JACKSONVILLE, Ark.-Some credit unions are finding those debit promotions that have ramped up the past few months are reeling in more than checking accounts, they're attracting profitable members.
Credit Union Journal spoke with three credit unions that have been running campaigns that center on debit incentives, free debit and checking, and bank fees.
All three of the credit unions confirmed that consumers are fed up with competing pricing from bank issuers, to the point that the credit union often doesn't have to initiate the cross-sale to get a deeper relationship.
"We had a member come into one branch who had been with a bank for 40 years-one of the banks that announced the debit usage fee-and she moved her entire relationship," said Larry Biernacki, CEO of the $840-million Arkansas Federal Credit Union. "We got her savings and checking accounts, debit card, online banking and bill pay, direct deposit, and she applied for a credit card. That is not untypical of what we are seeing throughout our 14 branches."
Arkansas Federal Credit Union is not running a new debit or checking promo, instead, it is has pledged to its members and the community it will not charge any debit card usage fees for at least the next three years.
That announcement brought in 646 new checking accounts in October, a 12% increase over the credit union's best checking month ever and 40% above this year's average monthly total.
Oct. 1, Coastal FCU began offering a whopping 2.51% APY on checking for members who swipe their debit card 30 or more times a month.
But it isn't the rate that's setting new checking account opening records at the Raleigh, N.C.-based credit union, it's the fact that the $2-billion Coastal is not charging for debit or checking.
So Irate, Rate Doesn't Matter
"As it turns out, people are so upset with the banks that the large majority of those coming into our branches to open up a checking account really don't care about the checking rate," explained CEO Larry Wilson. "They are just dissatisfied with their bank and don't want to pay fees. Some, mostly older individuals, are saying they don't even want the debit card. But our staff has been able cross-sell the card by explaining debit is safer and easier than using checks."
Besides opening 1,790 checking accounts in October, two-and-a-half times the credit union's monthly new checking business, Coastal is opening many other services for the new members-and more will come down the road.
"The new accounts have come so fast it has been difficult to cross-sell to the level we would like," Wilson observed. "About 60% of the new members say they want to bring over their entire financial relationship. It's hard to handle all that right now, but we'll get it done."
In Charleston, W.Va., Pioneer West Virginia Credit Union is paying members five cents every time they swipe their debit card, and based on results from the first week of the campaign, the $140-million credit union will get a lot more than new checking business.
SVP CFO Dan McGowan said of the nine new checking accounts opened, six were from new members, seven members signed up for direct deposit, and five took auto loans.
"We are getting traction on social media, too," he related. "A couple of the new members are talking about us on Facebook, saying we are doing something very different than banks."
Where Focus Needs To Stay
That is the point credit unions need to stay focused on throughout this rush to join credit unions, Biernacki said, adding that credit unions also need to stick with it long after this rush subsides.
He insisted credit unions cannot overlook the fact that vast majority of the public does not understand the value of credit unions and that it is the credit union community's job to regularly educate their communities.
"Credit unions often forget we have to share this message again and again, and you have to make sure people are listening. I think we get complacent and often don't do a good job of this," Biernacki suggested. "We have been guilty of that here. We'll bury the information on the credit union difference inside the newsletter or send it out as part of a direct mail piece and think we did our job."
