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Card Portfolio Sales: The Broker Makes What?!?

If you sell your credit card portfolio there is a very good chance that the broker will make more money from that sale than you will. In today’s market, with bid prices down and a limited set of buyers, a broker’s commission can easily be more than half of the premium available and quickly gets into the hundreds of thousands of dollars for even small portfolios. This is not in the interests of the credit union, the credit union’s members or the buyer of the portfolio. But the brokers love it.

How can this be? This happens because of how most credit unions begin to explore a credit card portfolio sale. Typically a salesperson for a portfolio broker contacts the credit union suggesting a ‘free’ or unreasonably low price review of the card program. This will include a look at ‘market bids so you can see what it’s worth.’ There is no obligation to sell your portfolio, so this sounds like a fine and risk-free idea. Who doesn’t want something free? But in this case free becomes very, very expensive.

Here is the reason:

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