At the same time credit unions gathered in Florida were being urged to think carefully about selling card portfolios, Robert Lawhead, president of Raddon Financial Group, was telling CUs in Las Vegas much the same.
Lawshead said he isn't opposed to credit unions selling their credit card portfolios. But he is bothered by the fact many sell those portfolios based on what he says is faulty analysis."I'm not saying anything bad about these companies that want to buy your portfolio," he said. "What we want to do is level the playing field. Those guys sitting across the desk from you know a lot more about your portfolio. You have a lot of inactive cards and moderate users."
Lawhead also breaks out cardholders as inactive users (12%), moderate users (40%), convenience users (23%), balance-rollers (16%), and heavy users (9%).
"It's tough to make money on the moderate users," he said. "You shouldn't be in the business if you have a lot of these users." The balance rollers and heavy users are the cardholders generating the income.
What Lawhead said credit unions examining their card porftolios often overlook is the profitability from each group. Inactive users who have other relationships are actually more profitable than moderate users. The other three segments all are profitable.
"I'm not telling everyone not to sell the portfolio, but get the information. I'm telling you, you do not want to give up these relationships," he said.
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