MADISON, Wis.–While credit unions are seeing growth in credit cards, most consumers continue to select a bank-issued credit card first when making a purchase, with bank-issued cards holding 75% of the market.
A new white paper from the Filene Research Institute explores how credit unions can steal away more of the market, particularly from within their memberships.
Filene said that, surprisingly, its research has found that using the “Wallet Allocation Rule,” it’s not value that drives usage, it’s the allure of rewards. Among the findings:
- Despite higher satisfaction levels with credit union cards, credit union members still spend more on bank-issued cards ($821) per month than credit union-issued cards ($732).
- Credit union members who also possess bank-issued cards use the banks’ cards because of the rewards. Only 10% of members sought out a credit union card for rewards, compared with 50% who looked at a bank card.
“Despite credit unions’ traditional strengths of low rates and fees, and overall consumer friendliness, only about half of existing members carry a credit union card,” the report states. “And those that do carry a credit union card tend to spend less on it than they do on bank cards. Translating satisfaction into growth will require reducing members’ perceived need to use the competition for rewards and prestige. That’s how to get deeper into their wallets.”
For info: www.filene.org