Magazine article American Banker

IBAA Says Members Have Edge in Cards

Magazine article American Banker

IBAA Says Members Have Edge in Cards

Article excerpt

Community bankers are proving to be formidable in price competition against national credit card issuers, according to a report from IBAA Bancard.

The card affiliate of the Independent Bankers Association of America says its members charge lower annual fees and interest rates than regional and national banks.

The 1,600 banks in IBAA Bancard, which have joined to obtain group pricing and other benefits, collectively rank 29th among Visa card issuers and 40th among MasterCard issuers.

Average annual fees on IBAA Bancard standard cards is $15.38, compared with the August weighted average for national issuers of $16.84 as compiled by RAM Research Corp., Frederick, Md.

Average rates in the IBAA program are 14.67%, compared with 17.24% for national issuers.

IBAA Bancard statistics show that smaller issuers lag in average balances but their delinquencies as a percentage of outstandings are lower than national issuers'.

"The numbers show that our bankers are able to consistently offer better pricing than their national counterparts," said Sarah Brachman, communications associate for IBAA Bancard.

"Generally, smaller issuers tend to offer a plain vanilla card that doesn't offer a lot of enhancements," which allows for competitive pricing, said Robert B. McKinley, president of RAM.

Low Overhead

Banks that work with the IBAA have the advantages of shared costs and experience, Mr. McKinley added. Their overhead is low and they do not spend much on marketing, relying more on word of mouth. …

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