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November 19, 2009. Topics Today Goals Credit Card Consolidation Loans First Credit Cards Transaction Accounts.

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Presentation on theme: "November 19, 2009. Topics Today Goals Credit Card Consolidation Loans First Credit Cards Transaction Accounts."— Presentation transcript:

1 November 19, 2009

2 Topics Today Goals Credit Card Consolidation Loans First Credit Cards Transaction Accounts

3 Credit Card Consolidation Loans Card-carrying students SeniorsFreshman 91% have a credit card42% have a credit card 56% carry 4+ credit cards15% carry 4+ credit cards $2,864 average balance$1,585 average balance

4 Credit Card Consolidation Loans Lower monthly payments. Ability to pay off debt faster. Eliminating confusion. Paying only one bill instead of many. Lower interest rates.

5 Credit Card Consolidation Loans

6

7 Young Adult Transaction Accounts

8 Transaction Accounts Targets 76% of 25-34 year olds used a debit card in prior month (Sept. 08) vs. 63% using credit card. 71% of 18-24 year olds used a debit card in prior month (Sept. 08) vs. 51% using credit card. Source: Javelin, "Credit Card Spending Declines, March 2009

9 Financial Transactions Trends

10 Young Adult Transaction Accounts Most popular features: Online banking (95%) Online bill pay (84%) E-statements (84%) Online tutorials (63%) Affiliated credit card (53%) Online account opening (47%)

11 Young Adult Transaction Accounts Differentiating features: High rates Reward points Special debit card design Mobile banking

12 Transaction Accounts Best Practices Avoid teen or Gen Y in title Make it free Debit, debit, debit Bundling: Credit card, overdraft LOC, etc. Mixed results from education sessions

13 Transaction Accounts Best Practices Offer tangible rewards

14 Young Adult Transaction Accounts Americans Reward Card Preferences 56% prefer cash-back rewards 23% prefer air miles 12% prefer points 9% prefer automatic discounts or rebates

15 Transaction Accounts Best Practices Emphasize (and personalize) debit

16 Rewards that Reward WSJ Sept. 22, 2008 Meyer-Waarden&Benavent

17 Economic rewards save money

18 Hedonistic rewards feel pleasure

19 Social-relational rewards Youre invited valuable relationships

20 Informational rewards make better decisions

21 Functional rewards save time/effort

22 First Credit Cards 1 in 3 high school seniors carries a credit card 56% of college freshmen report getting their first credit card at age 18 2 out of 3 college students have a credit card The first credit card relationship lasts on average 15 years

23 Credit Card Charge Volume v. Outstanding Revolving Debt, 1990-2009 Note: 2009 Data point for Outstanding Revolving Debt is from May 2009. Source: Card Industry Directory (Editions 1-20) Faulkner & Gray. Federal Reserve Table G.19 Consumer Credit, available at http://federalreserve.gov/releases/g19/current/g19.htm

24 Year Number of Cards (U.S. in millions) US Charge Volume (in billions) U.S. Year End Receivables (in billions) 1990272.0$348.5$172.6 1991282.8$371.1$188.6 1992299.7$400.8$201.7 1993331.4$474.9$241.2 1994383.0$581.5$287.9 1995424.5$700.9$357.9 1996451.3$798.1$409.5 1997493.3$887.0$439.0 1998519.9$974.0$451.8 1999626.0$1,095.7$491.6 2000675.3$1,250.4$553.6 2001743.0$1,369.3$605.0 2002606.9$1,426.4$633.3 2003616.1$1,321.4$667.8 2004662.4$1,451.8$691.2 2005671.7$1,618.8$713.5 2006667.0$1,783.3$736.4 2007694.4$1,904.6$838.1 Credit Card Data, 1990-2007 Source: Card Industry Directory, Faulkner & Gray: Editions 1-20

25 Year Outstanding Revolving Debt (in billions) Charge Volume (in billions) 1990238.6348.5 1991263.8371.1 1992278.4400.8 1993309.9474.9 1994365.6581.5 1995443.5700.9 1996499.6798.1 1997536.7887 1998578.0974 1999606.81095.7 2000678.51250.4 2001716.61369.3 2002736.41426.4 2003758.31321.4 2004793.51451.8 2005805.01618.8 2006875.41783.3 2007941.81904.6 2008976.11932.3 2009928.0

26 In Favor of First Credit Cards 1 in 3 high school seniors carries a credit card 56% of college freshmen report getting their first credit card at age 18 2 out of 3 college students have a credit card The first credit card relationship lasts on average 15 years

27 CARD Act = CU Standard Practice Requires issuers extending credit to young consumers under the age of 21 to obtain an application that contains: the signature of a parent, guardian, or other individual 21 years or older who will take responsibility for the debt; or proof that the applicant has an independent means of repaying any credit extended; Limits prescreened offers of credit to young consumers; Prohibits increases in the credit limit on accounts where a parent, legal guardian, spouse or other individual is jointly liable unless the individual who is jointly liable approves the increase; Increases protections for students against aggressive credit card marketing, and increases transparency of affinity arrangements between credit card companies and universities. Source: blogs.findlaw.com

28 First Credit Card Best Practices Responsible Late Fees – Average fee of $34 (2005) Responsible APR – Student oriented cards carry an average 15% APR Savings Component – Offer overpay option or cashback to savings automatically Slow-Rising Intro Rate Share credit scores with members regularly Forgive a handful of late or over-payment fees annually

29 Parent Connection Trust already in place with existing members Students cite parents as second most important input for deciding on credit card (after direct mail!) Combined offer to young adult AND parent differentiates you

30 Learn from …

31

32

33 Ben Rogers 608-231-8171 benr@filene.org Lois Kitsch 202-508-6770 lkitsch@ncuf.coop


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