As the economy improves, so does consumers’ willingness to use credit to purchase those items and services they have put on hold for the past four or five years. This is happening in consumer spaces such as auto loans, appliances and other bigger ticket items. Consequently, we’re seeing a substantial surge in credit use. Balances are going up, issuers are offering higher credit lines and so is the number of bank marketing programs aimed at extending credit to consumers – including credit union members.

Upward economic trending is certainly being registered, and felt, in credit card usage.  According to TRK Advisors, consumers charged $53.5 billion in credit card debt in 2012 – five times what they charged in 2010. Credit union card balances are up 4.6 percent since November 2011, according to CUNA Mutual Group, compared to growth of only 0.4 percent for the rest of the non-CU credit card market. Also on the rise, debit and prepaid card purchases grew by 14.6% ($177 billion) between 2009 and 2010.  

With this increasing level of credit card activity, banks are on the prowl. They are already marketing new cards, balance transfer offers and increased credit lines to their best customers. While a rising tide lifts all ships, credit unions must be proactive and creative in promoting their credit card business or banks may take away your potential growth with their heavily advertised programs featuring Vikings and movie stars.  If you aren’t in the credit game aggressively, you’re not going to win. 

Credit Cards Are Good for Business

Although it seems obvious, it’s easy to lose sight of this: Credit transactions drive both interest and non-interest revenue at credit unions. A new survey by FinancialBrand.com of bank and credit union executives underscores the importance of credit cards for future growth of both industries. Credit cards were number five on the priority list behind auto loans, mortgages and home equity lines of credit. Number one on the list was utilizing mobile banking solutions to increase lending activity. However, when properly managed, credit cards can be the most profitable lending product a credit union can provide.

How can credit unions capitalize on the growing market for credit cards?

First, increase credit lines, especially to creditworthy members. Credit cardholders typically keep their usage under 30 percent of their total lines of credit. If the credit card you provide doesn’t have an adequate credit limit, your member may choose to use another card for their major purchases.

Second, a viable method is to add products that address credit-bruised consumers such as credit cards that are secured by funds in a credit union savings account.

Third, cross-marketing is also an effective way to increase card usage by your members. If debit and credit cards together make for an attractive primary financial package, promote credit to debit card holders and checking accounts to credit cardholders. And if you have great credit card programs, you can win business with balance transfer offers. Responding proactively to current demand and services keeps your credit union and its credit card business relevant.

Fourth, building on credit unions’ strong legacy of service and trust is a key for credit unions to market any products and services, but that is especially so when it comes to credit card business. Be knowledgeable about the competition and be sure to inform members about your fair and competitive interest rates and fees. We have a positive story to tell members – be their credit ally.  

The Future

Looking ahead, the horizon is filled with exciting new payment technologies, products and services that will greatly benefit credit card use and its growth. The expansion of mobile payment technologies, P2P payments, mobile credit card readers and online purchasing, to name a few, are set to drive credit and debit card usage in the near future.  

The future is bright but credit unions must plan now and be prepared for the new world of financial services technology and certainly credit cards are at the top of the list. If we in the credit union industry focus on the right priorities and have in place the systems and procedures to adopt advances, we can continue to provide a valuable credit payment vehicle that will build credit card usage and income as the market demand grows well into the future.

Jennifer Kerry is Vice President, Credit Issuer Processing, for CO-OP Financial Services, Rancho Cucamonga, Calif. She can be reached at jennifer.kerry@co-opfs.org and (800) 782-90432, ext. 7022.

I was six when my dad taught me to ride a bike.  This wasn’t an easy feat since I’ve always been a little clumsy. It took a lot of hard work and conquering of pretty daunting fears to keep getting up on that seat to try again. After many scraped knees, sore feet and even hitting a few parked cars, I was finally able to go on my first solo bike ride. What a thrill to gain a little more freedom, all thanks to a patient teacher.

