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Reentering Credit Card Issuing: A Primer

Credit cards remain an ever evolving product for credit unions. And nowadays a new trend is emerging: credit unions that previously sold their credit card business deciding to become issuers again. The reasons vary and can include considerations such as a desire to find new loan balances, a search for higher yielding assets or dissatisfaction with operating an ‘outsourced’ card operation. We have even heard tales of regulators recommending getting back into the business (though we have not heard that they bring business plans or a willingness to share the risk with them).

So far the numbers of those who have reentered the business remain modest. Of the roughly 200 credit unions which sold more than five years ago (and can therefore be assumed to be contractually able to start issuing again) we have identified sixteen which have returned to issuing credit cards and have generated portfolios of at least $1 million. Another handful have restarted or announced plans to do so and are not yet at this size threshold. And we continue to receive inquiries from others who are examining this option. It all points to meaningful numbers of credit unions taking a serious look at become issuers again, especially as another 200+ past portfolio sellers will come to this same decision point over the next few years.

In an effort to help those working through this decision, we have analyzed the performance of those sixteen ‘rebooted’ card programs….

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