Credit Card Portfolio Sales: Lessons Learned
Credit card portfolio sales have always been a contentious topic. Some are 100% opposed at any time for any reason. Others are firmly convinced that most small issuers cannot possibly compete with the big banks and will inevitably sell off over time. The experience of small and regional banks has largely supported the latter: only about 400 banks now issue their own credit cards. Yet thousands of credit unions still issue credit cards and showing it is possible to do so affordably and prudently (well, at least most of the time).
Still, offering credit cards through a third-party remains and option that some credit unions continue to explore. Their reasons typically include concerns with ever-escalating compliance risk, concerns about future performance, a need for income or capital, different strategic priorities or a lack of internal resources to manage the program. Whatever the reason a credit union is looking at portfolio sale, they need to be very careful and deliberate about how they proceed. Some of the lessons learned by others include:
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