Credit unions have historically shied away from the competitive credit card market, often prioritizing other financial products like auto loans and mortgages. But what if credit cards could be a powerful new engine for member acquisition and revenue growth? A recent interview with Joe Gracia, CEO of Nickels, and Tyler Kuhn, VP of Marketing & Digital Strategy at Service Credit Union, sheds light on a new approach challenging the status quo.
Gracia explains that Nickels was founded in 2019 with the specific goal of helping credit unions in the credit card space. Their latest product, CardFit, is described as the “NerdWallet for credit union credit cards.” This isn’t just about offering another card; it’s about strategically using credit cards to attract new members – a significant shift from the traditional cross-selling model. Gracia notes that while credit unions excel on rates (often capped at 18% APR), they’ve struggled to compete with big banks’ flashy rewards programs. CardFit aims to level the playing field by focusing on ‘total card value,’ factoring in rewards and costs, which often reveals that credit unions offer a better product for a significant portion of the population.
A key challenge for credit unions entering this arena is their field of membership restrictions. Gracia explains how CardFit addresses this by using a user’s location to connect them with eligible local credit union partners, ensuring that only relevant card comparisons are shown. This innovative solution opens up a new avenue for credit unions to reach potential members who might otherwise be unaware of their competitive offerings.
Tyler Kuhn of Service Credit Union shares that credit cards are now seen as a profitable product and extremely important for driving credit unions’ non-interest income. Service Credit Union initially approached CardFit as a test, seeking higher-quality leads. The results have been striking: approval rates for leads generated through Nickels are significantly higher, 47% compared to 31% from normal channels. Kuhn emphasizes, “Driving good applications is where the rubber meets the road”, highlighting the efficiency and value CardFit brings to their marketing efforts.
With delinquencies on the rise and credit scores fluctuating, the conversation also touches on the current economic landscape. Both Gracia and Kuhn offer insights into how credit unions can navigate these challenges and continue to leverage credit card offerings strategically.
Curious to learn more about this innovative approach and its impact on credit union growth? Watch the full interview to get all the details and insights!
Disclosure: Transcript below is automatically generated
Sarah Cooke
Yeah, no, I feel you do alright, so I just hit record. You guys gotta accept and then we’ll get started. One thing actually that people often forget is even when you’re not talking, you are on camera, so don’t be like looking around anyway. So there we go. Hello and welcome. I am Sarah Snell cook your host for the Credit Union Connection, and I’m here today with two wonderful gentlemen. We got Joe Gracia from the founder, CEO of Nickels, good to see you again, Joe, which is the, he describes it as the nerd wallet for credit unions and Tyler Kuhn, again, welcome. Tyler is from Service Credit Union. He is the VP of marketing digital strategy. Thanks for having me, absolutely. So I’m going to let you guys do a little bit deeper dive on your introductions. Joe, why don’t you start
Joseph Gracia
Sure? So I am the CEO of Nickles. We are a credit union service organization. We only work with credit unions. We were founded in 2019 and we have a few different products helping credit unions in the area of credit cards, in credit card debt. And our most recent product is one we launched end of last summer, which is called CardFit. And so it’s CardFit that is the Nerd Wallet for credit union credit cards.
Tyler Kuhn
Yeah. So I am the VP of marketing, digital strategy here at service, which I oversee, digital strategy, data and most importantly today, marketing, of course
Sarah Cooke
Most importantly, marketing. I wish everybody had that attitude. Um, Alrighty, so Joe, I’m going to go ahead and kick it off with you. Credit unions, historically, haven’t been that into credit cards, whether it’s, you know, too much competition from the the big guys, or what have you, what do you think? What made you think that it was the right time for CardFit?
