Three credit union market perspectives – Q1 2022

Below I break down three key observations we’ve made in our latest Credit Union Market Perspectives Report.

• Inventory challenges have caused origination decline in the auto market. With fewer new car sales, and captive lenders having priority, many banks and credit unions are finding intense rate competition in auto lending. While some lenders have continued to lower rates and increase dealer reserves on indirect lending, others have shifted their focus to auto refinance and recapture programs. TransUnion data indicates that credit unions own 68% of the auto refinance market. Leveraging available data and industry best practices can help credit unions meet their members with relevant refinance offers.
• Prescreen marketing growth signals lender confidence and consumer demand for credit. In Q1 2021, TransUnion data showed that many lenders had returned to acquisition campaigns, at least for certain segments of the population. At that time, the growth was consolidated to affluent members and prospects, with high credit scores and financial health. More recent studies have revealed that the growth is now being experienced across the credit spectrum, with significant YoY growth in the Near Prime and Subprime risk tiers. Savvy lenders know that Consumers in Prime and below tiers carry the highest balances, with credit union cardholders carrying substantially higher balances than bank cardholders. We expect credit unions to continue this push to grow their card portfolios throughout 2022, and leveraging wallet share studies can help these lenders better understand the opportunity across products.
• Consumers in Prime and below tiers carry the highest balances, with credit union cardholders carrying substantially higher balances than bank cardholders. The percentage of accounts with a credit line increase grew throughout 2021, as lenders aimed to drive loyalty in their card programs. This increase was specifically targets at new cardholders, as acquisition competition becomes more intense. Research suggests consumers—especially younger ones—will reward lenders who provide adequate credit lines, and will shift spending to another card with a higher limit, increasing the importance of regular credit line reviews. Implementing industry best practices into line management strategies will help credit unions and banks fine tune credit line increase programs, driving loyalty and retention in card portfolios.

Email us at creditunions@transunion.com for the full Market Perspective Report!