Alliant Credit Union upgraded its card rewards program, and so can you

Posted by Cyndie Martini on August 3, 2017 at 8:04 PM

For years, the reasons for consumers to bank at a credit union have been strong, but numbered: better customer service; lower fees; a more personalized experience.

Until recently, credit card offerings rarely made the list.

Big banks, using their higher fees and bigger budgets, had the means to provide attractive rewards programs to customers. Meanwhile, credit union credit card offerings boasted low rates and not much else.

That has recently changed, though. The technologies that support rewards programs have improved over the years, and the costs that once kept these incentives just out of reach for credit unions are much lower, Credit Union Times reported.

"The bar to entry has gone to the floor," Andrew Gates, a loyalty program consultant, told Credit Union Times.

Alliant Credit Union paves the way for card rewards upgrades

Credit unions have not hesitated in taking advantage of these beneficial programs. One shining star of an example is Alliant Credit Union, a Chicago-based nationwide institution that recently revamped its card rewards program, NerdWallet reported.

The program offers Alliant members two options. The first gives 2.5 percent cash back and no annual fee for the first year. After that, the card costs $59 per year.

The second offers 2 points on the dollar and no annual fee - ever. This translates effectively to a 2 percent rewards rate.

Before the change, this card offered a meager 1 point per dollar.

Alliant said that, as soon as the changes went into effect, many consumers began applying for the new cards.

"We got a lot of emails back saying, 'Thank you for doing this,' and, 'Finally, this is going to be a card I use,'" Michelle Goeppner, Alliant's senior manager of credit product strategy, told NerdWallet.

Credit unions gain credit card market share

Alliant's change was a newsworthy event; few credit unions have rolled out a rewards program robust enough to compete with major banks and card issuers. However, it's certainly not the only credit union that has managed to draw in members using an attractive card rewards program.

Educators Credit Union in Racine, Wisconsin, has offered a points program for more than a decade, and has altered it periodically over the years, Credit Union Times reported.

Currently, Educators offers members 1 point per dollar they spend with their credit card, and 2 points per dollar they spend with their debt. When a member redeems 7,500 points, he or she gets $50 cash.

Though not as flashy as Alliant's 2 points per dollar, Educators has found that its member base of 146,050 genuinely appreciates the rewards.

"We've had consistent growth," explained on Educators employee, Jodi Darga, according to Credit Union Times. "We do well getting new members and retaining the older cardholders."

On a national level, credit unions like Educators and Alliant have slowly gleaned more of the credit card market share. As of May 2017, credit unions held $53.2 billion of all revolving debt in the country, according to the Federal Reserve's July consumer credit report.

This translates to 5.43 percent of the total $979.5 billion in revolving debt seen across the U.S. In 2012, credit unions only claimed 4.6 percent of credit card debt.

How to revamp your own card rewards program

Credit unions that struggle with credit card growth may want to investigate options as to how they can make their own card programs more attractive.

The first and most important step in doing this - the same first step Alliant and Educators took - is to ask your members directly what they want.

Your card program simply can't be an attractive one if you're not sure exactly what your members are looking for in a card.

"We said, 'What features and benefits are important to you? What makes a card your go-to card at the top of your wallet?'" Goeppner told NerdWallet.

When asked, Alliant members answered. They said they preferred cash back over any other form of rewards - hence the credit union's hefty cash back program

Educators asked their members the same question - what do members want in a card - when the credit union conducted periodic focus groups.

Members said they like the points programs, and like to have options for redeeming them. Though the most popular redemption method is cash, some members like to apply points to other credit union products. For example, a collection of points might lower the interest rate on a loan, or be used to lower closing costs on a mortgage.

Do you know what your members want in a credit card program? If not - it may be time to ask. The answer may surprise you and point you in the right direction in creating a competitive credit card rewards program.

Topics: Reward Program, Rewards

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