Joseph Gracia
Sure. Well, if credit unions aren’t into credit cards, why launching a company that’s trying to help them with that I, in my experience, you’re exactly right. Credit unions aren’t super big into credit cards. Maybe that’s like priority number seven on their overall list, but they are big into member growth, and that’s typically priority number one. Maybe priority number two. And the the opportunity that we’ve seen is that credit unions, historically haven’t been using their credit cards to acquire new members. They cross sell their credit cards as they bring them in on an auto loan or a mortgage, but they’re not using credit cards to acquire new members, and that’s where we see the big opportunity, where someone can get a credit card without having to directly displace a current mortgage or a current auto loan or something like that kind of part one and then part two, we really and this will be a little bit of a longer answer. This down if you want. But we actually got into this a couple, a couple years ago when the CFPB approached us to join a tech sprint where they were trying to increase credit card competition. And we saw through the data that half the country, it’s now about 60% of the country, sometimes carries a balance on their credit cards. And for them, they earn about $42 in rewards, but get charged over $456 in interest and fees, and so they’re on the wrong cards. Credit unions, by and large, are capped at 18% they win on rate, and we’ve seen that credit unions really struggle to market around rate when everyone’s talking about rewards and cash back. And that’s where we saw the opportunity. Sorry, I got a little little excited and long winded there
Sarah Cooke
Absolutely, I like people who talk a lot, because it just makes the video much more in depth. So, and Tyler, I’m going to go with you now. What is service? Credit unions? History with credit cards?
Tyler Kuhn
Yeah, so I think it’s been, you know, prior to maybe five years ago, it was similar of, you know, we had the product, but it wasn’t really, wasn’t something we positioned as a member, you know, acquisition tool. We weren’t leading with it. You know, like most credit unions, leading with, you know, auto loans and checking accounts and CDs. We’ve grown that portfolio quite a bit over the past few years. We continue to see growth in that portfolio. We’ve definitely, you know, think it’s a, it’s an important product for us and for our members. You know, a lot of people struggle with especially in today’s economy. They struggle with credit cards. They struggle with spending. And points are great. You know, we, we kind of have, we have a points card. We also have a low interest rate card, and we believe that, you know, both of those are value to our members. And so, you know, it’s also a profitable product. You know, we look at our portfolio of products, credit cards are one of the more profitable products in our portfolio, right? And so I think for us, it’s extremely important. The interchange makes a lot of sense for us. And you know, something that we definitely we’d love to have, you know, I think driving non interest income as we approach the 10 billion mark, and, you know, start planning ahead of what that’s to look like. Credit cards are extremely important to us, and so I think for us, it’s important to us to grow with those cards as an institution. We also believe that we can do, like you heard Joe say, we can do better for our members than they’re getting for. Other places, right? So, yeah, you can get the 50 bucks in cash back, or you can get the 10,000 points, that’s 100 bucks, but we can save you that if you’re really going to carry a balance, and you know, over half of Americans do, and so we believe that, you know, we can be competitive, but we can also add value to those members.
Sarah Cooke
Yeah, and I think there’s a lot of education there about around the rewards and what you’re really paying for them. And so Tyler, gonna ask you also, why did you decide to go with cart? Fit,
Tyler Kuhn
Yeah, so it started off as just a test, right? A POC to, hey, does it make sense? I think there’s a lot of people that want to get in with the nerd wallets and want to get into some of the affiliate marketing. You know, we do some of that, but CardFit was a, it’s a, you know, kind of a low barrier entry into that world. And I think for us, it’s, it’s an opportunity for somebody to test out and to see if they can get approved without actually putting an application in. And so for us, I think, you know, I’m sure we’ll dig into the data, but we’re seeing, you know, you know, some funding efficiencies and some approval approval percentages going up with the apps we have, but it’s also a good way for people to compare us and stack us up to others. But also, I think CardFit does a good job of saying, Hey, listen, you might want a rewards card, but have you ever thought about this? Right? So it gets to the heart of who is the borrower. What are you looking to do? Do you carry a balance? And it makes a recommendation. And I think those sites, you know, like nerd wallet, they carry a lot of weight, and people listen to them. So for us, it was a neat opportunity, not something we had seen before. And we, you know, we definitely want to test it out
Sarah Cooke
Yeah, yeah. And so Joe, that’s perfect segue into what I was going to ask you. Thanks. Tom, we’ve talked about nerd wall a lot because this is going to be the nerd wallet for credit unions. And so the reason a lot of cranes aren’t in nerd wallet itself is because of the Field of Membership restrictions. And so how do you solve for that?
