10% CD Rate Draws A Crowd
More than 100 people lined the sidewalks of Glacier Hills Credit Union's new headquarters recently to take advantage of a CD rate not offered since the 1980s-10%.
That annual percentage yield is nearly double the rate in metropolitan Milwaukee for some one-year maturity CDs, and more than twice the state average of 4.25%.
"It was quite a busy day,'' said Christine Petroff, marketing manager of the $56-million GHCU, describing the crowd that was at the CU's doors from 8:30 a.m. until 3 p.m. to join the CU, open checking accounts and/or deposit a $1,000 minimum/maximum into one-year CDs paying 10% interest.
During its first day of offering a limited supply of 750 CDs at the 10% rate, some 328 CD accounts were opened. In addition, the CU brought in 99 new members and opened 100 new checking accounts.
Several days after the grand opening, Petroff said, members were still inquiring about the 10% rate. "We've had a lot of people call and say they couldn't make it Saturday but still wanted the special rate,'' she said. "They can get it as long as we have any left.''
To qualify for the rate last offered when Ronald Reagan was president, she said, participants had to open a checking account and promise to conduct at least one check card transaction or check withdrawal per month for the duration of the CD.
"We didn't just want people to open a checking account and let it sit there,'' Petroff said. "We're hoping that most will like our services and stay with us.''
She said CU staff planned to monitor the checking accounts of those members with the special rate. "If someone does not maintain their checking account, we will revert the CD rate back to the standard rate (4.75%),'' she said.
Petroff said the standard rate CD pays about $50 per $1,000. This promotion doubles the interest to $100 for each 10% CD or $75,000 in total interest if members take advantage of all 750 CDs. The CD must remain untouched for the full year to receive the special rate. At maturity, it converts to the going rate for a one-year CD.
"The value was worth it,'' Petroff said. "It's not that we made any money from it, but we did bring in a lot of new members with active checking accounts and new CDs.''
There was no "new money" restriction on this offer, Petroff said, because the CU did not want to penalize existing members. However, she said, in conjunction with the 10% rate, the CU is running a separate new money-only CD promotion at 5.05% for 10 months.
Petroff said the campaign borrowed from a similar offer made by another credit union was used to attract new members and inspire existing members to utilize more services.
"We wanted to bring in new members but we didn't want to leave our existing members out or exclude them from such a great offer.''
Once they completed their transactions, participants were treated to food, drawings for prizes and children's activities, Petroff said.
The CU's five-county field of membership was alerted about the special offer via direct mail, special inserts in local newspapers and radio advertising. One local newspaper even ran a business article about the special rate.
"We were very pleased with the results,'' Petroff said, adding that while she didn't know how much was invested in the campaign, she expected CU officials would crunch numbers determine its return on investment once all the CDs are taken.
Petroff also said she would not rule out offering similar promotions in the future.