BEDFORD, Mass. — Saving money, suggests one credit union, is like eating spinach- many people don't like to do it but they know it's good for them.
That philosophy led Hanscom FCU to offer a 5% APY on an existing savings product to spice it up and encourage members to overcome any aversion to saving, and boost the credit union's checking activity in the process.
The approach and the pricing makes the product, called CU Thrive, more palatable to members today, according Scott Post, HFCU's SVP of strategy and delivery, who shared that 600 CU Thrive accounts were opened in the first month of the offer. "CU Thrive is a cleverly repackaged, one-year certificate positioned to look like a savings account. Like a traditional CD, you have to keep money in until maturity, but we don't call it a maturity date. We call it the anniversary date."
The product requires members to make regular deposits of up to $500 a month, and money must be transferred from HFCU's free checking account. Members can choose to deposit weekly, biweekly, or monthly in amounts as little as $5. The minimum balance requirement was removed from the original CD and no money is needed to open the account.
"The average monthly deposit has been about $200 to $250," shared Post. "But we are getting amounts as little as $10 to $20. This shows the product has wide appeal. We're not just attracting rate shoppers."
Benefit to Members
The benefit to members, outside of the rate, is that they are saving at a time when saving can be difficult, offered Post. "We want them to think about paying themselves first, which is what happens with the automatic monthly transfer from checking. Members can choose to stop the monthly deposits if they run into financial trouble, but the money stays in until maturity."
CU Thrive is one element of HFCU's "multi-pronged effort" to help members better manage their finances and remain financially sound (
'Not Priced to Make Money'
Post said the savings account was "not priced to make money," but shared that the credit union benefits in other ways. "CU Thrive makes checking accounts active. There are a lot of institutions that say you get these special rates and you have to have a checking account, but there is no real engagement in that checking account. Here you actually have to fund it. So what we're hoping will happen is that members will modify their behavior."
Post says HFCU has limited its risk exposure with the monthly $500 limit, noting that the maximum any member can deposit in a year is $3,000. He said the CU is balancing the higher rate against its overall cost of funds. Hanscom's capital stood at 10.25% at the close of 2008, a year in which the $660-million credit union grew by $60 million in assets.
No changes have been made in loan pricing, said Post. Members with the best credit scores at press time paid 4.49% for a 60-month auto loan, 4.875% for a 30-year fixed-rate mortgage, and 8.49% for a signature loan. CD pricing stood at 2.35% for 6-months and 3.35% for 60 months.
"We look at the costs for CU Thrive as a marketing expense, as opposed to a cost of funds expense," added Post.
The SEG-based credit union has promoted the offer to members via e-mail, its website and newsletter, and in-branch signage with the slogan: "Don't just save, Thrive!"
