"Curiouser and curiouser."
Commenter: "Numbers of cards issued will go up immediately---just as soon as the new/new industry standard rewards card is out!! SECU has not been providing what the members want. Can't you look into the crystal ball and see that?"
✅ Probably ought to back up and clarify a few things about the SECU Rewards card program. You may be getting the wrong impression. Rewards cards are now the industry standard. Everybody has ("2.3 cards on average") a rewards card and uses them. You have one, I have one.
The question is not whether you should have a rewards card, that's your call. The question is whether SECU should issue rewards cards. If you are a "Well, everybody else is doing it!" leader, then case closed. The "lowest common denominator" has a tendency to always become the "industry standard" in business - and perhaps in our social values. Again, your call.
😎 Here are some facts which may be worth considering about SECU rewards cards:
1) SECU in the past had one of the very best, low rate/no fee cards in the U.S. - that card attracted 342,000 members with balances of $1.2 billion. A large majority carry a monthly balance.
2) When SECU was presented with the financial proposals to offer a rewards card, the card companies showed that a) the costs of rewards (miles, points, cash back) made a lowest rate/no fee card appear "unprofitable", b) the card holders who paid in full monthly were unprofitable (got a free ride) if reward benefits were @2% (miles, points, cash back), c) the only way to make a rewards card profitable was to raise rates by @3+%.
3) The card companies indicated that over 90+% of new SECU credit card account holders will choose the reward cards over the best, lowest rate/no fee card, despite the fact that over 72+% would always carry a balance - financially the wrong decision. The 72% of rewards card holders will not only pay 3% more in interest, but will also pay the costs of the rewards given to the 28% who paid in full.
4) The card companies also indicated that a majority of existing SECU low rate/no fee card holders will abandon that SECU card and move to the rewards card, further boosting SECU "profits". The primary "target" market of the SECU rewards card will be SECU members with the low rate. no fee card. Most "carry-a-balance" members have a set credit limit and won't be able to qualify for both cards
5) There is no grace period for cardholders who carry a balance over. Unlike pay-in-full card holders, members who "revolve" pay that extra 3+% immediately - from day one.
6) When a prior SECU Board considered all this, it voted against the rewards program as unfair to the majority of SECU (the 72%) members. SECU was not be providing sound financial advice to the membership as a fiduciary.
7) Every member of that SECU Board had and was using a rewards credit card! All indicated they would not switch from their established rewards card, if SECU offered such a card.
8) Members will not readily give up existing cards - with established points, miles, etc - for the new SECU rewards card. As proposed, the SECU rewards card is a mediocre industry standard. Members already have better rewards cards, or can easliy find one [search here]. Wll you change from your current rewards card?
9) The card "profitability analyses" haven't changed over the years. The only way to make a rewards card work is to overcharge the carry-a-balance members and subsidize the pay monthly folks' free ride.
10) Again "looking into that crystal ball", you and I already have a rewards card... be honest, are you going to switch to SECU rewards?
😎 Nah, why would you? You and I already have "industry standard" ... or better! And best of all, we're not asking any other SECU member to subsidize us!
"Alice-in-Wonderland says its her baby, but it sure looks a lot like a pig..."
So members are getting rewards cards somewhere else with higher interest rates and some with annual fees and worse rewards. Plenty of places offer cash advances, SECU offers the best salary advance loan. With this logic, we would have never rolled out the SALO loan and saved members money. What did you use to refer to our SALO as, our most profitable loan?
ReplyDelete@11:45.. good point, but apparently we're not allowed to offer our own member owners the products they want, while saving them money. if we offer any products that others do, it makes us industry standard, and evidently giving owners products they makes us mediocre.
Delete11:45am Believe you get mixed up in your thinking. The salary advance program came in response to seeing members pay 300 to 800% at the cash advance places for a 2-3 week loan.
DeleteThe SECU salary advance loan was not "industry standard" charging 300+%; it was at 12% and gave members who never had savings a path out of the salary advance trap. That is an example of a unicorn type product that helped members.
As you correctly state it is the best product in the marketplace and even at 12% vs. 300% was in fact the "most profitable" loan SECU made.
You failed to note that those SALO users now also have $55 million of savings with SECU.
Yes in prior years SECU chose not to offer members "the benefit" of paying 3% higher interest rates on their SECU credit card for the privilege of paying for other members points.
Those members who valued points and avoided carrying balances went elsewhere and got a better deal. Seems like all members benefited from that strategy.
