{"id":3059,"date":"2020-11-17T12:59:21","date_gmt":"2020-11-17T17:59:21","guid":{"rendered":"http:\/\/www.ncultheaffiliate.com\/?p=3059"},"modified":"2020-11-20T16:13:07","modified_gmt":"2020-11-20T21:13:07","slug":"in-turbulent-times-like-these-credit-provides-the-financial-support-members-need","status":"publish","type":"post","link":"https:\/\/www.ncultheaffiliate.com\/?p=3059","title":{"rendered":"In turbulent times like these, credit provides the financial support members need"},"content":{"rendered":"

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IN TURBULENT TIMES LIKE THESE, CREDIT PROVIDES THE FINANCIAL SUPPORT MEMBERS NEED
<\/b><\/span>By Beth Phillips, Director, Strategic Growth, CO-OP Financial Services<\/b><\/span><\/p>\n

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This article previously appeared on\u00a0<\/i>CUInsight.com<\/i><\/span><\/a><\/span><\/p>\n

It\u2019s hard to believe that we\u2019re almost eight months into the COVID-19 pandemic. The last several months have given us a roller coaster of an economy that has left many consumers financially-vulnerable and uncertain about their long-term financial outlook. Looking at the data from thousands of credit unions within the CO-OP Credit and Debit portfolio, we\u2019ve seen member spending levels climb back over the last few weeks; however, with many Americans still unemployed and the next government stimulus package potentially in limbo, we can still expect some bumps in the road to recovery ahead.<\/span><\/p>\n

If history is any indicator of what we can expect in the upcoming months, then we\u2019ll likely see a shift to credit spending among credit union members. A review of September payment transaction data across CO-OP\u2019s credit and debit portfolios indeed shows that credit purchase activity is picking up after months of depressed volume, while debit spending is beginning to fade. Credit transaction counts and amounts increased for the month by 16% and 17%, respectively, compared with September 2019. This tells us that as more consumers suffer from reduced income and access to cash in their checking accounts, they are relying more on credit for daily expenses.<\/span><\/p>\n

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History also tells us that credit unions are well-equipped to respond to economic turbulence and the resulting shift towards credit. This is because consumers tend to flock towards the lower interest rate credit cards and better terms that credit unions can offer. According to\u00a0TRK Advisors<\/span><\/a>, in the months following the Great Recession of 2008-2009 card balances at traditional banks plummeted while credit unions actually saw an increase in card balances.<\/span><\/p>\n

Interestingly, credit unions have also fared better historically than large issuers in managing credit portfolio risk. During the Great Recession, bank charge-offs hit a high of over 9%, whereas credit union charge-offs maxed out at slightly above 4%,\u00a0TRK Advisors<\/span><\/a>\u00a0found.<\/span><\/p>\n

All of this tells us that there are distinct economic advantages to growing your credit portfolio. But going beyond that, credit is more important than ever because it provides the financial support your members need. While large issuers and credit card providers\u00a0continue to slash credit lines<\/span><\/a>, credit unions can be the compassionate payments alternative (as they always have been). In the early months of the pandemic, this meant offering\u00a0skip-a-payment and interest relief programs to members<\/span><\/a>, which we saw many of our credit unions do. Now, credit unions should focus on capturing top-of-wallet opportunities within their cardholder base and supplementing their card programs with tools like\u00a0card controls and alerts<\/span><\/a>\u00a0that help members track and better manage their spend.\u00a0<\/span><\/p>\n

\u00a0<\/span>Credit Card Top-of-Wallet Opportunities Ahead of the Holiday Shopping Season<\/b><\/span><\/p>\n

With digital expected to dominate a much larger portion of holiday shopping this year, now is the time to start pushing to get your cards into your members\u2019 digital wallets. Consider offering special incentives on high-volume online shopping categories. Within CO-OP\u2019s credit portfolio, we have seen strong year-over-year growth across the following categories:\u00a0<\/span><\/p>\n