By Ray Birch
SEATTLE—Inspirus CU is working to ensure it does not lose in the growing battle over credit card rewards by introducing new plastic that offers perks and a rate that are top-of-market nationally.
The Inspirus Visa Signature card delivers 2% cash back and a rate as low as 9%. The card does not charge annual or foreign transaction fees, provides free 24/7 concierge service, travel and emergency assistance, travel savings, and a credit limit up to $20,000.
As CUToday.info recently reported, a credit card “rewards war” is taking place among many of the biggest issuers. Many of the big banks, including BofA, Chase and Citigroup, have reported that their card income is down due to investments made in beefing up rewards programs. Credit card expert Tim Kolk told CUToday.info that the big banks are realizing that it will take a sizeable investment in their rewards programs to win, and that many CUs face an “inflection point” with their rewards offers—step up and compete or risk members leaving them behind.
Experts have stated that 2% cash back is what it will take to compete.
Time To Spend The Money
Collin Campbell, VP of strategic initiatives at the $1.1-billion Inspirus, declined to say how much the credit union is spending on its new Visa Signature card program, but said that if CUs want to compete in the rewards space that money must be spent.
“There is not much choice,” said Campbell, “because the cost of not spending the money is vastly higher than what it will cost the credit union not to spend on rewards. It’s a new reality. You must have a product that is competitive. Your members’ expectations are going up because of their experience with other brands and cards. When members shop for credit cards, we are not being compared to those FIs that are just in our market, we are being compared to Capital One, Amex . . .”
In setting up its card program Inspirus looked at all the national rewards offers.
“We believe we are at the forefront of the market at 2% cash back and with our rate, which ranges from about 9% to 15% based on your credit,” Campbell said.
In addition to scanning the competition nationally, Campbell said Inspirus worked with its payments processor PSCU and Visa to construct the program.
“There is no way you can compete by simply choosing a rewards program off the shelf,” said Campbell.
Sense Of Prestige
Other factors, outside of pricing, play a role, as well, said Campbell. The card’s marketing, and the plastic itself, are designed to share a sense of prestige in card ownership, said Campbell.
One of the credit union’s ads shows a group at dinner in an upscale restaurant and the Visa Signature cardholder handing over the black and gold plastic to a waitress.
“The card itself is impressive; we want members to be proud when they pull their card out of their wallets,” said Campbell.
Until digital wallets become dominant, the look and feel of the card, too, can lead members to place it top of wallet, insisted Campbell.
“The card is shiny black and has a gold edge,” said Campbell, who added that Inspirus is considering offering the card in metal later this year. “We want the card to impress people. That, too, helps to keep it top of wallet.”
But Campbell emphasized that the card is not positioned to feel “exclusive” to members and that the deal members are getting with the card can be afforded by most.
“That’s important. We are proud of that,” he said. “The card has tremendous benefits, yet is available to anyone who would have otherwise qualified for a traditional Visa with us. It’s the black card for the broad market.”
CU Advantage Over Banks
Campbell insisted that if credit unions jump into the rewards battle with both feet, that they have an advantage to retain cardholders that banks do not. He said that Inspirus is looking for the card to bring in new members, but what will keep them long term is the combination of great products and the CU’s community involvement.
“We believe the price and value of the card are necessary. We have to be competitive. But that is not sufficient to win loyalty,” explained Campbell. “What will win the relationship is our authentic commitment to the communities we serve and to education, which our new members will learn when they begin doing business with us. We donate a portion of our net income to schools. What wins, long term, is a competitive product backed by our CU ethos.”