ARLINGTON, Va. – Credit unions with card portfolios can sometimes find them difficult to manage and keep profitable and some have speculated that credit union's in general, like community banks and thrifts, have no business managing their own credit card portfolios when large banks that only issue cards, are able do it significantly more efficiently. But advocates of credit unions managing their own card portfolios maintain that institutions that educate themselves about their cards and invest time in their portfolios can find them sources of both strong income streams and stronger member relationships. Two such credit unions were recently recognized for their card management efforts by Card Services for Credit Unions, the association of credit unions that process their card transactions through Certegy. Franklin First Federal Credit Union, a $32 million institution based in Greenfield, Massachusetts, faced a card portfolio that appeared to be stagnating along a number of different parameters. Some cardholders among the credit unions' 8,000 members were asking for higher credit limits on the credit union's only card offering, a classic VISA card with an adjustable interest rate. Interchange income from the portfolio had been dropping and the current low interest rates had had a negative impact on the portfolio's interest income, according to Steve Tripp, marketing manager for the credit union. "Clearly something needed to be done, but we weren't exactly sure what," Tripp reported. "Based on our own internal data we suspected that we needed to offer a premium card, like a platinum card, but didn't really have any outside data to support our suspicions," he said. The credit union found that data by using CSCU's Virtual Card Consultant, a program that allows a credit union that processes with Certegy to more easily analyze and understand information flowing from its card portfolio. The VCC program was particularly useful, Tripp reported, because it allowed the credit union to see recommendations based on data that they recognized as authentic and not merely the product of Certegy trying to cross sell another product. Tripp said credit union executives were pleased to see the online card analyst also recommend the institution offer a platinum card, but they were surprised to see the program recommend adding a rewards program and increasing card limits as well. After careful consideration and consultation with another credit union that had taken similar steps, Franklin did all three things, Tripp said. The credit union offered a platinum card, increased credit limits where appropriate and applied Certegy's rewards program to both its old and new cards. Tripp also reported, an edge of triumph entering into his voice, that the credit union had aggressively marketed the rewards program by awarding double points for balance transfers. "I am especially proud of that one," Tripp said. A significantly larger credit union that Franklin had consulted about its card questions had taken that approach and had achieved $250,000 in new card business in two months from the effort, he explained. Franklin decided to try it too, and set a goal of seeing $200,000 in new card business from its promotion. "Well, we did over $400,000 in new card business from that offering," he said. Now, a year later, the credit union has issued 180 of the new platinum cards, increased credit limits to $30,000 on some cards and has continued pressing both its old and new card. Tripp reported that the credit union found that not only are platinum cardholders more inclined to make purchases with their cards, the average purchase was $30 higher for the platinum cardholders than for the classic cardholders. "Already the 180 platinum cards make as much money as the 900 classic cards," he said. It was a little hard to convince the board to take the risks of expanding the program, he explained, particularly the increase in credit limits, but in the end it has proved worth it. He said that after the initial reluctance about the card program, the credit union had endorsed it strongly, placing an enormous card in the institutions lobby (see art on this page), devoting an entire newsletter issue to it and placing applications all around the credit union. A similar approach to risk taking motivated the $224 million Group Health Credit Union, based in Seattle Washington. Faced with a member base of 30,000 members with an average age of 47, the credit union wanted its cards and its overall brand in the community to draw younger residents of King County, said Amy Herbig, marketing manager for the credit union. The credit union especially wanted to attract King County residents between 18 and 36 years old, members who might both use their credit cards more and remain with the credit union as they moved into the key financial times of establishing households and starting families. To that end the credit union significantly redesigned many of its communications vehicles and its card to reinforce themes that its research indicated the desired demographic desired, Herbig explained. "We knew from our research that our younger residents strongly identified with their city, to which most had come as adults," Herbig said. "We knew that they strongly identified with things that they liked doing, taking part in physical sports outdoors for example." Thus each of the credit union's five credit cards has images on it that link it in the cardholder's mind with these themes. Each card has a common Seattle landmark, such as Mount Rainier which can be seen from almost any part of the city, as a watermark on the card, as well as pictures of activities in which the credit union presumes the cardholder will take part, Herbig said. For example, the credit union's Equity Visa, which draws on a home equity line of credit, carries symbols of home remodeling, college graduation and weddings, all things for which someone might borrow against their home equity to do, Herbig explained. Herbig said she was particularly pleased with the credit union's My Plastic card, which it had begun offering to members who either had no credit or were trying to rebuild their credit. Because so many young people either don't believe that they have credit at all, or have bad credit from mistakes during college, Herbig said, the goal of My Plastic is to cut through the usual marketing messages that turn off many in this demographic and to offer a basic, no-nonsense card. "No, you're not gonna be able to charge a new XTerra on it, but you'll be able to enjoy the convenience of a credit card," the credit union's recently redone Web site advertises about My Plastic card. "And as you show the world you can handle the power of plastic, your track record will improve.and so will your opportunities." [email protected]