Joseph Gracia
Sure, it’s funny. I think most people think that nerd wallet has, like every credit card in America in the system. When you actually start to dig in. There really aren’t that many cards, because they’re basically just working. And if you look at their credit card partners, which they are clear about, you know, they’re just working basically with the big banks, because they want to be able to just work with a smaller number of institutions that can, that can drive a lot of business. And so we’ve done a couple of things differently. One our comparisons are around total card value, which factors in both rewards and costs, because those big comparison sites they’re basically working with the big banks are oriented around intro offers and rewards, where those big bank cards win. But for more than half the country, when you start factoring in total card value, credit unions just have a better credit card product for those users. And so what we quickly realized to that field of membership. Question was, we had to create a card comparison website that actually operates through the patchwork of all these credit unions in different communities with different fields of membership. So what we do is, when you come to CardFit.us the first thing we’re doing is either pulling your pulling your location through your phone or your computer browser, or just asking you where you are, so that we can then take that location and identify what local credit union partners you can be qualified for. They will will then show you card comparisons on so if you’re in Southern California, yeah, you’re not going to see a service credit union card, but we can handle all the different field of memberships, and we’re willing to do that because that’s part of working with the credit unions, to be able to route people wherever they are in the US to show to include local credit union options.
Sarah Cooke
Yeah, and that’s that’s a problem for credit unions in a lot of different areas of the business, as far as like the business partners or vendors, if you will, wanting to only work with the big guys. And so 90% of the cranium population is not, not in the running, and and so. And I think you so is, you know, definitely a way, a great way, for credit unions to get what they want without having to deal with people who don’t want to deal with them. Basically. So, Tyler, what were your objectives, what were you trying to solve that led you to Nickels and CardFit?
Tyler Kuhn
Yeah, I think, I think just driving, driving more leads, right? Like finding, finding, you know, a few different feeders to get leads, I think. But in that, I finding higher quality leads, right? Like, what every marketer wants to do is find higher quality leads. I think it’s not. There’s not a credit union in the country. And if there is, I mean, I’m all ears to listen to what they’re doing, but there’s not a credit in the country that’s converting on a lot of the leads they’re getting. You know, there’s a lot of places to drop in the pipeline, whether that be, you know, before the application, during the application, but the worst place for them to drop is after you’ve gotten the application right, and not not to get that, to get that lead to go through. And so I think for us, it was really, how do we get good leads into the pipeline? Maybe even discourage people who might not apply for the might not get it to not apply right, because we get a better sense of what our spend is going after. And so. So for us, I think, you know, we set out to get higher quality leads and to get leads that had a better chance of funding. And I think from you know, what we’ve seen, last time I checked, the approval rate was, you know, or the start of the funding rate was about 25% higher than leads that come in through, you know, a normal channel, or non Nichols or non Nichols lead. So for us, it’s accomplishing exactly what we wanted, and it was that, that high quality lead.
Sarah Cooke
And do you happen to know the dollars and cents of that?
Tyler Kuhn
So I think for us, if there’s a lot of you know, there’s we do we know a lot of the dollars and cents of the profitability, it’s a newer partnership. So to see what like if these card holders are performing differently, I think we’d have to kind of let that bake out. But I think the most important first step is getting a card in their hand. And we’re seeing that they’re doing that at again, about 25% higher than the normal leads,
Sarah Cooke
Yeah, yeah. And to Joe’s point, getting more members.
