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BETHPAGE, N.Y.-Earlier this year, as several banks in its markets placed restrictions on free checking, Bethpage FCU made a splash by not only keeping its checking accounts fee free in 2010, but adding an interest component for qualified members.

Bethpage Bonus Checking has no monthly fees, no minimum balance requirement, and no per-check charges. It comes with a free VISA Check card, online and mobile banking, and free online bill pay. It offers 1% interest for each month members meet transactional and other requirements: online banking with e-statements, direct deposit into the account and posting 15 point-of-sale debit card transactions per month.

Robert Hoppenstedt, SVP at the $3.9-billion CU, told Credit Union Journal it has been opening about 380 to 410 checking accounts per week for most of the year since the product was announced. "Both Chase and Bank of America have largely eliminated their free checking products or put in absurd minimum deposits, so we have seen a lot of people come across the street," he said.

Bethpage FCU has run ads in local newspapers promoting Bonus Checking, but Hoppenstedt said the most effective strategy is to emphasize the product during member onboarding. If the new member does not open a checking account, the staff follows up by phone within 10 days to ask about service satisfaction. At that time, new members are reminded about the checking account.

"When we follow up with letters we mention the checking account," he said. "We also do direct mail from branches within a two-mile basis. Raddon Financial Group is able to pinpoint locations. What we've found is outside two to three miles from a branch, the percentage of members who use us for checking drops off dramatically."

Bethpage FCU has opened approximately 16,000 new checking accounts year to date; about 9,000 of those are Bonus Checking. Hoppenstedt said Bonus Checking has been an easy sell for three reasons: it is simple, free, and rewards are uncomplicated.

"People are catching on to the fact they can get interest by doing a few things, and these are members who have a better relationship with us today than they had six months ago," he said. "Unlike other rewards checking products, we are not paying an obscene amount of interest and not cannibalizing our money market or CD accounts. It is a fair product for everybody."

According to Hoppenstedt, Bethpage FCU has improved its penetration of new members with checking accounts from 35% to 60%.

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