WALNUT CREEK, Calif. - Pacific Service Credit Union has been offering not just an attractive CD rate, but throwing in a twist.
The $1.1-billion Pacific Service has been seeking to attract new members–especially young people in the coveted under-23 age bracket. To do so, it created a special certificate for new members that offered 7% APY on a six-month term. The minimum investment varied by age: new members 23 or younger could open a certificate for just $100; for all others the minimum was $1,000. The maximum amount that could earn the 7% rate for members of any age was $1,500.
And just so existing members did not feel left out, Pacific Service CU developed a “7 for 11 Certificate.” Terms required a $50,000 new money investment, where the first $10,000 earned 7% APY for 11 months.
Noelle Fischer-Herbert, Pacific Service’s vice president of corporate development, told the Credit Union Journal the rate was intended to attract new members by offering a higher-yielding investment than is available in the market. The $1,500 maximum was a hedge so it did not get inundated with high-cost money at 7%, she explained.
“The minimum was set for younger savers at $100 because we found kids with lower-balance accounts do not have a lot of earning opportunities,” said Fischer-Herbert. “Perhaps their parents will make the deposit for them, but it has to be a new member.”
For Pacific Service CU, its current CD promotion has “been an evolution,” according to Fischer-Herbert said. In 2007, Pacific Service first offered the 7 for 11 certificate, which drew “a phenomenal response–$12 million of new business in the communities we serve.”
When deposit rates began sliding in response to the Fed’s recent rate-cutting campaign, the credit union wanted to maintain the program but avoid too much high-cost money on its balance sheet, she continued.
“We want to keep our reputation in the community as a high-investment-return provider. We are paying 7% in a market where the average for a CD is down in the threes. In that environment, we are attempting to establish in the community markets we serve we do have an impact, even when rates are down.”
Pacific Service serves 12 counties in Northern and Central California.
The current offer paying 7% APY on six-month terms for new members debuted in the latter half of January. As of March 3, Fischer-Herbert said, it had brought in a total of $2.9 million and 87 new members. Of the new members, 27 are age 23 and below.
“The 23-and-under new members have $40,000 of that $2.9 million. The program is geared toward new members, and we priced the 23-and-under rate to attract youths. The hardest thing a credit union does is attract new members, so we’ll take them any way we can get them.”
