Search
 
Commentary

Now Is the Time to Micromanage Your Credit Card Operations, Expenses to Protect Your Star Product

Credit unions that issue credit cards may soon be coming upon some tough times in terms of reduced profitability of their star performing product. The national media is communicating how consumer spending is down by double digits, and we are in for a much slower holiday spending season. Mainstream industry...

By Staff Writer | Updated on October 28, 2008

Credit unions that issue credit cards may soon be coming upon some tough times in terms of reduced profitability of their star performing product. The national media is communicating how consumer spending is down by double digits, and we are in for a much slower holiday spending season. Mainstream industry experts on the likes of CNN, MSNBC, Fox and CNBC are encouraging consumers to hang on to their money and cut erroneous spending. The message being sent to consumers is maintain humility, cut back and check your ego at the door. You can no longer afford to keep up with the Jones!

How do these messages translate for credit unions and their credit card programs? Reduced interchange income. Typically interchange income represents 15%-25% of a credit card portfolio’s revenue, with the higher interchange representative of those with reward programs. If consumer spending is down, resulting in reduction of interchange income, what’s left to maintain profitability? Finance charge and fee income. For credit unions, finance charge income typically represents 65%-70% of a credit card program’s revenue and fee income the remaining 10%-15%.

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including Law.com and GlobeSt.com.

Already have an account?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Recommended Stories

Why Your CU Needs a Chief Data Officer

Why Your CU Needs a Chief Data Officer

Henry C. Meier, Esq. |

There are too many data-related questions to answer and legal issues hanging around to not have a data chief at the helm.

Credit Union Times

Join Credit Union Times

Don’t miss crucial strategic and tactical information necessary to run your institution and better serve your members. Join Credit Union Times now!

  • Free unlimited access to Credit Union Times' trusted and independent team of experts for extensive industry news, conference coverage, people features, statistical analysis, and regulation and technology updates.
  • Exclusive discounts on ALM and Credit Union Times events.
  • Access to other award-winning ALM websites including TreasuryandRisk.com and Law.com.

Already have an account? Sign In Now
Join Credit Union Times

Copyright © 2024 ALM Global, LLC. All Rights Reserved.