LoanPromo Surpasses Goal By 544%
WOODBRDIGE, Va.-Belvior FCU is reporting its most recent loan promotion exceeded goal by 544%.
The results, according to the $266-million CU, suggest that consumers may be gaining confidence in the economy and are looking to borrow more, and that it may be a good time for credit unions to pay more attention to marketing a line of credit.
The loan volume results surprised Belvior FCU, which was simply looking for a one-month loan promo to fill the gap between its summer and holiday loan campaigns. "I think we learned we have products that we typically don't market and that maybe we should," said Amy Shanks, e-marketing specialist. "You see a lot of auto loan and mortgage loan advertising in the market, but no lines of credit. It was unique."
On its Gold Star Line of Credit, Belvoir cut its standard 7.75% variable rate to 7% fixed for the initial advance only, as long as the advance was taken in September during the promotion. "The goal was to acquire at least one line of credit per business day-so 25 loans-and we hoped for $125,000 in approved balances," said Shanks. "We got 89 loans for $861,800 in approved balances. The average approved balance was $9,000 and the average advance was $7,000."
Shanks pointed out that Belvoir Federal exceeded goal in the number of loans by 356% and 544% in actual advances ($680,000) on the revolving line of credit. Shanks noted the local market average for revolving lines is 10%. "We were so much lower than the competition it was just a matter of getting the rate out there," Shanks said.
BFCU viewed the promo, in part, as a loss-leader. Shanks explained the credit union needed to make 125 loans to break even on the deal. "And since it is a revolving line of credit, our hope is that members use it for their next need, maybe a home repair or a loan for college. We expect to deepen relationships with this product."
Despite extending the offer down to the C tier, BFCU was not concerned about risk, having recently tightened its lending standards. Shanks said most of the paper was A and B credit.
BFCU promoted the campaign on its website, through Internet banner ads, Internet interactive commercials, print, and in-branch signage. In addition to the low-rate advance, advertising touted debit card access and a rate "better than a credit card," saying "Get Star Status." The CU's credit card rate is 8.9% variable. Former Washington Redskins running back Brian Mitchell was the spokesperson. "We were more than pleasantly surprised at the results of the campaign," concluded Shanks. "We opened things up for a product we had not marketed before and it took off."