WICHITA, Kan.-TECU here has seen an uptick in credit card transactions, outstanding balances and the number of cardholders since debuting its "Care Card," which allows members to donate the value of their card rewards to local nonprofits.
The card, explained Charles Bullock, CEO at the 8,200-member, $70 million credit union, debuted in 2012 as part of a rebranding at TECU. Prior to introducing the Care Card, said Bullock, TECU offered a "plain Jane, vanilla" credit card, with a set rate of 16% and outstanding balances that had plateaued at about $1.2 million. "I would be hesitant to call the program dormant, but it just wasn't growing," said Bullock.
Staff Provided Idea
TECU works with Tampa, Fla.-based Card Services for Credit Unions (CSCU) on its cards program, and Bullock said that CSCU had long encouraged TECU to beef up its credit card offering with some kind of rewards program. Staff members came up with the idea to allow members the option of passing their rewards on to a charity of their choice. In addition to that feature, TECU also lowered its APR on the card and introduced two different tiers priced by risk at 9.9% and 12.9%, respectively.
One goal of the rebrand and the new card, said Bullock, was "to try to achieve what a lot of credit unions have attempted to do, which is reach a younger generation. ... We found that so many young professionals are pretty tuned in to giving back, so we felt like this might be a unique opportunity for us to revamp this credit card program completely."
Cardholders can go online and set up their account to start earning rewards, explained Bullock. "That's nothing new. What's different is that you are able to go in and assign the value of your rewards to the charity of your choice as (the rewards) build up over time." Once rewards have been accumulated, members have the choice of taking them for themselves or donating them.
The value of those rewards is determined by CSCU's "Scorecard" program, and Bullock said it takes $3,500 in transactions to equal $25 in rewards.
The program is paying off. Year-over-year, the number of new cardholders has doubled, with more than 1,100 members now carrying the Care Card. As of June 30, outstanding balances are at $1.65 million, an increase of 16% since August of 2012. Net sales volume has increased by 17.7%. Total revenue has increased by 22% since the end of 2012, though Bullock noted that "we're still a few thousand dollars per month off of total revenue compared to where we were last September when we cut the rate" from a flat 16% to a blended 11.5%. He estimated that the CU will make up that difference by year-end.
"It's baby steps," he said. "I'll be honest, while we don't have this etched in stone anywhere, I'd like to see us at $2 million (in outstanding balances) by the end of the year." Bullock added that the improving economy and upcoming holiday season should help the CU reach that number.
Bullock said that TECU does not yet know how much has been donated to charity, and said it will take at least 18-24 months before that is determined.
How Card Is Promoted
TECU is promoting the card through its website, direct mail and in branches, but Bullock said that the card also "affords us some unique quasi-SEG opportunities," because many local non-profits require board members to contribute a certain amount in order to serve on the board.
"The way I look at this is what a great opportunity to reach out to some of our local non-profits," said Bullock, adding that TECU has already reached out to the local Habitat for Humanity chapter about adopting the card.