ALL Credit Union Credit Card Programs Are NOT Created Equal

Happy Labor Day!


As you begin your quest for a BETTER credit card than a bank (ie a Credit Union Credit Card), you must be aware there is a small percentage of credit unions whose programs are actually "issued" by banks.


Of the 7,900 credit unions in the USA, roughly 50% issue their own card programs. There remain about 10% of credit unions whose card programs are owned by our "friendly bankers".


Your best bet is to get a credit card from a credit union that owns their own program.


Some background: Back in 2002, there was a surge of credit unions "selling" their portfolios. That is about the same time I started Card Analysis Solutions for the benefit of credit unions and to educate them how to manage their card programs more effectively and ward off any more sales. The banks (MBNA, Elan, Infibank and others) realized there was a great "untapped" potential within the credit union market and they aggressively approached credit unions with very enticing premiums.


It is no secret within the credit union industry, that I am strongly opposed to credit unions selling their credit card portfolios to banks. But in all fairness, some credit unions needed capital to either build new branches or utilize the funds for other purposes.


The good news is some of the credit unions that had previously sold, are now coming back into the card issuing business based on feedback from their members. I still hold true that the credit union members were being "sold" - not just the credit card portfolio.


So how do you know if your credit union is operating their card program via a BANK?

1. Call them and ask them outright


2. Go to the credit card section of your credit union website


3. Go through the motion of "applying" for a credit card online


4. Be aware of where the link takes you...ie a third party website


5. Review the "Terms & Conditions" of the Credit Card Application


6. Scroll towards the bottom and search for terminology such as Infibank, Elan, FIA Card Services, etc.


7. Reward programs named "Worldpoints" (MBNA/FIA)

Typically, these credit union card programs will look JUST like a bank card (since they are issued by a bank):

• Variable rates


• Separate and often HIGHER cash advance/balance transfer APRs


• Cash advance fees ranging from 3%-4%


• Balance transfer fees ranging from 3%-4%


• Late and Overlimit fees in the $35-$39 range


• Minimum Finance Charge Fees


• Shortened grace periods


• APR Penalty rates for paying late

So do your homework. Again, the MAJORITY of credit unions have FAIR and ETHICAL credit card programs, but do not assume all Credit Union Card Programs are created equal. You may need to shop around.


As a reminder, this is what is "out there" with many credit unions:

• Fixed Rates ranging from as low as 7.95% up to 17.95% based on FICO score (Federally chartered Credit Unions are prohibited from charging more than 18%)


• $20-$25 Late Fees with a 5 day payment grace period (not hours after payment is due)


• No Penalty APRs


• No Separate Cash Advance/Balance Transfer APRs


• No Cash Advance or Balance Transfer Fees (why charge the member to bring a balance over?)


• No Annual Fees


• Generous Reward Programs (if you're into that: points to be redeemed on ANY airline with no blackout dates)

Until next time!


Ondine

How Can Credit Unions Offer Better Card Programs Than Banks?

Well first of all, for the novices:

1) Credit Unions are non-profit and do NOT have stockholders as banks do. Credit Unions have "members" (you!), so any profits are returned to the members in forms of reduced loan rates and increased savings rates. Banks have stockholders to answer to-credit unions have their members to answer to (You!). And we all know what a FINE job the banks have been doing the past several years!.

2) Credit Unions do need to generate a certain amount of income to cover their expenses for offering a card program: Card Processing Costs, Charge Offs/Loan Losses, Fraud, Marketing, Insurance, Salaries, etc. So in all honesty, they do need to make some money.

3) Credit Unions do not saturate the market with extraordinary marketing expenses. Do you remember the time when pre-approval offers where showing up in droves in mail boxes? Their marketing costs are much lower, as they mostly have a loyal group of members. Credit Unions are not interested in being the BIGGEST, but are interested in being the BEST! The marketing expenses are a FRACTION of what banks have.

Typcically the revenue generated by a credit union card program is as follows:

• 70% Finance Charge Income


• 15% Interchange Fee Income


• 15% Fee Income

Whereas, the typical credit card revenue for a bank card program:

• 55% Finance Charge Income


• 10% Interchange


• 35% Fee Income

See the difference here? Banks receive a GREAT DEAL of their income from FEES, which is why so many of you are seeing increases in your APR's and other fees the past several months, BEFORE the Credit Card Act takes effect in Feb 2009. The fact that the Overlimit Fee is going away with some issuers, is a bit misleading...as the banks will get you in other ways: higher APRS and higher fees are becoming rampant!

Stay tuned....because NOT ALL CREDIT UNION Card Programs are Created Equal! Next Post Coming Soon!!

Suze Orman Shares Blog

Good morning, everyone!

After just creating this NEW BLOG, Miss Suze Orman shared this site with her 600,000+ tweeters this morning. We have been tweeting the past several months and she has really been supporting the credit union movement.

This was just created last night, so be on the watch for A LOT more information.

If anyone needs help in finding a credit union with GOOD card programs and how to tell the difference, either tweet me @CardAnalysis or post on the blog.

Thanks much!

CONSUMERS: What Can You Expect From A Credit Union Credit Card?

First of all, let's get the terminology straight...

It is NOT "Credit Card Banks" or "Credit Card Companies"....the correct term is "CREDIT CARD ISSUER". The issuer may be in form of a bank, credit union, investment firm, etc.

Visa and MasterCard are NOT issuers: Visa and MasterCard are the BRAND. The issuer or merchant "contract" with Visa and MasterCard to utilize the brand name in promoting their credit card.

Visa and MasterCard have nothing to do with setting of rates, fees or features of a card program. These are completely up to the issuers.

Secondly, as a consumer, what can you expect from most credit union credit cards as compared to the mega banks?

• Same VISA or MasterCard brand
• Much lower rates (fixed in most cases)
• No Annual Fees
• Late Fees averaging $20-$25 with a 5 day grace period (as opposed to $39 bank fees and NO grace period)
• Reward/Point programs that rival any frequent flier program with the added benefit of use on ANY airline with NO blackout dates
• No Cash Advance or Balance Transfer Fees
• No Penalty Fees
• Improved Customer Service: speaking to YOUR credit union after all!

KEY POINT: MOST Credit Unions have the features listed above....there are some mismanaged and poorly structured credit card programs: so do your homework!

Welcome to My Blog!

Hi everyone-

Welcome to the Card Analysis Solutions blog! This blog was developed for the benefit of credit unions and their members (and potential members) to educate you about the inner workings of "The World of Credit Cards" not often seen by the general public.

How can credit unions offer more consumer friendly credit cards than banks? Are all credit union card programs created equal (No!)? Is there a fundamental difference between a credit card from a BANK versus a CREDIT UNION (No!).

I've worked with our nation's credit unions of all sizes, from the $6 billion asset credit unions to the $25 million asset neigborhood credit union. The credit unions which utilize Card Analysis Solutions, all have one goal: to offer their members a fair and equitable product while keeping expenses low for the credit union! But even those credit unions which have not used CAS, may find posts interesting. What is the end result? A win-win for credit unions and the members!

Check back often for updates and feel free to ask questions via Twitter link on the right!