BETHPAGE, N.Y.-As the retail marketplace changes and many banks are placing restrictions on free checking, Bethpage FCU is not only keeping its checking accounts fee free, it is adding an interest component.
Bethpage Bonus Checking has no monthly service or maintenance fees, no minimum-balance requirement, and no-per check charges. It comes with a free VISA Check card, free online and mobile banking, and free online bill pay. It offers 1% interest for each month members meets transactional and other requirements: online banking with e-statements, direct deposit into the account, and posting 15 point-of-sale debit card transactions per month.
Robert Hoppenstedt, senior vice president at the $3.7 billion CU, said Bethpage "tweaked" an existing checking product it has had for three years to create Bonus Checking.
"What we wanted to do was make it more appealing for people, given what is going on in the checking market at the time," he said. "The main tweak was the ability for someone to earn interest on the account-it previously was straight free checking."
Hoppenstedt told Credit Union Journal Bethpage's decision to restructure the product was not in response to anticipated revenue declines due to changes in interchange-related rules; instead it was born of a desire to build the number of active accounts. Requiring a minimum number of debit card transactions is designed to ensure BFCU isn't carrying empty accounts on its books. The levels were made "very reasonable," so people could make the 1% interest, he added.
"But we don't have any hooks on the free checking side-we still give people free checking," he said. "Chase (Bank) requires a certain number of debit transactions for free checking, and other banks have requirements for free checking. I was a banker for 25 years, so I know banks look at checking as purely a profit product. Our philosophy is different: we believe the core product begins with checking. If it is free without hooks and without strings, it is the first step of a relationship. Members are not required to have a checking account, but checking is why we build branches and why we have online banking."
Bethpage is promoting the new Bonus Checking product through a variety of channels, including print advertising in local newspapers, radio spots, notices on its webpage and Facebook page, and direct mail. There is an explanation of it in the latest edition of its bi-monthly newsletter, as well as in-branch merchandising.
The common thread in the marketing messages: while banks are eliminating free checking, the credit union is keeping checking free and offering an opportunity to earn interest.
Bethpage FCU is a member of the CO-OP Network, and it uses CO-OP data to see how it stands compared to its peer group. Hoppenstedt said average monthly debit transaction use by its checking account users is approximately 12, while the average for all CO-OP member CUs is 18 to 20.
Inside The Numbers
"So we decided 15 debit transactions was a good number for this account," he said. "We grandfathered in everyone who opened a checking account in the last three years-they don't have to close their account and reapply. About 20% of checking accounts already qualified to earn interest, which seemed a reasonable number."
Hoppenstedt said BFCU opened 400 of the new checking accounts during its first week of availability, and that was without any advertising.
"The feedback from the branch personnel is it is very easy for them to talk about. It is free, and there is an opportunity to earn interest. Members appear to be very happy. We open about 1,200 checking accounts per month. Long Island is a great market."
