Tuesday, December 19, 2006

I Just Can’t Do It

Last week, the business development consultant from our credit card processing company paid us our annual visit. Every year, they come out and give us suggestions for growing our credit card portfolio.

The fellow was very nice. I feel a bit bad for him. He and I disagreed on a few points and I can be, well, passionate about some topics.

The two topics on which we went toe to toe were Platinum and Points. I understand his position, I do. When you look at our portfolio, our Platinum card and our Journey card (the card with travel points) are doing much better than our Classic, our Credit Builder and our Cascade card. There are several examples of credit unions that converted all of their cards to Platinum and saw an increase in usage. There are several credit unions that put point programs on all of their cards, including debit and saw an increase in usage. These are two things that are hard to argue with. But let me try…

Platinum for all –

So awhile back, VISA lifted all restrictions on Platinum. Now, any card issuer can give any consumer a Platinum card (I didn’t just tell the world there is no Santa, did I?) So we could, technically, give the 18 year old off the street, or the member with terrible credit a Platinum card.

Right now, the Platinum card itself has no added benefit except prestige (this – please note – it not the case with Verity’s card. I’ll explain later). I asked the consultant if anyone in the industry was worried that if we give everyone Platinum, then it would no longer be prestigious. He said then we give the Platinum people Titanium. Hmmm…

I tried to picture myself sending out 11,000 mailing pieces that say, “since you are such a great credit card holder, we are changing your credit card from orange to Platinum.” It just doesn’t sit right with me.

Maybe I am old fashion, but I like the fact that our Platinum card is more difficult to qualify for. You have to have a better credit history, a good income and to have been wise with your finances. I also like the fact that we aren’t just giving prestige with our Platinum card. It comes with lower rates and higher limits. (which one may argue is why it is outperforming our other cards – wait, I did argue that.)

I asked the consultant if they had used the data gathered from other credit unions in a regression analysis – you know, to see if it was actually the color of the card that spiked usage or was it the rate, the additional marketing or some other factor. They had not.

I thought about what would happen if I sent all of our Credit Builder folks this “You now have a Platinum card” mailing. I don’t profess to know a lot about Gen Y, but it seems like their reaction to a communication like that would be apathetic at best and annoyed at worst.

I don’t know. Changing the color of our cards to a more prestigious color just doesn’t seem like the best use of the credit union’s money. So for right now, I am going to leave them like they are.

If you want a Platinum card (and I would highly recommend it, because, by the way, it comes with a Passport logo which gets you two for one dinners at hundreds of upscale restaurants in our area), then apply for the real Platinum. You’ll get a better rate, a higher limit, and what the heck, some honest bragging rights.

Tune in tomorrow when I take on Points…

2 Comments:

Anonymous Jesse Robbins said...

As we organize our own Credit Union we've begun talking about our lending philosophy, and I used this post as a primary example of "responsible lending" applied.

I really appreciate everything you are doing, both as a Credit Union organizer AND as a Verity member.

Keep up the outstanding work!

Sincerely,
Jesse Robbins

Thu Jan 04, 06:32:00 PM PST  
Blogger shari storm said...

Jesse - thanks for the note and hey - best of luck with Black Rock Federal Credit Union!

-shari storm

Fri Jan 05, 04:48:00 AM PST  

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