Navy Federal finds looser credit card policy will yield higher returns

<p>VIENNA, Va. – Navy Federal CU, a credit union with a reputation for having among the more conservative credit card policies, estimates it will realize a $1.4 million dollar boost in income from its 750,000 account credit card portfolio if it changes some longstanding policies. The credit union has taken the advice of a team of analysts from MasterCard, which found that the credit union’s tight authorization policies were costing it additional income and some measure of goodwill from its members. The MasterCard analysts suggested easing the policies after they determined that members with accounts in good standing were having their purchases declined, sometimes because a payment might be a few days late or because the customer approached the credit limit. These denials of authorization not only cut into Navy Federal’s income from its card portfolio, but also made members who felt the purchase should have gone through angry. “And if they have another card from another issuer in their wallet and it comes time to make another purchase, which one do you think they are going to choose,” said Bill Mathis, MasterCard senior vice president for member relations. Navy Federal has an “extremely complex” formula for scoring its credit card users whose score is updated with every payment and every purchase, according to Debbie Calder, assistant vice president for credit cards. The changes MasterCard suggested were changes to that formula, she said. MasterCard offers this analysis on a fee for service basis to any credit unions that issue MasterCard, Mathis said. “Our analysts are ready to work with small credit unions as well as large.”</p>