Since becoming a financial counselor, I have met plenty of people who are clumsy with their money. For some members, it’s from no fault of their own. Due to underemployment, divorce, an economy that is limping along or health reasons, some well-intentioned people are struggling to make ends meet. Others just aren’t money savvy or have never had anyone teach them the basics of personal finance. Still others have made poor decisions they regret and are looking for reprieve. They all have one thing in common– they have come to Meritrust looking for guidance.

The 2012 Consumer Financial Literacy Survey prepared by Harris Interactive Inc. reveals many of the money management problems that plague our society: 33% of adults admit to paying bills late, 39% carry balances month to month on a credit card, 57% do not have a formal budget written for their household and 25% say they are spending more money this year than they did last year. According to the survey of more than 1,000 participants, 42% of adults would give their money management skills a C, D or F letter grade. That number is up 2% from last year.

Meritrust’s desire to focus on the well-being of our members, coupled with my financial literacy experience, led us to pursue my financial counseling certification through the CUNA Credit Union Financial Counseling Certification program. We have since developed a free financial counseling service for our members. Every meeting with a member, every consultation with our lending or collections department and every community organization that has shared resources has provided me the opportunity to accumulate more personal finance knowledge. More importantly, it has taught me compassion and given me the tools necessary to help our members maneuver through difficult financial situations. Not every encounter has been successful, but hundreds of members have benefited from our decision to focus more intently on meeting members’ basic financial needs – as well as hopefully helping them avoid some scrapes and bruises while on their path to financial independence and confidence.

As an adult, you won’t catch me on a bike all that often these days. But thanks to my dad, I have the skills to avoid the parked cars and mud puddles that undoubtedly arise – both on the road and in life. My goal is to help our members gain this confidence, conquer their fear and achieve the financial freedom they desire and deserve.

Chris will be speaking at CUNA Certified Financial Counselor School, June 9-13 in New Orleans. Register today to start earning your Certified Credit Union Financial Counselor (CCUFC) designation so your credit union can also help members down the path to financial freedom!

Chris Wolgamott, Financial Counselor at Meritrust Credit Union, has been in the credit union industry for almost 14 years at Meritrust in Wichita, KS and BECU in Seattle, WA. He spends a majority of his time counseling members as well as developing and teaching financial literacy classes to schools and non-profit organizations in Wichita and throughout the state of Kansas. Chris earned his Bachelors degree from Wichita State University in Management and Marketing, and obtained his Masters of Adult Education degree from Kansas State University. In 2009, Chris was given the opportunity to testify to a congressional sub-committee about the need for financial literacy and how credit unions in Kansas are meeting that need state-wide.

He also earned the CCUFC designation for financial counseling though CUNA in 2010 and was a 40 Under 40 award recipient from the Wichita Business Journal.

The CU Movement is blessed with extraordinary leaders. 

Every year at this time, we’re honored to present four exceptional leaders who you’ve nominated over the past year as Credit Union Heroes. These individuals exemplify the credit union philosophy of “people helping people,” and they’ve gone the extra mile to extend credit union service in their communities.

Now it’s time to choose one as the 2013 Credit Union Hero of the Year. Voting is open now through May 17.

Learn about this year’s nominees and cast your vote.  

Steve Rodgers is the Editoral Director for the Credit Union National Association. 

Every year, credit union professionals gather to seek insights from the masters of service culture, the staff of the Ritz-Carlton Hotel. Known for its staff empowerment practices and dedication to its customers, the Ritz sets the bar for the service industry, acting as model for other organizations to strive toward.

CUNA World-Class Service Leadership Institute, May 20-22, 2013 at The Ritz-Carlton, Denver, highlights that model and allows credit union professionals to experience top-notch service firsthand. By taking a look at core service principles and seeing them applied outside the credit union industry, attendees gain a comprehensive view of service as an encompassing mindset to live by and not just an element of running a credit union.

Having attended and facilitated CUNA World-Class Service Leadership Institute for a number of years, I’ve picked up on some of the eye-opening insights that have helped transform the service cultures of many credit unions.

