NASHVILLE-The recession has turned many more CU credit card holders into transactors-those who pay off balances monthly-which is making rewards more important.

That is the opinion of Kevin O'Donnell, VP of credit insurance for the Discover Network, who during NAFCU's Annual Conference shared results of a recent Discover US Spending Monitor survey as well as suggestions about how CUs should best market cards to members.

"It was very clear in our study that more credit union members are becoming like the average consumer today in the use of credit cards-not carrying balances," explained O'Donnell, who noted that previously CU members tended to be much higher revolvers than bank card holders. "Credit union members are becoming more like the rest of the pack."

The shift, according to O'Donnell, places a greater emphasis on offering rewards, since transactors are high rewards users. The study also indicated that consumers, particularly CU members, are showing improvement in their outlook toward the economy and personal finances, and therefore have a greater willingness to spend now.

"Build on that growing consumer optimism with targeted ads and promotions," shared O'Donnell.

However, there is growing competition for rewards, noted O'Donnell, who insisted that merchant-funded rewards are a good way for credit unions to differentiate in the rewards space. "The big card issuers can't do merchant-funded, it is difficult for them. You can do it. You have a connection with the local community and you are nimble," O'Donnell told meeting attendees.

Discover's study also indicated a high propensity for consumers to increase spending on discretionary entertainment. O'Donnell recommended partnering with local restaurants, movie theaters and ice cream stands to offer member discounts from these types of merchants.

Where Cash Is King

The study also indicated that consumers use rewards cards most to earn more rewards points; cash back was the No. 1 reward while discounts and free products were second.

O'Donnell emphasized that generational marketing can also keep the credit union's card top of wallet, whether it's debit, credit or prepaid. For the Swing/World War II generation, stress high service and to reward loyalty, advised O'Donnell. Boomer ads should focus on retirement and emphasize savings and lending. Gen X wants the CU to be "authentic" and technology is critical. For Gen Y it's about technology, value and personal loans.

"You must change your marketing strategy based on the generation you are targeting. Communicating effectively between generations is essential when doing business today. Create a marketing plan that speaks to each generation in the way they will understand. And use technology for any age group," concluded O'Donnell, who said a recent consumer survey showed that 63% of those 65 years of age and older use social media.

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