Thanks to the CARD Act, credit unions have brought their credit card portfolios into the forefront of their strategic priorities. This is a good thing for credit unions and their members. In the Nov. 30 article "Card Act Expected to Make It Harder to Sell Portfolios," it was stated that the new legislation would make it "more difficult and less rewarding for credit unions to sell their card portfolios" and that there are "no good buyers left."
As an agent issuer, TMG Financial Services has worked with credit unions continue to determine the best way to serve their members with a credit card product. This isn't a new concern - it has been the single driving factor in portfolio sales since 2004.
The CARD Act has created a new level of uncertainty. How credit unions deal with that uncertainty will impact the success of their credit card portfolios. Selling a portfolio is a strategic decision that revolves around determining core competencies, as well as the ability to take advantage of opportunities that present themselves. For some credit unions, investing additional resources into managing their card portfolio is the way to go. For others, selling the portfolio to a valued partner is the best solution to providing a product that most benefits the membership.
Despite what the article suggests, credit unions continue to have options - and good ones at that. As the only credit union-owned issuer actively participating in the portfolio purchasing market today, we offer our partners a collaborative, competitive and member-friendly program that they can promote with confidence.
Furthermore, critics of portfolio sales have suggested that purchasing portfolios at a discount is the new norm. The truth is that from 2004-2007 the portfolio purchase market was not dissimilar to the housing market where buyers saw wide fluctuations in pricing. It's no doubt that those prices have now returned to more sustainable levels that are more in line with the current underlying value of the asset. From the beginning, TMG Financial Services' business model has been one that works with credit unions to provide a reasonable and competitive premium as well as profitable on-going revenue shares that solidify our joint goal of growing a credit union's credit card portfolio.
The CARD Act is prompting changes and uncertainty for everyone. Now is the time to strategically consider the best options for your credit card portfolio. From our standpoint, our customers remain proud to offer our product and know that it is a great fit for their future - and that's what continues to make selling a viable option.
Jeff Russell, President & CEO
TMG Financial Services, Des Moines, Iowa
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