Bigger is not always better in cards

<p>NEW YORK – One of the axioms strongly pushed by banks who seek to purchase credit unions’ credit card portfolios is that only the bigger bank issuers, the MBNAs and the InfiCorps, have the size and the economies of scale to really make credit union card portfolios perform to their potential. Further, they point out that the trend of credit unions selling their credit card portfolios mimics an earlier trend among banks that saw small card issuers selling their portfolios. But not all banks have gone along with the crowd, according to a story in the American Banker. The Banker reported the experience of $75 billion BB&T, the 29th largest Visa/Mastercard issuer, which has not decided to go the way of other institutions that sell their portfolios. In the report BB&T executive, Bud Tremblay said BB&T does not see its cards as a “commodity” but as a “relationship product.” The bank has succeeded with its card portfolio by keeping to a modest marketing budget and keeping its card product line “slim,” an approach which is directly at odds with that of the large card issuers and portfolio purchasers. This approach has meant BB&T has had very low loss rates on its cards, for a bank, 3.25%, which is less than half the average among banks, the Banker reported, and a corresponding low delinquency rate. The bank issues platinum, gold and student cards, mostly Visa but customers who ask can have a MasterCard. According to the story, during the time when many card portfolios have been contracting, BB&T’s has been growing, up 30% last year over 2000.</p>