© Copyright 2011 Vantiv, LLC. All rights reserved.

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Three consecutive years…five percent annual losses. This was not what Community Resource Credit Union expected from its credit card portfolio. But the $275 million credit union knew its credit cards were beneficial to its members. It had to find a way to make the portfolio a viable, long-term solution that benefitted both the credit union and members.

Strategies for a Competitive Card Product The credit union’s leadership team took important steps to dramatically revamp the portfolio. Vantiv’s Portfolio Consulting team was called on to develop a strategy to transform the card portfolio from a losing proposition into a growth asset. We proposed a three-part strategy to make the card program more profitable and more competitive in the marketplace.

The first step…eliminate Community Resource’s gold card. In its place, the credit union offered a platinum card with rates as low as 8.75 percent, nearly a two percent decrease in APR from its previous rate.

Next…reduce their portfolio’s overall risk by implementing risk-based pricing. This provided Community Resource the option to base rates on individual cardholder creditworthiness as opposed to a one-for-all flat rate.

Community Resource Credit Union Revamps

Credit Card Portfolio Reengineered Credit Card Portfolio Now Shines Brightly

By restructuring the card portfolio, Community Resource’s card balances grew by 21% within 12 months, to $6.4 million.

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Finally…the credit union adopted a targeted cash back rewards program. After it was determined that more than 63 percent of Community Resource’s cardholders were A+ and A credit rated, rewards were put in place to encourage cardholders to use their cards more often. The credit union also adjusted credit lines based on individual cardholder risk, with credit availability up to $20,000 for some cardholders.

Employee Training Enables Growth Other changes were focused inward. Besides revamping the card product line and re-pricing the portfolio, Community Resource adopted a new culture. Employees were encouraged to promote credit cards to its members. The card product became part of its employee scorecard, a performance evaluation tool used to measure and reward employees. A cash incentive program was introduced to motivate employees to cross-sell the credit card.

Members were on board. Employees were on board. The result? Community Resource’s card portfolio balances grew by 21 percent within 12 months, to $6.4 million. The portfolio currently has 3,700 accounts on file. The credit union averages 55 new card accounts a month, more than four times the new account rate before it adopted its new card-focused culture.

“We’re hitting on all cylinders and plan to grow the portfolio another 20 percent this year,” said David Frazier, CEO of Community Resource Credit Union. “Now that we have a competitive card product, we are able to aggressively sell it to our members, who see the value of our cards and are responding enthusiastically.”

In less than two years Community Resource is stronger than ever, reducing its loan loss and turning around its card portfolio. Well below the industry average, portfolio losses have hovered between 1.56 and 2 percent since the repricing and realignment. Balances have grown far faster than the credit union’s objectives. And net income and return on assets performance surpassed the full-year 2010 goals in the first six months.

Effective pricing and employee engagement can turn your card program into a high performing asset. Call Vantiv to determine if your card products are effectively priced and to establish a sales driven culture. We make card processing simple.

© Copyright 2011 Vantiv, LLC. All rights reserved.

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Frazier added, “Our card products truly provide a value to our members and the credit union’s financial stability. Our only regret is that we didn’t partner with Vantiv and revamp the card portfolio sooner.”

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Community Resource Credit Union Baytown, Texas