Credit card lending at credit unions has retained its usual seasonal pattern so far in 2015, but has seen more activity this year so far than it had at the same time in the previous two years, according to credit union and processing executives.
Executives explained that credit union credit card receivables generally fall in the first part of the year as consumers pay off the holiday balances built up in the previous year, particularly in the fourth quarter. Then, the executives said, the receivables gradually rise over the year, peaking in the fourth quarter holiday season before falling again in the first quarter of the next year.
That pattern has continued during the 2014-2015 cycle, the executives said, but consumers have generally been taking out more cards and spending more than in previous years.
"We don't have the data to say whether members spent more or paid their balances down less in 2015," Card Services for Credit Unions Portfolio Consulting Manager Barney Moore said in regard to the association's card data from the first three months of 2015. "But we are definitely seeing everything on a higher trajectory."
CSCU is an association of credit unions that process their card transactions, as well as other payment transactions, with FIS. Moore reported CSCU had roughly 2,300 member credit unions as of the end of 2014.
Moore also reported that in 2013 and 2014, credit card portfolios among the association's member cooperatives were up in the first quarter by roughly 10%, and that the credit unions with the largest portfolios were seeing even larger gaps between 2015 and previous years.
In addition, he stated that member credit unions were opening new card accounts at a faster rate and offering more balance transfer programs. He said that members had been particularly receptive to balance transfer offers that allowed members to transfer balances for a lower rate, but not a promotional rate, and then keep that lower rate for the life of the loan.
PSCU Vice President of Product Management Jeff Carelli said many of the CUSO's roughly 800 member credit unions are seeing much of the same things in their credit card accounts.
"It's almost like the old saying about high tides lifting all boats," Carelli said, pointing to the way an improved economy and job market had been helping a variety of credit union lending programs, including credit cards.
Carelli said the overall spending cycle in cards remained the same, with the primary push running from October into January as the effects of the holiday consumer push lingered into the New Year, but added credit unions had reported seeing a bit of a spike in spending on summer vacations and summer activities.
Credit union executives shared similar news. Greg Smith, president/CEO of the $4.4 million, 430,000-member Pennsylvania State Employees Credit Union, reported that the credit union's card portfolio remained relatively stable in 2014 but that there had been some signs of an uptick in 2015.
According to the credit union's CALL report for the first quarter of 2015, the Harrisburg, Pa.-based PSECU had a roughly $569 million credit card portfolio on roughly 116,000 accounts.
Smith credited some of the increase to the credit union's low-rate card and a 2.9% balance transfer offer, which allowed members to move balances from higher cards to their PSECU card without paying any balance transfer or application fees.
"We did the math and couldn't see how we would make a rewards card pay," Smith said. "I know other institutions have rewards cards that hemorrhage red ink, and I think our members appreciate our 9.9% card with the balance transfer offer."
Balances transferred at a 2.9% rate remain there until the end of 2016, according to PSECU's website.
Navy Federal Credit Union, the nation's largest at $66.8 billion and 5.4 million members, reported that it had also seen an uptick in credit card activity.
According to the NCUA's CALL Report for the 2015 first quarter, the Vienna, Va.-based Navy Federal had roughly $1.6 million card accounts generate a portfolio worth roughly $9.4 billion.
Navy Federal Manager for Credit Card Products Matt Freeman reported the credit union had five card platforms: A cash-back Visa, a travel rewards Visa, a merchandise rewards Visa, a higher limit Signature Reward Visa and a low APR Visa. Navy Federal also offered a secured Visa card to help rebuild credit, according to the credit union's website.
Freeman reported that Navy Federal had seen strong credit card numbers since 2013.
"Account growth has remained strong each of the last three years," Freeman wrote in an email exchange. He also noted that Navy Federal is one of the largest credit card issuers and that the Nilson Report, a national credit card industry trade journal, showed a 13-15% increase annually.
"The value given back to members has continued to increase as well," he wrote. "In 2013, Navy Federal increased the rewards on [the Signature Visa] Flagship from one to two points per dollar, and removed the annual fee from [the travel rewards] GO REWARDS card, and in 2014, the cash Rewards program was increased to 1.5% cash back on all purchases."
He also explained that Navy Federal has standing promotional campaigns for their cards.
"Each year, Navy Federal invites cardholders to see free, advance screenings of the summer's top movies [using their cards]," he wrote. "These events are conducted all across the country and host thousands of members each summer. Additionally, during Military Appreciation month in May, members received double rewards on purchases at commissaries and exchanges."
The $1.7 billion, 233,000-member GTE Federal Credit Union, headquartered in Tampa, Fla., reported that its card portfolio was also following the usual pattern, but added that extra attention from the credit union had also boosted its growth.
GTE FCU Vice President of Member Consumer Loans Tina Narron reported the credit union had made a push to build its credit card and auto loan portfolios in 2015, in part by tackling some long-standing credit card marketing problems.
In April 2015, according to Narron, GTE had a card portfolio of roughly $147 million from 56,000 cards.
One of the problems was the place credit cards often hold in the minds of credit union members. Generally, Narron explained, credit union members have not sought their credit union's credit card early in their membership. However, in February 2015, GTE FCU began working with credit bureaus to make pre-approved card offers to new members through the credit union's mobile banking channel, Narron explained.
"They see a box asking if they want a credit card with a $2,000 limit or a $5,000 limit and they hit yes and away we go," Narron said, adding that the approach minimized the process members had to use to get a new credit card.
The new approach has already begun to bear fruit, she noted. In all of 2014, the credit union added 6,300 card accounts, but it had already added 2,600 as of April 2015, according to Narron.
GTE FCU had also adopted a similar approach to balance transfers, she explained, simplifying the process through the online banking channel and making it possible to do it all online.
"The new approach takes us [credit union staff] out of it," Narron said, adding that GTE FCU did not charge any balance transfer fees. In addition, like PSECU, GTE FCU counted on a very low rate to attract and hold members to its card, Narron acknowledged.
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