BTW, your current SECU Classic card (despite the up 600% chargeoff trend) is highly profitable, the rewards card according to the experts will only be profitable because the interest rate will be jacked up by 3+%... the folks who pay monthly are free riders and won't be paying any interest at all.
9:15pm Hope it's clear that you won't be saving members any money by jacking up your rate by 3+% on a rewards card for members who carry a balance. That's where SECU starts losing its reputation for member fairness.
DeleteFor the record, which card would you recommend to a 22 year old, new teacher in NC?
you don't understand segmentation. the rewards card isn't targeted to the current cardholders, who you think will just have their rate jacked up. yes, the rewards rate will higher than current card, but it will be 4-5% lower than the rewards card they have somewhere else. do you get it?
Delete9:56 am Actually, pretty sure I do understand "segmentation". In other arenas it's called profiling, bias, discrimination, exploitation... .. just "taking advantage" of others.
DeleteHave always preferred treating members as fellow human beings, not as "segments" nor "targets".
Under the cover of "best intentions", the rewards card will lead unwary, unsavvy members, who carry over balances, into paying 3+% more than they should. Existing SECU card holders are the only major group the stats say will change cards... and the ELT has seen the stats.
Again, which card will you recommend to the young, new teacher? To the young parent highway patrolman? The single Mom... most of these members - over 70+% of SECU cardholders - will carry a balance...
If they are going to payoff their statement balance each month, the rewards cards would be a better option. If they are going to carry a balance, would recommend the classic card
Delete3:36pm Where do I find the fin lit calculator on the SECU website to help the member make that decision?
DeleteDo you understand that the "profitability" forecasts provided to loan administration indicate that @70% of new card members will make the wrong decision and end up carrying a high interest rate balance on the SECU rewards card?
Don't you see that as a problem?
since when are you concerned about what is unprofitable? every C-E loan and line made lost money for SECU, and created the toxic portfolio you left new/new. not for profit, remember?
ReplyDelete12:26pm Every loan SECU ever made to "C-E" members was unprofitable, toxic? A statement a bit distant from the truth and reality.
DeleteTheir is no differentiation in the current ELT between "C-E" members who faithfully pay off their loans and "C-E" members who do not. That is the current and entire problem with charge-offs and delinquencies. An algorithm is determining who gets a loan and it ain't as smart as the local loan officers in the branches once were. And those locals treated every member as a member!!!
DeleteYou mentioned that you have a rewards cards somewhere with another financial institution. Does this mean that someone is subsidizing your rewards? Could some SECU members have rewards cards, be paying interest, and therefore are subsidizing your rewards.
ReplyDelete2:53pm Yes some bank stock holder is paying for my rewards card..But more astute card issuers have a tendency to weed out free riders through adding fees and changes in the rewards programs. They understand that "transactors" are unprofitable.
DeleteFeel good about not forcing fellow SECU members to pay for that free ride... those members deserve better.
@12:26 Ha! You're a classic narcissist - always trying to blame others for your....shortcomings. The new/new arrived in September 2021. Of course none of the new/new have anything to do with the currently exploding delinquency and charge offs, right? What fantasy world do you live in? The "toxic portfolio" lays at the feet of the Board, Hayes and Brady. Have the balls to own it.
ReplyDeleteFacts!
Deleteso the board bought the industry standard rhetoric that 90% of new card holders would pick rewards? you let card companies make the decision with their crystal ball? all board members said they wouldn't switch? well a sample of 10. that speaks for 2.7 million members
ReplyDelete7:18pm No the Board was presented with the actual financial projections from the credit card experts Visa/MC. Most business folks do business plans for new products and services.
DeleteThe SECU ELT hopefully used sound business practices in attempting to analyze the financial costs/impact of a new rewards card. Surely they didn't just go to someone's website and copy down what they saw!
The analyses they received projected # of new cards, cost of rewards, balances, etc... and most importantly showed that the "profitability" of the rewards program relies on SECU members carrying balances at rates 3% higher than the current SECU card. Rewards don't make finacial sense unless you mislead the members who revolve.
The facts on rewards card programs are pretty much the same for all institutions... you have to dupe those who carry a balance.
Can't believe the ELT hasn't seen the truth. Sure hope the SECU Board didn't get presented withe facts and willingly agree to pull a fast one on the membership.
so yes, would absolutely would move it. you're totally wrong, and can't back up the statement that the target market is the 342k current holders. why is SECU's card penetration at 50% of the industry level?
