Use credit line management to drive profits and reduce risks

Implementing and managing credit card portfolio has always been an important activity for credit unions. This has been so because credit cards have always been the most profitable product for any financial institution. It is such a fluid and versatile product that this imparts financial institutions the flexibility to offer a wide range of rewards, features, and pricing on them. Credit unions, who are generally limited in terms of product portfolio, can use credit cards to expand their offerings and attract a variety of members seeking different benefits.  

An important step in managing a credit card portfolio is continuously assessing and maintaining appropriate card limits for each individual cardholder.   By doing this, you will continue to reward loyal transactional behavior and incentivize additional spending opportunities for those in your portfolio who are eligible for higher credit limits and manage risks for members with higher chances of turning delinquent in the future. 

Managing Credit Limits needs to be a Continuous Activity 

With advancement in technology and analytics, the process of setting and reviewing individual cardholder limits during underwriting has become quick and easy.  It is generally driven by several external and internal factors like the local or overall economy, competition among the FIs, cardholder’s income, employment status, other debts, and payments schedule.