PORTLAND, Ore. — A few years ago many credit unions were questioning whether they could compete in the credit card market. A look at first quarter 2007 data shows they clearly can.
"There seems to be something of a reversal of fortune with credit unions with regards to their credit cards. Five or six years ago it was pretty flat, not performing well, not keeping up with the rest of the market. Now they are growing rather nicely," said Frank Selker, president of AssetExchange, a card portfolio advisory and brokerage firm.
Analysis of portfolios of $1 million and larger in the first quarter show the average balance per account has grown nearly 10% to $2,200 from March 2006 to March 2007. Total card assets increased from $22.4 billion to $25.3 billion during the same period.
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"There was a period of time when big issuers were getting ahead of credit unions with rewards, and features that credit unions were not matching. In the last few years, credit unions have been adding those features and are matching the big issuers," said Selker. He said credit union card processors have stepped up with more products and services to help credit unions compete.
AssetExchange also noted that 17 credit unions with portfolios totaling $110 million sold their portfolios in the first quarter. Selker believes card portfolio sales will continue. "I think the right reasons to sell three or four years ago are still the right reasons to sell today. They have to do with the particulars of the credit union and the particulars of the portfolio." Selker said it's too simplistic to paint all portfolio sales as bad or shortsighted as some in the industry have, given the variances in CUs and portfolios, while at the same time noting not all sales have been good for members.
AssetExchange analyzed the 2,050 credit unions with portfolios of $1 million and larger.
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