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PURSUING DIFFERENTIATION AND THE AFFLUENT CARDHOLDER

PURSUING DIFFERENTIATION AND THE AFFLUENT CARDHOLDER
Posted: Sep 19, 2018
Categories: Credit Cards, Marketing
Comments: 0

[Editor’s Note: This article was previously published in the CU Today, and has been modified.]


It’s no surprise that card issuers are pursuing the affluent consumer with their credit card offerings. These cardholders generally contribute 60% more spend than non-affluent cardholders and their monthly spend is 3.6X greater than cardholders with traditional credit cards. Therefore, these consumers are spending and transacting more frequently, which equates to higher revenue for the issuer.

 

With the positive economic environment, credit card spend has already increased, and affluent consumers will be encouraged to use their cards more often. According to PYMNTS.com “Issuers, and the bankcard networks supporting their cards, therefore have shifted their attention to affluent sectors of society to grow their transaction and sales volumes, and they continue to do so today.”

 

Credit unions are no different than the big issuers and should be looking at their membership to see if an affluent card makes sense for their market. Not only will it help to differentiate the portfolio, but it will also help the credit union align and compete more effectively with the big issuers in the marketplace. As noted in a recent TPR article titled “Offering a Rewarding Experience with Affluent Cards”, Maps Credit Union designed their affluent World Card product for frequent travelers to attract a whole new demographic of cardholders that they were missing with their current card product offering. In this article, Toni Silbernagel, the VP of Consumer Lending at Maps Credit Union, stressed the need to market and bring attention to the new product and not just launch it and let it run on auto-pilot.

 

As an issuer you’ll find that your goals and views of how you choose to structure your affluent card may vary from the card brands (MasterCard and Visa namely) and other issuers. Some credit unions, such as Maps Credit Union chose to focus on the traveler and wanted their affluent product to be competitive with the travel cards in the marketplace, so their rewards were structured to meet that need with double points for travel and restaurants all the time.

 

It’s important to look at best practices in the industry and decide what area you want to focus on and how you’re going to market your affluent card. Travel continues to be a key benefit desired by the affluent cardholder and as airlines continue to consolidate and change miles programs, cardholders are being affected. Safety and security benefits while travelling are also important to affluent cardholders. Some examples of the benefits to include in your program are trip interruption and trip cancellation insurance, lost baggage insurance and auto rental collision damage waiver. Also, let’s not forget that the affluent consumer cares about digital just as much as the traditional cardholder, so access and ease of use with rewards and benefits are important as well.

 

Ultimately, the goal of any credit card issuer is to drive spend among its cardholders and affluent consumers are usually the ones spending more. So, it’s worth considering the upfront expense of offering an affluent card to have a product in your credit card portfolio that targets this profitable group. The card brands will help with key benefits to offer, but it’s up to the individual issuer to create and market an attractive and valuable affluent product.

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Michael Chenderlin

Michael ChenderlinMichael Chenderlin

Mike Chenderlin, Trellance Sr. Portfolio Consultant, has more than 20 years of relationship management experience.

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