DES MOINES, Iowa (10/2/15)--A new white paper from The Members Group (TMG) explores how credit unions can increase the profitability of their credit card programs.

The potential of credit union credit card programs is often underestimated, according to the paper’s author, Jennifer Davis, portfolio management executive for TMG. The paper, “Getting the Most of Your Credit Card Program,” explores how even small tweaks to a credit card portfolio can produce big results.

The paper describes how to understand and monitor key metrics that are essential in achieving growth. Among the key metrics are credit line amount, penetration, losses and attrition.

“With a strategic ear to the ground, cards teams can easily uncover otherwise illusive information and capitalize on the untapped potential of their most lucrative asset,” Davis writes.

In addition to goal metrics, Davis’ paper includes discussion of the five stages of the cardholder lifecycle and strategies for optimizing the consumer experience within each.

The five stages are:

• Product: The card must be compelling and take into account the features, terms and conditions offered by issuers pursing the same segment of consumers.
• Account generation: A steady stream of new, financially healthy applicants will help keep the portfolio balanced and profitable. Today, credit unions and community banks have a plethora of channels through which to drum up new business.
• Activation/usage: The first 60 days of a new account is the most important time in the cardholder lifecycle. This is when card activation occurs, as does the best chance of earning top-of-wallet status. Having an early life-on-books strategy is key.
• Account management: Encourage cards and marketing teams to collaborate on the creation of an ongoing promotions calendar to keep cardholders engaged. The goal should be to stimulate purchase activity and balance growth.
• Service: Every business is operating in the age of the consumer, where the member’s voice has a better chance of being heard and valued than ever before. For this reason, cards teams can’t overlook the importance of consistent and friendly cardholder service.

Lastly, Davis tells the story of two credit unions that gained eye-opening insights from credit card portfolio reviews.

“I would recommend every [financial institution] take the opportunity to undergo a performance review,” said Dave Cale, president/CEO of Financial Plus CU, West Des Moines, Iowa. “It’s a valuable process to either confirm you are headed in the right direction or to make adjustments. It has certainly helped us reignite a dormant product, giving us the opportunity to deliver more value to our cardholders and equity to all members.”