ReplyDelete7:19pm Not what expert financial projections indicated. Will be easy too track... time will tell.
DeleteGlad you acknowledge that you and all the rest of us already has a rewards card. Before you move, you might want to check around.... you will easily find a better deal...
... or at least many institutions trying to convince you its a better deal. Thr kind of bait and switch SECU was famous for not doing in the past
Believe you will be the exception in switching away from an established card and accumulated points, etc... why would anyone waste the time for an "industry standard" card?
... other than the projections that SECU will flip many members carrying balances out of the existing SECU low rate/no fee card... lured by rewards.
ReplyDeletebecause there is demand from members that others are serving.
7:20am Agree that SECU should focus on doing better what they are already doing....such as improving deposit rates, lowering operating costs, fix lending weaknesses and quality service., before more folks go elsewhere.
Deletecan easily find a car loan, mortgage, share certificate, and any other product somewhere else. does that mean we shouldn't offer them?
ReplyDelete7:21am Yep, see 8:56am above...would be wiser to work on improving deficiencies before jumping off a cliff... especially in the credit card area with those up 600% loss increases.
Deletelosses increased 500%, not 600%. check your math.
Delete12:15 pm I agree with you that going from annual losses of $9 million in 2021 to losses in 2024 of $54 million .... 6x higher could be stated up 500% rather than 600%...certainly won't argue that one.
DeleteAre you saying that losses up only 500% when balances increased only 37% is ok?
thanks in advance for subsidizing my cash back with lower deposit rates.
ReplyDeleteOuch 7:22am It wasn't me...
DeleteCredit card rewards are considered rebates under current tax law. Rewards credit cards are a way for SECU to return money to the membership in a tax free way. Not saying it’s the best or most efficient, but there are fringe benefits for all cardholders to consider.
ReplyDelete8:38am Interesting idea... so what is SECU "rebating" to those who carry no balances? Why would those who carry a balance have to pay 3% more in interest to "earn their benefit"?
DeleteHow exactly does that work?
ReplyDeleteso how are members going to be "flipped" into the new card.
11:58pm Some folks think credit cards work like opioids...
ReplyDelete@12:00; unfortunate that you think so little of our members and their ability to make good decisions. even worse, the lack of confidence in employees to give good advice....
DeleteYes--certainly expect employees who understand SECU as established to provide excellent advice, although the way the centralization has tied employees handsmay keep them from being able to help the member. New/new, if you are any indication, doesn't know what good advice is, so no help for members there!
Delete3:51pm In the past, SECU was told that @ 70% of cardholders would end up carrying a balance with a rewards card.
ReplyDeleteIn the past the best way to help assure that SECU members ( the 70% with excessive rates who end up carrying a balance with a rewards card)) was not to offer the rewards program - 342,000 SECU seem to think that was the right choice for them.
The "new/new" have chosen to take the tough luck, its your fault if you made a bad choice
The rewards game hasn't changed much over the years, except that the more sophisticated issuers are offering dozens of choices - SECU will offer two.
Uncertain times! Average monthly card balances are at an all time high of $1.3 trillion (@$6,500 per)... and losses at "some institutions" are up as much as 500%" (6x!).
"Where do I find the fin lit calculator on the SECU website to help the member make that decision?"
ReplyDeleteMembers make financially irresponsible decisions all the time. We can't stop them from doing it if they want to,
8:43pm The challenge of these posts has been against that brand of - lets call it Pontius Plate-like - thinking. "It's not our fault"
DeleteSECU has in the past chosen not to enable 70+% of members who carry a balance to make the wrong decision about the best credit card for their family.
Nor did, SECU turn a blind eye to the best interests of ALL SECU members.
Those who carried a balance got the best rate around. Those members who benefited from rewards were able to shop the entire market and choose the best card for their needs. EVERY member made the right decision.
Under the new/new Pontius Pilate rewards card, EVERY member will lose. The new/new rewards card - 3+% higher rate with limited, mediocre reward choices.
The 342k cardholder population includes members that 1) have a rewards card somewhere else; 2) don't have and don't want a rewards card; and 3) don't have rewards card, but may consider the SECU card, in addition to or in lieu of the one they have.
ReplyDelete9:12am Well, for the sake of argument do you really think that those that have a rewards card ("71% of all consumers") are going to switch to the SECU rewards card when they can easily find numerous, much better deals?
DeleteHey, why not ask the SECU Board and ELT whose rewards card they now carry and if they will switch to SECU? (Just ask them to raise their hand!!). Let us know what they say...