Joseph Gracia
So Joe, you can choose to, yeah, you can choose to have us edit this out, but to just provide, like, a sense of the pilot with service, we’ve spent like, 10s of 1000s of dollars, like more than $10,000 in paid digital at this point, I think we’ve driven, you know, over 1000 credit polls successfully for users that are in the area of Massachusetts and New Hampshire, that are interested In a service card, and we’ve sent, you know, well over 100 leads that are that are meeting services criteria to be able to possibly or likely get approved, to get in to kind of, just give a sense of of numbers, but we can edit that out if you want.
Tyler Kuhn
Yeah, for sure. I mean, I think for us, like that, the numbers that we’re seeing is General, General leads, or everybody wants to compete in the digital space. General leads that we’re seeing convert at about, you know, they get approved at about 31% 31% clip, right? So that 31% of applications that come in get an approval with nickels, we’re seeing 47% right? So we’re talking dramatic, drastically different. And so again, I don’t know marketers that are seeing one and two approvals on leads that they’re driving, but that’s what we’re seeing, right? And so for us, it’s, there’s tons of value in that, and there’s tons of value in knowing that, hey, we can put our dollars towards something where, like, not only can we get somebody to apply, but we can get somebody who’s actually going to get approved to apply. Because I think, you know, I don’t think I’m alone when I can say it’s really, really easy to drive applications. That’s super easy. Anybody can do if you have money, you can do it. Driving good applications is where the rubber meets the road. And I think that’s, again, like you heard the stats, that’s what we’re seeing.
Sarah Cooke
Yeah, that’s, that’s a really amazing, amazing bump. The and Joe, can you speak to overall results for credit unions in general?
Joseph Gracia
Yeah, where I being super transparent, I will say, like, service. And there’s a reason Tyler is here, like they’re one of our best partners, and so that’s really been a good working relationship. And them kind of meeting us halfway, and also doing things on their end when they’re seeing like, hey, there’s other things that we can do to make this all be more successful overall. Right now, we’re spending like more than 8000 a week in paid digital ads. We’re driving over like 700 successful credit polls across users a week, and we’re typically generating about like 50 to 70 qualified leads. And what I say by that is we have a check eligibility process with first name, last name and phone number, the user can initiate a soft credit poll, and then we can use that and match it up against the criteria that the credit unions have given us to be able to tell the user in real time, are you likely to get approved for this card? Are you a possible approval? Or if you’re unlikely, and if you’re unlikely, we can try to cross sell other credit union products at that point like but you might be a better fit. We see you have an auto loan, refinance that, but we’re not going to send them down a path of an Apply Now button to go apply for a card if we can see that they’re very unlikely to get approved. And so that’s the filtering that we’re able to do on our end to try to make sure that we’re only bringing qualified leads over to the credit unions. And that’s the stats. Once we pat we’re lead gen, so once we pass them over, it’s in the credit union’s hands, but that’s the stats that I can share in terms of, like, what we’re doing in paid digital spend, how many credit pulls we’re successfully generating, and then how many of those people are passing likely or possible approval on those unsecured cards?
Sarah Cooke
Yeah, and right now, and both of you can speak to this, delinquencies are on the rise, and credit scores have plummeted, especially since the student loans have started getting reported again. So what’s your take on all that as it pertains to credit union credit cards?
Joseph Gracia
I’ll take first. Okay, you go first. Yeah, I would say, I would say, I would say two things, like, I think it’s pretty well documented that in a recession, unsecured debt is like, the first thing to take a hit in like, that’s just a fact. And so we are seeing that credit unions are have tightened up over the past months about, like, what they’re going to approve for a non new member. In unsecured debt that goes back to like your original your original question to me. And the point, though, is that we see CardFit as a great mouse trap to hook people and bring them in and let them know about credit card products that’s leading with a credit card, but then once we have that credit report in that poll, we can identify other cross sells throughout the way that can still make sense for a credit union to bring someone in. So it’s not that CardFit is only about issue getting as many credit cards out there as possible. It’s about using credit unions cards to drive new engagement and potential membership than they’ve been doing previously, and that’s something I’d like to believe can still work even as we go through these market cycles.
