Kent Dicken
Golden opportunity on plastic - November 23, 2009

platterThe big credit card issuers are handing credit unions a golden opportunity on little plastic platters. They’re furiously raising rates and fees and changing rules in a desperate attempt to maximize profits before the CARD act takes effect in February. Naturally, it’s all just in time for the holidays.

The media certainly has noticed. Newsweek has been running articles about a recent Pew Trusts report on credit cards. The Today Show ran a segment stating that  BofA is going to charge a new annual fee ($29-$99) to their customers who pay off their balances every month, that Citi is going to charge a new fee ($20-$39) on customers who do not carry a high enough balance ($2500) every month, and others are adding fees for cards that are not used. The show even recommended that consumers go to their credit unions for a new card.

The credit union advantage in this area is huge, and the high-balance holiday and post-holiday periods are the perfect time to pursue consolidation via balance transfers. This advantage is plenty strong enough to attract new members as well.
Credit cards and credit card bills will be top of mind throughout December 2009 and January 2010, and credit cards will be in the news in February 2010 as the CARD Act takes effect and the credit card issuers squeeze consumers even harder to make up lost profits.

Here are a few key findings from the 10/09 Pew Trusts report, based on their research on nearly 400 credit cards issued by the largest 12 banks and largest 12 credit unions:

  • One hundred percent of credit cards from the largest 12 banks used practices deemed “unfair or deceptive” under Federal Reserve guidelines.
  • 99.7 percent of bank cards allowed issuers to increase interest rates on outstanding balances
  • 95 percent of bank cards permitted issuers to apply payments in a way the Federal Reserve found likely to cause substantial financial injury to consumers
  • 90 percent of bank cards had penalty rate hikes with the vast majority imposed by “hair triggers” of one or two late payments in a year.

Now is the time to make sure your members and potential members know that your card is different.


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  1. Heather Snyder — December 2, 2009 @ 4:05 pm

    Thanks for the very timely information. It’s incredible ammunition for the credit union movement! The Pew report has a wonderful chart comparing the cards offered by banks vs. credit unions that I found especially useful.

  2. Kent Dicken — December 2, 2009 @ 4:24 pm

    Glad to help, Heather. Interesting that banks now claim to be making changes to their cards, according to the NYTimes (http://www.nytimes.com/2009/11/10/your-money/credit-and-debit-cards/10rates.html?_r=1):

    “American Express and Discover Financial, for instance, have vowed to stop charging fees when cardholders exceed their credit limits. JPMorgan has started a program that can help consumers categorize their spending and pay down their balances more quickly. And Bank of America is promoting a line of consumer products so simple that the terms and conditions fit on one page. The BankAmericard Basic Visa, for instance, has no rewards and a single interest rate.”

    Think they are getting some heat from consumers?

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