Credit Union Card Portfolio Sales Continue at Steady Pace    
Industry News

Source: CreditandCollectionsWorld.com and SourceMedia, Inc

Forty-seven credit unions with credit card portfolios of more than $1 million in outstanding balances sold their portfolios during the first three quarters of 2007, according to Brookwood Capital. The credit unions sold $273 million in outstanding balances, with an average portfolio size of $5.8 million, between Jan. 1 and Sept. 30, 2007, the Peterborough, N.H., consultancy says in a new report.

Tim Kolk, Brookwood managing partner, tells CCR sister publication CardLine that he expects fourth quarter transactions to bring the number of credit unions selling off their card portfolios to between 60 and 65 in 2007. Last year, 69 credit unions with receivables of more than $1 million sold portfolios with a total outstanding balance of $466 million and an average portfolio size of $6.7 million in receivables.

Since 2002 more than 14% of credit unions with credit card portfolios of more than $1 million in receivables have sold their portfolios to third-party partners, according to Brookwood. Most credit unions have avoided the subprime mortgage entanglements that now plague many large card-issuing banks, says Kolk. Subprime-related losses may drive those banks to raise card fees and interest rates to try to generate more profits from their credit card operations, making the lower fees and interest rates of credit union-issued cards more attractive to cardholders, he adds.

“They’ll be able to become even more competitive,” Kolk says of credit union issuers. “Still, the overall pressures of being a small issuer when there are some really dominant players in the market will continue.” He says he expects credit union portfolio sales to continue at 60 to 70 per year in the near future.

Story Options

Copyright © 2000-2020 Kollect Systems
All trademarks and copyrights on this site are owned by their respective owners.