Saying "no" to a member goes against the very nature of Community 1st Credit Union — and many other cooperatives like it. Yet, in some cases, the potential risk of saying "yes" stands in the way of what could otherwise become a long-term and mutually beneficial relationship. According to Marian Holmes, Community 1st CU's director of branch operations, "Although it may be prudent to turn down an applicant for a credit card, it never feels good."

To empower its employees to say "yes" more often, the $500 million credit union added a secured credit card product. The card, which comes with a low annual fee, allows cardmembers to secure funds with their own cash deposits.

Even with an annual fee, a secured credit card typically does not generate a great deal of revenue. Low credit lines, little spend and minor revolving balances make for a fairly small profit margin. But profit is not the strategic objective — it's all about developing the relationship, which, over time, can become profitable if handled properly.

The goal is to help members build or rebuild credit, and eventually, work their way into a traditional credit card, perhaps even a car loan or a home mortgage. Community 1st's secured cardmembers can earn their way into a traditional card in as little as 12 to 18 months — shorter for members who make special requests for review and demonstrate an excellent repayment history and improved credit picture.

Certainly, helping community members build and maintain credit is a core objective for credit unions. So, too, is earning the business and trust of underserved consumers. The underserved market presents a tremendous growth opportunity for the movement. In the U.S., there are roughly 70 million low- and middle-income consumers who have some type of relationship with a traditional financial institution yet still turn to alternative providers for things like check cashing and payday loans. In its most recent report, the Center for Financial Services Innovation found the financially underserved market generated $103 billion in revenue. What's more, many of these consumers have already exhibited financial behaviors that resemble prime-credit audiences, making them ideal credit union members.

Identifying those existing members and prospects who fall into this underserved segment is a first step toward outlining a plan to serve them. From there, a CU can map out a strategy for evolving the product mix in a way most likely to trigger a response from their unique underserved segments. In addition to secured credit cards, other credit unions have reached this market through adapted lending programs. In Alabama, Tuscaloosa CU launched the Square One Loan for members who were unbanked, or underbanked or needed to rebuild credit. Not only does this help members think differently about money; it also sets the stage for long-term, engaged membership.

Finding success with a credit-builder product like a secured card is far from a breeze. Issuers still must take the necessary steps to comply with several regulations, including ability to repay rules. Cards and marketing teams will need to collaborate closely to execute sales, communication and cardmember education plans. There must also be a good program in place for graduating cardmembers into appropriate products as their improving credit profiles warrant. But it can be well worth it: in the first three months the Iowa credit union offered its secured card, more than 60 Community 1st cardmembers have been approved and are working their way toward prime-credit products.

Millions of consumers are denied credit cards each year. Finding creative ways to approve more members will avoid that discomfort while helping the credit union earn revenue, grow membership and most importantly, live out its mission.

Corey Skadburg is manager of credit, compliance and risk for top-70 agent issuer TMG Financial Services. He can be reached at For more information about Community 1st Credit Union, visit