Sarah Cooke
Yeah, there’s often a flight to safety for credit unions or toward credit
Joseph Gracia
Exactly. I pay attention to this stuff, but I’ve even seen a lot of the big banks really start to hammer like 0% for 18 months and things like that. Because anecdotally, we’re seeing a lot more rate sensitivity and interest in what the APR on cards is, which is which is an opportunity for credit unions that have lower rates.
Sarah Cooke
Yep, all that great information out there, from Nerd Wallet and CardFit Tyler. What’s your response to that?
Tyler Kuhn
Yeah. I mean, I think there’s, there’s a lot that can happen over the next, you know, 24 months even, I think, you know, you see the rise of buy now, pay later. You see the rise of all these different types of payments. And I think it’s something we’ve got to keep our eyes on. I think credit cards, you know, they’ve been, they’ve been under attack. You know, both, you know, from a regulatory perspective, but also, I think, from from big banks attacking what we’re able to offer. I think when you look at credit cards, I see more of, like, the next 24 months, there being like a adoption surge with like digital wallet integrations and contactless payments. I think credit credit unions that can can meet those needs have a great opportunity. I think, you know, you definitely see unsecured debt rise. But again, by 2027 I think is they think over half of all payments are going to be made in a digital wallet, right? And so I think if you can have your card there, position it in a unique way, I think it’s a big win. I think there’s definitely risk involved with charge offs and everything that’s happening. But I think there’s a lot of alternative scoring methods, like, you know, we have, we have a few AI models, and so things that we can get ahead of some of that, and, you know, kind of like, find where we’re able to take risk. So I think it’s not going to be, I think from a risk perspective, it won’t be unprecedented, unprecedented. I think it’s going to be similar to what we’ve seen before. But I think it’s, you know, it’s going to be again, getting getting the right card in the right person’s hands, and then getting them to utilize it right and so I think for us, there’s definitely going to be risk, but the profitability on the products, you know, they can be higher, right? And so I think it can offset some of the risk that you have. So I think it’s, I think credit unions will pick their spots, and some will strategically choose to adopt credit cards, you know, some may stay away from them, but I think where we are right now is, you know, we definitely think it’s an opportunity, and we want to lean into
Sarah Cooke
it. Yeah, absolutely. And so I always allow my guests of final thoughts of these interviews. Joseph, we started with you, I believe so you go first with your final thought.
Joseph Gracia
Yeah, I don’t know final thought, but summary would be like, we’re still we’re learning a lot. We’ve iterated a lot. We’ve we’ve layered in, like, not only credit score eligibility check, but now pre qual report. We’re now going to be working soon with multiple bureaus and doing that. And so it’s been really great working with credit unions like service and through Filene and their pilot like that, to really figure out how we can tune and iterate to get CardFit working for them. And so a little bit of a unabashed sales pitch, like as Tyler mentioned, we’ve tried to make it incredibly easy for credit unions to trial and pilot CardFit, where all they have to do is fill out a launch worksheet letting us know where they want to go grow what their credit criteria is, and then you know what the paid digital budget would be, because we do want to make it easy to work with credit unions to try to figure out a solution that’s going to be right for them long term. So that’s my that’s my unashamed plug rather than
Sarah Cooke
And Tyler, how about you close us up? What do you have to say to your peers?
Tyler Kuhn
Yeah. I mean, I think just from a marketing perspective, I’ve never met a marker that didn’t want better quality leads in their funnel. And so I think you know with that. And then you know, again, this, this all started with the POC for us. And like, just being willing to try something and try something new with a spend that probably already exists. I like, I don’t know why you wouldn’t, right? It’s you can do something with a digital, digital spend that already exists, and get better quality leads, right? And if you don’t, then I think it’s a small risk with, you know, a greater reward. So, I mean, I don’t know why you wouldn’t try it, but it’s been, it’s been great for us
Sarah Cooke
So far. Awesome. Well, thank you so much, gentlemen. I appreciate your time this afternoon.