Growing Card Balances with Promotional Checks by skr83537

VIEWS: 4 PAGES: 11

									Growing Card Balances
with Promotional Checks

           Doreen Fox Kelsey
           P.O. Box 8483, Spokane, WA
           99203-0483
           (800) 716-4479
           dfoxkelsey@hotmail.com
STCU Card Portfolio Performance

   12-mos. portfolio growth = 19.1%
    (national average = 4%)
   Return on balances (portfolio “ROA”) = 4.71%
    (national average = 2.72%)
   Household penetration = 34%
    (national average = 22%)
   Average account balance = $2,176
    (national average = $1,669)
Source: Raddon Financial Group CEO Strategies Spring 2005 Cycle
Historical Balance Trends

                          History of Visa Balance Trends

     $45,000,000

     $40,000,000                                                                           2000
                                                                                           2001
     $35,000,000
                                                                                           2002
                                                                                           2003
     $30,000,000
                                                                                           2004
     $25,000,000                                                                           2005

     $20,000,000



                                                                               Nov
                                                 Jun
                                                       Jul
                                           May




                                                             Aug
                   Jan




                                                                         Oct
                               Mar
                                     Apr




                                                                                     Dec
                         Feb




                                                                   Sep
Methodology

   Mail twice yearly (January and July)
   Offer 0% promo rate for approx. five cycles
   Payments applied to promo balance first
   Select 5,000 cardholders meeting criteria:
    –   Age 18-64
    –   Available credit >=$1,000 and 25% of limit
    –   HH deposits <$30,000
   Exclude check users from previous cycle
2003 Promo Chex Results

   March 2003 mailing
    –   4.0% response rate (1.9% rate offered)
    –   Users increased balances 79%
    –   98.4% balance retention thru 12/31/03
   May 2003 mailing
    –   2.6% response rate (1.9% rate offered)
    –   Users increased balances 59%
    –   113.8% balance retention thru 12/31/03
2003 Promo Chex Results

   August 2003 mailing
    –   3.8% response rate (1.9% rate offered)
    –   Users increased balances 57%
    –   108.9% balance retention thru 12/31/03
   November 2003 mailing
    –   7.6% response rate (0% rate offered)
    –   Users increased balances 90.4%
    –   89.6% balance retention thru 6/30/04
2004 Promo Chex Results

   April 2004 mailing
    –   8.0% response rate*
    –   Users increased balances 97.1%
    –   93.8% balance retention thru 12/31/04
   July 2004 mailing
    –   10.7% response rate*
    –   Users increased balances 75.3%
    –   84.0% balance retention thru 3/31/05
    *Routine issuance of counter checks skews response rates.
2005 Promo Chex Results

   January 2005 mailing
    –   9.9% response rate*
    –   Users increased balances 41%
    –   96.9% balance retention through 8/31/05
   July 2005 mailing
    –   6.9% response rate thru 8/31/05
    –   Users increased balances 99.5% thru 8/31/05
    *Routine issuance of counter checks skews response rates.
Return on Investment

   Cost of Marketing Investment = $4,775
   Number of contacts = 5,218
   Cost per contact = $.92
   Total Acquisitions = 515
   Acquisition cost per account = $9.27
   Balances acquired = $603,189
   Average balances acquired = $1,172
Return on Investment

 Weighted average loan rate = 9.94%
  (blended yield including impact of 0%)
 Replacement rate = 2.47%
 Net interest margin = 7.47%
 Net interest income = $45,058
 Return on marketing investment = 944%
 Net income per account = $87
Questions?

								
To top