Gabe Krajicek, CEO of Austin, Texas-based BancVue, a wholesale financial services company, reminded credit unions to be aware of the potential for a short-term interest rate hike in 2015.
"No one knows for sure when rates will rise, but we cannot maintain the current interest rate environment indefinitely," Krajicek said, noting the inflation target is 2%, and the economy is approaching that, so there is pressure on the Fed to raise rates.
CUs need to prepare now so they do not get caught "flat footed," he said, adding, "Our products are good in a rising-rate environment, because credit unions can get their members into low-cost accounts now."
Most short-term products have to reprice "tick-for-tick," according to Krajicek, and consumers who have CDs are not loyalthey move their money when accounts reprice. He pointed to Kasasa accounts, one of BancVue's products, as an example of how to gain core deposits that are not as rate-sensitive as CDs or money market accounts.
"They reprice slowly, but they are checking and savings accounts, so consumers do not switch financial institutions," he said. "Find ways to get lots of low-priced deposits now, and not end up having to offer high-rate CDs next year."
