Are you taking this opportunity to educate your members on which type of card is better suited for their needs? 

Most members do not know the right card to use and when. They simply grab whatever card is closest, easiest, or they know has available funds and swipe (or tap) away to process the transaction. It is really up to the credit unions to assist with educating the members on when to use what card and the benefits of using the card at the right time, to make sure they get the most out of them.

While you do not want your debit and credit cards to compete against each other, there are things to consider when you are educating your members. First, let’s start by defining the cards and when they are better suited for the transaction.

Debit

Debit cards are typically considered immediate. This means that the funds are taken from the members’ accounts immediately. Members would need to stay focused and have more control over their finances to keep them from putting themselves in a negative state. Better said, keeping a balanced register would be critical. When processing transactions using debit cards, the members do not have the ability to build credit, but they can still benefit from things like reward programs.

So, what types of transactions should you educate members to use a debit card for? Debit card transactions typically are what you would call “daily transactions.” Think of things you would buy daily, like coffee, gas, groceries, etc.

Credit

Credit cards provide grace for members who may not have the funds to cover the purchase. This means that the funds are advanced from a loan, and the member then starts accruing interest, is required to make monthly payments, provides an opportunity to build credit, and typically offers a stronger fraud protection solution. These cards can also include reward programs, too.

So, what types of transactions should you educate members to use a credit card for? Credit card transactions are typically for larger purchases or purchases you need to ensure you have more fraud coverage (also known as high-risk transactions). Think of things like online purchases, travel, and larger purchases like furniture, etc.

What should you tell your members?

Financial education is important. Credit unions could create educational videos, guides, or do marketing campaigns for their members.  Within these educational courses, you could educate them on the types of transactions members should use the debit card for and what types of transactions they should use a credit card for. Digging deeper into how using the cards at the right time will benefit them as well as help protect them on the purchase they are making.

The biggest thing here is to think of it as ongoing education. If you publish something once, it might not hit at the right time or hit the right person. So, the more you plan and develop consistent material, the better you will be.

What are the benefits of educating the members?

If your credit union is going to take the time to educate the members, members will start to see that your credit union cares. When members think of businesses, they typically think the business is only looking out for itself. But in this case, you are providing them with information on ways they can help themselves as well as help keep your credit union top of mind.

In addition, the more you talk to your members, the more your members will have your cards top-of-wallet. Keeping your cards at the top of your members’ wallets will help you drive usage, which then will lead to more interchange for your credit union.

Having constant communication with your members could also lead to them remembering you for that next car loan, house loan, or even personal loans. Which in turn benefits your credit union even more and keeps your members protected!

Care is key

In conclusion, understanding the “why” behind the card types is not only important to the credit union, but also for the members to understand. The impact or benefits of one card type over the other, and even understanding how the card type can protect the transaction.

Those who educate not only drive stronger portfolio performance, but they’ll also build more informed, loyal, and financially confident members!