What is it that separates the Ritz-Carlton from the rest of the service industry? I asked some past institute attendees from BayPort Credit Union in Virginia the same question. Angela Snyder, BayPort’s Sales & Service Supervisor and Sue Fernaays, VP of Member Services, both attended the institute in the past and discussed with me the valuable takeaways the Ritz staff has to offer:

Learning, not training

Despite being world-renowned for their training programs, ask any of the staff and they’ll refer to the Ritz as a learning organization, rather than a training organization.

What’s the difference? Simply put, learning is active, training is passive. The Ritz staff is hired to learn, not to be trained, because it is much more productive to teach someone who is trying to learn than it is to train someone who is apathetic about knowing the information presented. This mindset puts the responsibility on the staff to know their job and to keep on learning more.

Angela Snyder embraces the concept of learning rather than training, acknowledging the effectiveness of such a practice. “I think we have implemented this approach and we try to instill in our employees the desire to want to learn,” she reported.

Service as advertisement

When was the last time you saw a Ritz-Carlton Hotel commercial on television? The answer is ‘never’. This is because the Ritz doesn’t employ commercial advertising. Their philosophy is that, “Our empowered employees are our number one advertising strategy.” Word of mouth, as well as a pristine reputation, provides enough positive attention to keep their renown growing.

“I think the institute’s most engaging factor was observing the Ritz-Carlton staff,” said Fernaays on the matter. “Seeing their service models in place was beneficial across our organization. It’s ladies and gentlemen serving ladies and gentlemen and it’s very apparent that they believe in what they’re doing.”

Snyder and Fernaays agreed that even if BayPort can’t always compete with the rates of every other financial institution, they can make membership more than worthwhile through exceptional service quality. The BayPort staff has taken to referring to itself as “members serving members.”

The BayPort Way

In 2010, the BayPort Credit Union invited me to be on site for the launch of their BayPort Way service program. With the Ritz-Carlton’s service standards in mind, they designed a culture shift that prioritized service and staff empowerment.

Utilizing specific practices, such as the Ritz’s values card, which acts as a constant reminder of the organization’s elite service principles and morning huddles to provide motivation and a sense of community, BayPort has constructed a culture that they’re right to be proud of.

“The institute and the Ritz staff played a huge part in our five-year build to critical mass,” explained Snyder. “With the takeaway of the service models and the values card, our standards evolved into something much more like the Ritz. We have a morning huddle on a weekly basis in addition to our monthly corporation-wide meeting. The Ritz staff meets every day, but we think this schedule better fits our industry.”

The Ritz has unraveled the mysteries of pristine service and, for an outsider, such a culture can appear daunting, but for those who attend CUNA World Class Service Leadership Institute, at least a few standards take hold and can be put into practice in today’s credit unions.

“Every year, we go over things and see what new was brought out,” concluded Snyder. “It’s always been a part of us and always will be. It’s the best conference we’ve ever attended.”

Rick Olson is the President of Rick Olson Seminars and is the lead presenter for CUNA World Class Service Leadership Institute.

 For more information on BayPort Credit Union, visit: https://www.bayportcu.org/home.html.

Lee Silber, as the
King of Rock ‘n Roll,
Elvis Presley

Lee was kind enough to sit down with us and answer a few of the questions regarding his unconventional plans for this conference’s opening session.

You’ll be presenting on the lifestyle of rock stars and applying that lifestyle to credit union lending practices. Can you fill us in on the connection there?

You’d be surprised what you can learn from rock stars. Really. Okay, there is the “what NOT to do stuff” (bad habits) to not emulate, but there are some valuable lessons we can use in our daily lives to be better at what we do at home and on the job. Let me give you one example off the top of my head. Credit unions would not exist without their members, which are a lot like fans of a band. Those of us who have been members of a credit union for a long time (I’ve been a member since 1985) are passionate, devoted, and excited to be a part of something special. Banks are huge (like a super group) and almost everyone has heard of them, but credit unions are more like that band that is popular, but a little less mainstream–which is cool because not everyone is into them and that makes us feel a little smarter for being a fan. Maybe we can connect a little better because the band isn’t as popular and answers their own fan mail or plays smaller venues so we can get up close and personal. Our small, but awesome band (Read: credit union) hasn’t sold out, is in it for the long haul, and does it right–and does right by us. We’re loyal and love them for what they do . . . and do for us. See, the analogy works. We become “Dead Heads” (Grateful Dead followers) or “Parrot Heads” (fans of Jimmy Buffett) because we identify with what these acts stand for. Those of us who have a special place in our hearts for credit unions are “Member Heads” for a good reason; the people at our branch are like rocks stars to us when we make an important financial transaction.

