Velera: Reigniting Your Credit Card Portfolio Strategy

How many members actively use your credit card products? Who is using your card and why? If your credit card program is based on assumptions from a decade ago - or even a few years ago - it may be time to reassess. In this blog post, Advisors Plus Senior Strategic Consultant Paige Watkins*, offers some questions to help you understand where you stand in terms of evolving cardholder needs and market trends - and reignite your program for growth.

Credit cards are a key driver of revenue, as well as a fundamental connection between credit unions and their members. As credit unions build and execute on strategies for growth, credit cards are a critical component. However, if your product suite is based on assumptions from a decade ago - or even a few years ago - it may be time to assess your current program to create a strategic path for growth. Here are some questions to help you reignite your program:

How many members actively use your credit card products?

If a significant number of members are using external credit cards instead of your credit union's offering, this can indicate potential gaps in innovation, competitiveness or marketing. These gaps represent opportunities to create a stronger program and a better experience for your members.

Who is using your card and why?

Tracking key performance indicators specific to credit cards ensures visibility into the health of the portfolio. Important metrics include:

• Active card penetration rates
• New account volume and attrition rates
• Average credit limits, average balances and utilization rates
• Interest income
• Interchange rates and interchange income
• Delinquency and charge-off rates

Is your credit union keeping pace with evolving cardholder needs and market trends?

You know your members, and you offer products and services that appeal to their unique needs. We are now operating at a time when innovation like seamless card management is a baseline consumer expectation. Take a deeper dive into where your program stands in terms of innovation:

• How does your digital experience compare to that of other credit unions and competitors?
• Have you integrated self-service tools that encourage member engagement?
• Is your credit card application experience sophisticated and efficient?

Members increasingly expect a highly efficient application process, instant digital issuance, real-time spending insights, mobile card controls and seamless integration with digital wallets. Credit unions can learn from their neobank and megabank competitors and incorporate what works for their own membership. Investing in these areas improves the user experience and strengthens cardholder retention.

Is your credit union competitive in terms of rewards, rates, fees and other perks?

Rewards and card construct are highly influential in keeping cards top of wallet. According to Velera's Eye on Payments 2025, seven in ten credit union members consider rewards an important influence on both debit (70%) and credit (72%) card usage. Cash back is both the most commonly earned and most desired reward - 64% of members say they are interested in it - followed by points redeemable for online shopping (36%) and travel rewards (25%). And beyond incentives, aesthetics matter: 54% of members say card design impacts which card they use, up significantly from 39% in 2023.

Neobanks, digital banks and megabanks recognize the importance of Gen Z and have built strategies to win their business. They offer perks such as early paycheck access, sign-up bonuses, $200 overdraft coverage, high-yield savings and fee-free banking (no monthly fees, overdraft charges or non-sufficient funds [NSF] fees). American Express and Discover turn everyday spending into rewards opportunities with a digital-first experience. The largest players, such as Chase and Bank of America, are shifting from traditional models to relationship-driven, wellness-focused financial design.

Is your marketing tailored to your members?

When it comes to marketing credit cards, a one-size-fits-all approach is no longer enough. Credit unions can benefit from their deep relationships with members, as well as access to valuable transaction data that can be leveraged for hyper-personalized marketing.

Marketing that takes advantage of this information results in stronger response and interaction rates, increased card usage and spend, and better retention and loyalty. Personalization is the future of marketing - and credit unions that embrace data-driven personalization will see even stronger member relationships and greater payments portfolio growth.

And finally, how profitable is your credit card portfolio?

Your credit card program builds an important connection between your financial institution and your membership. As you make plans to adjust credit card marketing, digital capabilities, products, etc., also consider overall portfolio profitability. Taking profitability into account will help your credit union match up shorter-term tactics to long-term strategy, ultimately leading to calculated sustainable viability of your credit card program.

As the payments landscape continues to evolve, it's more important than ever to ensure your card program incorporates a forward-thinking approach. It's a highly competitive market, but credit unions have a unique advantage of a loyal and engaged following. Unlike banks and fintechs that invest heavily in customer acquisition, credit unions already have a captive and loyal audience. The key is to question everything - so you can capitalize on this advantage and strengthen your position in the payments landscape, deliver exceptional member experiences through innovation and competitiveness and drive sustainable portfolio growth.

If you would like to discuss further with our experts, please contact Sara Taddeo at [email protected] to arrange a meeting.

About Paige Watkins: As a Senior Consultant with Advisors Plus, Paige helps credit unions optimize their payments strategy and operations to best serve their needs and the needs of their membership. She has spent her career in the credit union industry and has deep insights into the strategies behind effective and profitable credit card portfolios that drive performance goals. Paige holds a Master of Business Administration from the State University of New York at Oswego, and a Doctorate of Education in Executive Leadership from St. John Fisher University in Rochester, New York.