Credit Union Credit Cards Threaten Big Banks
A greater number of local credit unions across the United States are starting to issue credit cards to their members. Some of these have been more successful than others, but the growth of this phenomenon is creating competition for big banks.
The financial consulting firm Callahan and Associates recently issued a report that says some credit unions have credit card penetration rates as high as 65.66%. Over time, numbers like this could really hurt the business for major banks.
The credit card penetration rate is the percentage of credit union customers who own a credit union-based credit card. If a credit union has a penetration rate of 20%, that means 20 out of every 100 of their customers have one of these cards.
The average penetration rate at the moment is only 15.3% nationwide, but it is growing every year. That figure is already up 55 basis points compared to last year.
The main issue credit card unions still face is that many of them do not offer rates that are as competitive as big banks. When customers can start to see these cards as viable alternatives to issuers such as Capital One, Chase, Citi and Wells Fargo, that is when the penetration rates will really pick up.
Nevertheless, some credit unions are starting to make a strong push for these cards, so don’t be surprised if you are offered one in the near future.