How to stand out in a sea of celebrity-plagued credit card commercials.

Credit card rewards are so popular today that it’s actually quite difficult to find a credit card without some aspect of a rewards program. And when it comes to competing with large credit card companies, well, they’ve definitely set the bar high.

On one side of the spectrum, you have Jennifer Garner reminding you that you deserve to be trotting the globe and visiting exotic places. On the other side, you have Samuel L. Jackson telling you to get this credit card or else! And right in the middle, you have Jimmy Fallon, using his humor to make cash-back rewards all seem like a fun game to play.

But the truth is credit cards are not a game. You know this. And the majority of your members know this…but, much like a casino, the flashy lights and thought of jetting off to Paris can be pretty tempting.



So how does your credit union compete against these credit card behemoths? Maybe you’ve heard that you should boost your rewards program and make it more competitive and enticing to members. That’s an option, but going head-to-head with these credit card kingpins is a battle you’ll likely lose.


Going Head-to-Head

The greatest obstacle going head on with big credit card companies is financial stability. Your institution is not set up to assume the same levels of risk; especially in the unsecured debt arena.

These large companies can offset large portions of their losses with the extremely high-interest rates they charge – often up to 29% APR for their best rewards cards. NCUA sets the ceiling for credit union loan rates at 18%.

If you’re offering lower rates, usually no annual fees, and matching their rewards programs – you’re likely setting your credit union up for a financial disaster. Even just upping your rewards program slightly can cause a drastic decrease in your margins – giving you less wiggle room should the economy begin to backtrack again.

Instead, ditch the head-to-head tactics and play to your advantages.


Go Where They Won’t

It’s no secret the greatest advantage credit unions have is price. Because you’re not-for-profit, you don’t have to impress investors, your tax liability is non-existent and your levels of risk are lower, requiring less to be set aside for losses.

You’re already using price to your advantage by offering lower rates and lower/eliminated fees. By focusing on PRICE, you’re entering into an arena the big credit card companies will not venture. They’d much rather lure people in with rewards and charge high-interest rates.


Step #1 :: Get Visual

Most people are visual learners. Use this to your advantage and incorporate examples, charts and graphics illustrating HOW MUCH members are paying for those so called “rewards.” Instead of a statement insert listing all the perks of your credit card, SHOW members the difference.

For example, create a graphic that shows the difference between a $5,000 balance on your credit union’s 9.99% APR credit card vs a 5% cash back credit card charging 24%. With the right images, you can make it crystal clear how much they are paying for those rewards.


Step #2 :: Attack Costs and Fees

We already mentioned credit unions’ price advantage and the fact that credit card companies don’t want to compete here – so this is where you can really shine. Remind members it’s easy for these companies to offer 3% cash back when they are charging rates as high as 29% APR. If you mess up just ONCE and can’t pay your balance in full each month, you’ve completely lost the rewards game.

Additionally, many of these big companies have annual fees between $200 and $500. Why gamble playing the rewards game in exchange for a few $50 gift cards when you could buy 10, $50 gift cards yourself instead of paying that $500 annual fee? Communicate examples like these to your members regularly.


Step #3 :: Position Your Card to Be More

Brand your credit card to stand for something. Become the credit card financially savvy people – or smart people – carry. This makes your members feel confident about their membership and their choices. Then, routinely emphasize your lower rates, illustrate the savings vs high-interest rewards cards, and attack the high costs of competitors’ cards.

If your members just won’t resist the lure of the rewards game, position your credit card as the card to use if you have to carry a balance. Illustrate the long-term savings if they have to carry a balance for a few months with your card vs other high-interest options. Regularly offer balance transfer promotions and stress the “if you have to carry a balance” position over and over in your member communications.


COMPETE & WIN vs Credit Card Behemoths

It’s definitely a challenge going head-to-head with large credit card companies and their rewards programs. Play to your strengths, be visual, go where they won’t, and make your credit card stand for something bigger.

Helping credit unions COMPETE & WIN vs Larger Institutions is what we do. Interested? Let’s Chat.