HAMPDEN, Maine — Maine Savings Federal Credit Union, a $296-million institution based in Hampden, Maine, has witnessed an astonishing 63% surge in net new checking accounts after introducing its "RedWallet" checking product in June of 2014.
RedWallet — which comes in various forms — is basically a free checking account that offers easily achievable rewards.
"Many financial institutions are charging fees to maintain checking accounts," said John Reed, president and CEO of Maine Savings in a statement. "We're not just offering RedWallet for free; we're paying out rewards to many of our member-owners."
Indeed, after the first twelve months of the product's introduction, Maine Savings handed out more than $180,000 in rewards to members through interest, cash back, tunes and ATM refunds.
For example, the "RedWallet Cash" checking account product pays a high interest rate, while the more fanciful "RedWallet Tunes" product gives back rewards in the form of downloadable music. Another product, "RedWallet Cash Back" returns a percentage of debit card purchases.
"Several years ago we began researching both what people in our area wanted in a checking account as well as what trends were developing with our competitors," Kirk Duke, VP of marketing at Maine Savings FCU, told Credit Union Journal, explaining the motivation behind the RedWallet launch. "While consumers wanted more, it was clear they were getting less. We set out to fill the void."
The aforementioned 63% year-over-year jump in new checking accounts came entirely from the RedWallet program, Duke noted. "While we did not force any existing members to switch to RedWallet, we no longer offer our legacy checking account for new accounts."
In addition, since the launch of RedWallet, the credit union has seen a net increase of 1,200 new members from the product. "These are people who were not members [initially] and whose new membership started with a RedWallet account," he noted. (Maine Savings has about 28,0000 members in total).
There are, all told, four different RedWallet Checking products: RedWallet-Cash: RedWallet-Cash Back; RedWallet-Tunes; and the optional RedWallet-Saver.
With respect to the three main accounts (Cash, Cash Back and "Tunes"), they all offer: no monthly service fees; no minimum balance to earn rewards; free online banking with bill pay; free mobile banking and free app (iPhone and Android); free e-statements; free VISA debit card; unlimited check writing; a $20 minimum deposit to open an account; and an overdraft protection line of credit for qualified members.
In addition, to earn rewards under any of these three checking accounts, for every monthly cycle, members must: have at least 12 debit card purchases post and settle; be enrolled and receive e-statement notices; and be enrolled and log into online banking.
The accounts differ somewhat in terms of what members get back in return.
Under the RedWallet-Cash account, members receive Annual Percentage Yield (APY) of 2% for balances up to $10,000. For balances above $10,000, members earn 0.25% interest rate on the part of balance over $10,000.
Under RedWallet-Cash Back, members get 2% cash back on debit card purchases up to $400; up to a total cash back of $8 per monthly qualification cycle.
Under RedWallet-Tunes, members (who are presumably music-lovers), can earn up to $10 every month in automatic purchases on iTunes or Amazon.com.
A fourth checking account, called "RedWallet Saver" is described as a "companion account" to either the RedWallet Cash or RedWallet Cash Back account. Saver, which also requires no minimum balance or monthly fees, provides 0.50% APY on balances of up to $10,000; 0.25% APY on the amount of the balance over $10,000.
"The money you earn in RedWallet Cash, including the high APY and ATM fee refunds, will sweep into RedWallet Saver to help you save more," Maine Savings explained. "The money you earn in RedWallet Cash Back, including the cash back and ATM fee refunds, will post into RedWallet Saver."
Of the three main RedWallet products, the "Cash Back" is by far the most popular, Duke noted, with about 80% choosing it.
But why did they name the product RedWallet? Duke explained that, to be successful, they believed that Maine Savings needed not only a product that people wanted, but they needed to present it in a way that made it easy to remember and easy to ask for or search for by name.
"We launched RedWallet with a focused product brand," he said. "Maine Savings is still the overarching brand, and RedWallet fits nicely within it."
Given the success of RedWallet, Duke said they plan to introduce new checking products in the near future.
"We are currently in the process of revamping our business checking," he stated. "We followed a similar process — research what businesses want and what is available to them and build a product accordingly."
But Maine Savings does not have any plans to roll out any more consumer checking products at this time.
"However, we are working on other initiatives that [will] complement RedWallet," he added. "We'll be launching a member discount/loyalty app by the end of the year that offers members discounts at local merchants and alerts them to those discounts through the app when they are in proximity to the merchant."
