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Holiday Lessons About Value Of Gift Cards

During the current economic recession, recent studies reported that Americans spent less on gift cards this holiday season. Moreover with companies closing stores or going out of business altogether, there's a sense of "buyer beware" for gift card holders who usually opted for this popular gift.

Other reports say that Americans still prefer to receive or give cash during the holidays or at any other time. Along with national retailers reporting less credit card usage, the potential loss or significant decrease of these income channels can really hurt credit unions.

But, credit unions can also use this as an opportunity to earn back income by educating their members about prepaid and reloadable cards, one of the fastest-growing payment segments that also offer a safer, more flexible alternative to giving greenbacks.

The Downside

Given employment and economic uncertainties and consumers finding themselves on strict budgets, everyone is wise to look for ways to save money. Using cash more and credit cards less can be a good budgeting tool for members.

But, cash can also be easily lost or stolen, especially for those traveling during the holidays. Cash purchases also don't provide a paper trail, which can be very important for the coming holiday season of high returns and exchanges. The biggest downside to carrying large amounts of cash is that it is unsafe, making you a prime target for crime.

The Upside

Credit unions can earn fees with prepaid and reloadable cards for travelers, youngsters and gift givers. Prepaid and reloadable cards can be used anywhere MasterCard or Visa debit cards are accepted; therefore, unlike a gift card, prepaid cards don't limit you as to where you can spend it.

Prepaid cards through a credit union that belongs to a surcharge-free network also means your members can get cash at an ATM-surcharge-free!

The more cards a credit union offers, the more opportunities exist for your members to turn to you instead of a bank. You strengthen member loyalty, decrease attrition and improve service Reloadable prepaid cards are great for people who don't like to carry cash and for members on a budget because users can only spend the amount loaded on the card. Best of all reloadable cards mean repeat visits to your credit union.

You can also attract new members by offering reloadable prepaid cards to those who may not qualify or want traditional credit union services. Over time, you may transition this target group to other standard credit union products.

These are turbulent economic times indeed, but by finding new and creative spending habits, the holidays need not pose a threat to credit unions or credit union members.

Caroline Lane is SVP, Business Development & Marketing with CO-OP Financial Services in Ontario, Calif. For info: www.co-opfs.com.

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