In your opinion, what is the most valuable mindset to embrace when approaching a conference designed to open up new perspectives for attendees, like this year’s school?

I could try and equate the conference with a rock concert, but that would be a stretch. That’s not to say it won’t be awesome in its own way, but you won’t need to hold your lighter up to get a speaker to do an encore–but if you want to do that for me when I speak, I would be stoked. Okay, back to the question. In the music business there are several conferences (NAMM and South by Southwest to name two) where musicians meet to connect, learn, and find out what’s what in the industry. If there is any business model that has been turned upside down, it’s the music business. Everything from the way music is made and recorded (analog to digital) to how it is sold (albums in music stores to digital downloads on iTunes) and enjoyed (from cassettes played in cars to satellite radio and smart phones) has changed and the smart people are willing and able to change with it–and get ahead. If we look at the school as a chance to see what’s happening and how it can help us do what we do better, we will be much more engaged in what we will learn. There are plenty of parameters that control what can be done in the music business just like there are when writing loans, and music executives know they must find creative and innovative ways to work within the rules (if you are thinking about the payola scandal of the past and other record label tricks, it’s much less prevalent today) and adapt in order to get the music into the hands of those who want and need it. Sound familiar?

Followers and loyalty: definitely as important in credit unions as in the rock world. What advantages do you see in a credit union striving to build fandom rather than indifferent memberships?

A large and loyal following is the key to longevity in the music business. There are many bands that alienated their core fan base by trying to please the masses when their “members” were happy with what they had been doing previous to their attempts to be something they were not just because it was trending–and tempting. They lose the true fans of the band and after (maybe) a short bump in sales and popularity are dismayed when the fickle fans leave for the next big thing.

Fans for life are what credit unions want. A good example is a band like the Eagles where you will have three and four generations at a concert all singing along to the old songs. If we can create the kind of loyalty where credit union membership passes from generation to generation, we have the same kind of “sales” for our greatest hits album that bands do with theirs. Today, music is promoted primarily using social media which is, in essence, word-of-mouth marketing. When we do our jobs right and make sure our members’ expectations are exceeded, they will do the rest for us by posting positive comments on Facebook, in person and in passing, to other people.

Some might argue that rock stars live irresponsibly. Do you think there’s something to be said for calculated irresponsibility that a lending professional could embrace?

If rock stars were perfect, they would be far less interesting. Yes, it’s about the music, but we also like to see something and someone special out there doing things we can’t (or won’t because we’ll be arrested . . . or worse) so we live vicariously through our flawed heroes. At this point you are probably thinking, ‘There is no way he can tie this in to this conference and credit unions’–and you would be right . . . and wrong. We need to be shining examples of fiscal responsibility, be trustworthy, and know what we are talking about. Aha, here is the part you didn’t see coming. Nobody likes a know it all. Nobody is expecting a robot to help them with their loan. Nobody wants to be judged. If we can be empathetic, understanding, and non-judgmental by sharing our own personal experiences (good or bad) to help a member make the right decision, we should. If we leased when we should have bought a car and learned a valuable lesson from it, why not share it? If we bought a boat and realized “b-o-a-t” stands for “bring on another thousand” and maybe encouraged a member to make sure the boat is checked and double checked before buying it, what’s wrong with that? Be real so that members know you know what you are talking about because you have been in their shoes.

LEE SILBER is the best selling author of 19 books including “Rock To Riches”. He will be presenting the opening keynote about the connection between credit unions and rocks stars. www.leesilber.com