See the Benefits of Actively Managing Card Portfolio Growth
Credit unions that are fully-engaged with Advisors Plus exhibit impressive growth. While this infographic presents four major metrics of concern in a card portfolio, remember the complete view, not simply individual metrics, provides the best direction. A fact-based portfolio analysis will tell you your unique story and quickly identify credit card portfolio risks and marketing investment needs. The results below support the position that actively managed card portfolios do indeed grow!
| 35.5 | |
| 62.7 |
| 34.1 | |
| 73.2 |
| 57.5 | |
| 91.2 |
| 48.5 | |
| 87.8 |
A typical credit card program represents approximately 4% of total credit union assets, but represents about 20% of net income.
Source: Advisors Plus AnalysisNearly 196 million consumers had access to revolving loans, such as bank-issued and private-label credit cards, in the third quarter of 2017.
Source: Transunion.comCash back scores higher for overall consumer satisfaction with credit cards. Airline cards and store-branded rewards have the lowest level of satisfaction.
Source: JD Power 2017A typical credit card program yields a Return on Assets (ROA) of between 3.50% and 5.25%.
Source: Advisors Plus AnalysisMajor Points
Credit unions that were fully engaged with Advisors Plus achieved 6.27% growth in gross active accounts over 2016 – 75% higher than those who were not fully engaged with Advisors Plus.
Increasing active accounts is a major factor in determining portfolio growth. Successful credit unions smartly invest in account acquisition programs while using available information and technology to ensure that high-quality performance standards are maintained. In turn, more quality accounts will drive growth in sales volume and balances – which are the lynchpins for interchange and finance charge revenue respectively.
Major Points
Credit unions that were fully engaged with Advisors Plus achieved 7.32% growth in balances over 2016 – 115% higher than those who were not fully engaged with Advisors Plus.
The importance of balance growth for credit unions is related to the growth of finance charge revenue – the key to a credit card program’s profitability and main driver of the bottom line. With increasing pressure on interest rates, finance charge revenue is an increasingly important component of portfolio profitability.
Major Points
Credit unions that were fully engaged with Advisors Plus achieved 9.12% growth in transaction over 2016 – 59% higher than those who were not fully engaged with Advisors Plus.
Transaction growth occurs through both account growth and account management. Engaged credit unions not only focus on growing their account base but also execute targeted marketing programs toward increasing usage within their existing portfolios. These programs typically include tactics such as reward incentives and credit line increases – all designed in a way to responsibly increase usage and gain top-of-wallet status.
Major Points
Credit unions that were fully engaged with Advisors Plus achieved 8.78% growth in dollar volume over 2016 – 81% higher than those who were not fully engaged with Advisors Plus.
Be sure to look at how your card loans have increased in the past. Is it growth that comes from new balances or is it coming from finance charges and fee income? Do your payments exceed sales, leaving growth to finance charges and fees?