Revitalizing Dormant Credit Card Accounts: A Data-Driven Approach
Inactive credit card accounts can be a significant challenge for credit unions. Finding effective ways to re-engage these dormant accounts is crucial for maintaining a healthy and active portfolio. Here's how data can help.
The Key to Reactivating Dormant Accounts: Data
Credit union card teams need comprehensive data to segment dormant cardholders and devise strategies to re-engage them. Analyzing internal and external data is crucial for this process.
Identifying High-Potential Accounts
According to CUInsight, "The key to success is identifying which of a portfolio’s dormant credit card accounts offer the greatest potential for reactivation." The article “Data-driven strategies wake sleeping credit card accounts” outlines that dormant credit card account owners generally fall into one of four categories:
- Need a different product
- Need a higher credit line
- Need a different APR
- Have multiple needs (a combination of the above)
Segmenting credit card accounts based on these categories is a valuable step towards reactivating cardholders. Credit unions already possess valuable data on these accounts within their card management systems. This information can reveal how and when members have used their credit cards, as well as what other products they utilize.
Strategies to Reactivate Dormant Accounts
Here are four effective strategies to jostle dormant accounts:
Implement a Rewards Campaign
Offering basic card account holders an opportunity to upgrade to a rewards card can breathe new life into a portfolio and enhance customer relationships.
Provide Credit Line Increases
Cardholders rarely ask their issuers to change perceived set-in-stone limits. Instead of charging multiple cards with small balances, cardholders may prefer to use a single card with a higher limit. Be that card!
Set Down a Pricing Strategy
With the right data and a good credit union core system partner, you can better align your pricing with more of your members’ expectations. Understanding the current competitive landscape is key.
Give Them Cash Back
A primary reason credit card accounts go dormant is the lack of truly valuable incentives to use their cards. This is especially true among high-income cardholders. Cash back rewards are one of the best ways to incentivize these cardholders.
Leveraging Data for Product Adoption and Growth
Using data for product adoption and growth is vital. How easily does your credit union core processing system deliver the information you need for data-driven decision-making? A robust credit union technology system helps increase your knowledge on a daily basis, assisting in personalized and relevant product offerings to members. Some of these offerings could reawaken dormant cardholders and bring their spending back to life. Click the button below to learn more.
