Guaranteed $500 Holiday Loan Has Members Lined Up, Waiting In Texas
For the third year running, First Community Credit Union is offering its members a $500 guaranteed loan for holiday spending.
And, with 1,180 loans already approved in the first month of the two-month promotion, officials here expect at least a 50% increase in volume over last year.
"My (loan officer) is about to strangle me," joked Diana Fisher, VP Marketing. "I told her, 'On a selfish note, I am thrilled. If every promotion could be this successful, I'd have to hire 15 new people.'"
Last year, First Community approved 1,334 loans, an increase of 80% over 2001's loan total of 741, she said. Total amount distributed the first two years was $166,400 with an ROI of 20.75%.
But, Fisher quickly added that the goal was not to make money; rather it was to increase SEG membership penetration and draw attention to the credit union as a valuable financial institution.
"Our CEO, Ron (Downing), is really into finding new ways to differentiate ourselves from other financial institutions," Fisher said. "And I would say that out of that 1,134 loans from 2002, at least a fourth were new members."
While the CU is community chartered, Fisher said only selected employees from SEGS that offer direct deposit and payroll deduction were invited to apply for the loans. Many received word via a four-color payroll insert on Nov. 1. Because of a computer glitch at one school district SEG, she said, the credit union had to spread the word via direct mail.
But, even before the mail was delivered, Fisher said, members from that SEG were calling.
"Once one person heard they were going to be eligible, they told other people," she said. "At one point, we had nine in a row from them."
An extra benefit for those members who received a loan last year and paid it back on time was that they could receive an additional $250 during this holiday promotion, Fisher added.
"It's just another benefit of being a member of this credit union and for paying well," she said.
To qualify for the guaranteed holiday loan, members must show proof of at least 12 months of employment with the SEG. In addition, they must agree to repay the loan via payroll deduction or direct deposit. The interest rate the borrower receives is based on their own credit.
Fisher said that the 2002 promotion was so successful, one SEG had employees lined up to apply for loans via the CU's call center phone line. To keep the process moving smoothly, she said, the phone was passed from person to person, without anyone having to hang up and redial.
"Our call center representative just kept taking applications one after another," Fisher said.
While the credit union did project delinquencies-"We're not always dealing with A- plus credit," Fisher acknowledged-the hit wasn't too bad, maybe one car loan's worth.
And, in some cases, it was errors in setting up the accounts that caused the losses.
"We had people whose payroll wasn't set up accordingly," she said. "They just got frustrated and didn't pay up."
Fisher said First Community has taken extra steps this year that include allowing plenty of time between approval and payroll deduction date. "We learn something every year to make it easier on everybody," she said.
FCCU, a community-chartered CU with about 130 SEGS and two counties within its FOM, is the largest CU in Houston with more than $400-million in assets.