Credit cards are often the best product in your loan portfolio for generating income. Competing in the payments space requires constant management of the program. Cards should be a part of your strategic plan and key indicators regularly analyzed. From those indicators, portfolio growth strategies can be implemented.
5 Ways to Grow Your Credit Card Portfolio
1. Provide Multiple Card Types
According to Motley Fool, almost 60% of Americans carry a cash back card and 30% carry a low interest card . Offering multiple products increases the likelihood that your card will be top of wallet.
Data Driven Enhancement: Offering multiple cards is good. Be great by understanding which borrowers are most likely interested in a cash back or rewards card, and which are most likely to be interested in a low rate card.
2. Offer a Balance Transfer Program
Having a balance transfer program with any new card may incentivize a member to move to your card. Make sure the balance transfer rate discount is low enough and long enough for members to be encouraged to open a card with your credit union.
Data Driven Enhancement: If there’s no balance on cards with other financial institutions, there’s nothing to transfer. Understanding how your borrowers use credit will allow you to focus on high-probability targets and increase your marketing ROI.
3. Credit Limit Increases
Credit Line management is an instrumental tool to keep your card top of wallet. The increased spending power you provide your members will result in increased card usage, increasing interest and fee income and making your program more profitable.
Data Driven Enhancement: Ability to pay requirements make data a must in offering credit line increases. Improve your success by understanding precisely what credit limit you must offer to maximize your likelihood of moving to the top of your borrower’s wallet.
4. Adjust Lending Policies
Delinquency in your card portfolio can be too low due to strict lending policies and that could indicate you are keeping cards out of the hands of creditworthy members. The interest income generated in a card portfolio can support higher levels of delinquency and charge-offs, providing returns that are better than most other loan products.
Data Driven Enhancement: Quantify your profitability by segmenting your cards, rates and charge offs at the loan level. Use this information to make data-driven decisions that maximize the aggregate value you’re providing your membership.
5. Consistently Marketing your Card Program
Credit card portfolios turnover. Your members are looking for the next best thing. Think of your marketing as “How many licks does it take to get to the Tootsie Roll center of a Tootsie Pop?” Marketing your programs consistently throughout the year will keep your cards top of mind for your members.
Data Driven Enhancement: Scientific findings start with a question and hypothesis that is tested. That test generates data which is analyzed resulting in scientific conclusions. Data science is no different. Create data driven marketing programs and evaluate the results of those programs. Use your results to improve your next initiatives and continue this cycle in perpetuity.
Growing your credit card portfolio could be as easy as looking inward. Research says you’re much more likely to sell to an existing customer than to a new prospect. The Federal Reserve Bank of Atlanta data from August 2019 showed that 75.5% of consumers had at least one credit card. Do you know what percentage of your members carry your card?
2020 Analytics Credit Card Acquisition Program can help you to increase that percentage. The program assists you with performing pre-qualifications to acquire new credit cards for your portfolio. We can help you gain new accounts by screening your entire membership to determine who is likely to need or want a new card and then we help you pre-qualify those members. We take all the analytical work off your hands and make it as easy as possible for you to grow this important portfolio.
Contact 2020 Analytics to discuss credit card account acquisition or credit card limit increase programs today.
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