Yes, some members may take out an additional
card which will add to SECU operating costs, but they won't use it. Why? Because any astute rewards user knows to try an aggregate purchases on one card to achieve "extra rewards/premium rewards/bonus levels. Folks don't try to squander points frivolously among low value rewards programs... like... well, never mind.
Those members who don't have a credit card will probably just shake their head and ask what ever happened to "do the right thing"?
yes, people will switch if the card is competitive. all of them no?
Delete71% of US Adults have a rewards card. If SECU membership is representative, that's about 2 million members with a rewards card - and 100% of them with another issuer. To be conservative, say it's only 1.5 million members.. that would be over 4x the size of the current cardholder base.
ReplyDelete9:29am Interpret those numbers as you believing SECU's credit card base is going to soar. Will be interesting to monitor the success of the program.
ReplyDeleteHow many additional cards do you project to open in the first month, first quarter, first year, by year three? You do have a business plan for the new rewards program, right? Like any sound business plan it projects results and measures of success for the program. Why not publish that business plan so member owners can track?
Also since we all agree that rewards card "transactors" who pay their balance monthly are at best "breakeven", if not money losers... the best way to track "success" is to see how outstanding balances increase. Currently at $1.2 billion , growing abot 10% annually over last few years.
Stay tuned.... see how you do!
no one said it would "soar" whatever you think that means
Delete12:31pm Glad you admit that it won't soar. Why should it?
DeleteMembers already have a rewards card and will not switch for the SECU card which is less attractive and offers few features?
Why waste the members money on something that is inferior to what they already have?
Ever heard of reputational risk?
backwards logic. easily over 1 million secu members with a rewards card somewhere else, likely a bank. so just leave them to the wolves,
Delete12:47pm Will look forward to that 1 million card increase... easy to monitor along with balances on the fed reports. You're now "on the record"!
DeleteAs to the wolves, if you have been reading along here, you should understand the question has become: "Is SECU trying to join "the pack"?
@12:42... that's your issue your whole premise that it is inferior. explain how it will be less attractive. to BAC, Wells, Chase, Cap one?
Delete12:53 pm ridiculous, as always. didn't say we'd get 1 million cards, or everyone would switch. it would be meaningful, when being told it is the #1 requested product,
Delete2:22pm Who told you that/when? Just fooling yourself! No SECU member has asked for a less competitive rewards card have they?
DeleteWhy would they? Is that really the most requested service? Don't think so.
what is a good or legitimate reason you don't believe it's the most requested product, when 1.5+ million SECU members likely have a rewards card?
DeleteNever has been a legitimate survey of SECU members since 2021 new/new era. And when "the raise your hand" type question was asked it was generally to members who had the SECU Classic card (which doesn't have points)
DeleteSo as a Classic card holder how would you answer the simple question: "Would you like rewards?"
No explanation was provided to those members that they would pay 3+% more in interest for that "benefit" - - FAR more costly than the points and miles are worth!
Wouldn't you raise your hand everytime you could get something for nothing? Or would you start worrying that "someone" wasn't telling you the whole story?
Would you like a free lunch, too?
Ah so the survey that never took place, actually did take place. And it’s not legitimate just because you don’t like the results?
Delete@6:12. yes I would like a free lunch with my rewards. Some hard truths for you:
DeleteI am going to be paying my balance off each month and won't accrue interest, so you will be subsidizing my rewards for me.
12:16pm Appreciate your honesty!
DeletePerhaps that's not the best word to use...
6:37pm Could you tell the rest of us when the survey was conducted? What were the questions? Thank you!
Delete3;26pm The question is how many of those "1.5 million" SECU members are going to switch... wanna bet?
DeleteAre you suggesting that SECU decided, overnight and with no data and no plan, to offer a brand new product?
ReplyDelete12:21pm No, actually I would find it hard to believe that the ELT didn't ask for and receive a business analysis and proforma on the "new/nbe3w" rewards card.
ReplyDeleteWhich means that they looked at bait and switch realities of the program for members and went ahead anyway because of the "increased profitability"... and igored the negative impaqct to the membership.
Pretty sure the ELT didn't inform the Board of the downside.
When Duke and Carolina play against each other, who do you root for? What is it like to root against your former organization?
ReplyDelete6:26am Got to admit its really hard to see my #1 team keep coming up short time after time after time.
DeleteMay no longer be able to make the "tournament"...
Too many turnovers? Too many unforced errors? Can't stay in their lane ...?
Delete