As Rates Rise, 'Bump Up' Option CDs Begin To Appear

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With rates rising, LA DOTD FCU has created a new share certificate program that includes options to bump up the dividend rate and lower or eliminate penalty fees.

The "Bend and Stretch" campaign that began in mid-September offers several new "flexible" certificates that put members in control of their money, said Michele R. Merle Lacour, VP of Growth Services.

"We really had not played with the share certificate product line," she said, noting that prvious efforts simply offered shares tied to prime. "We want to make it a little more flexible."

Using a rubber band theme to promote the products, the $79-million LADOTD FCU captured $233,000 in new share certificates in five weeks.

Most popular was the 12/6-month certificate that allows members to cash out after six months with no penalty. "The rate is 10 basis points below the standard 12-month certificate," she said.

Other options include the 24-Month Interest Plus Certificate and the 24-Month IRA Interest Plus Certificate. Both certificates give members a single opportunity to update or bump the certificate to the current rate and both require a minimum balance of $5,000. The difference between the two is that the initial rate of the former is 20 basis points below the standard 24-month certificate rate, Lacour said. The initial rate is 20 basis points below the standard 36 Month Certificate. Penalty for early withdrawal on both certificates equals 181 days of dividends calculated.

She said the CU also has several Principal Plus Certificates through which members can add money in $500 increments between the 1st and 5th of each month. Depending on the term, the rates vary from five basis points below the standard 12-month certificate rate to 10 basis points below the standard 36-month certificate rate.

Lacour said employees received special PowerPoint training and "help aids" from the marketing department to help them become well versed in the product line. She said the help aids are small cards that highlight key features of the products. Members learned of the promotion via direct mail, posters, fliers and the CU's website.

The share certificates are part of the CU's efforts to grow.

"Eight years ago, we were a sleepy credit union," she said. "Since then, we've undergone some wonderful changes."

In addition to a long line of new products and services that include financial counseling services for members, she said the CU is working internally to inspire staff using the popular FISH! Philosophy training.

Lacour, said even her new title as VP of Growth Services from traditional marketing director, shows the "visionary" qualities of CEO Cary J. Anderson. "He said, 'You're growing the credit union so why not have a title that reflects that,' "she said.

LA DOTD FCU serves Louisiana Department of Transportation employees and affiliates along with 100 SEGs and five underserved communities. She said the CU recently added a teacher to its full time staff to help direct financial literacy efforts in underserved areas.

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