and debt levels."

Additionally, CUNA Research's member survey benchmarking database indicates that one in four members (24%) from credit card-offering credit unions don't even know that their credit union offers such a program, let alone what the rate- and fee-structure is.

Ensuring that you're not behind the curve with respect to the marketing strategies being employed by your competitors can also help. Introducing a Gold and/or Platinum offering too late in the game, or waiting too long to, for example, add an airline mile or "points" for merchandise feature, can lead members to drop your card in favor of another providers' or lessen the appeal of your offering in the eyes of current nonusers.

Providing more liberal credit limits—especially for your higher-income, lower-risk members—increasing members’ awareness of your program, improving your primary financial institution (PFI) levels (credit unions’ share of wallet among PFI members is twice that of non-PFI members), and keeping up with the latest product/feature offerings can all lead to better credit card performance.

Credit unions that can make the necessary adjustments in their credit card policies and marketing strategies will be in the best position to improve upon their current performance.

• Americans’ credit card debt is currently approximately $644 billion ($546B on such cards as Visa and MasterCard). (Source: Research Alert.)



• 56% of members have at least one loan (including credit cards) at a credit union. (Source: CUNA/PSI Global’s Credit Union Members Today & Tomorrow.)

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