Mass. CU's $100-Minimum CD Draws Larger Balances

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Most everyone agrees young people and those with lower incomes should save more money. Less certain is how do to that.

M/A COM FCU here has an idea. It has launched a "Build Your Nest Egg" certificate of deposit that can be opened with as little as $100 but which still pays an attractive 5.25% APY during its 13-month term. The CDs are capped at $10,000 per member. By contrast, M/A-COM offers a nine to 17-month CD at 5.00% APY with a 2,500 minimum deposit. M/A-COM VP of Operations Carla Waldo said the goal was to reach out to members who have a deposit relationship with the credit union, just not much of a relationship.

In little more than a week after introduction, the Nest Egg CDs brought in more than $100,000 in deposits for M/A-COM FCU.

"We really want to reach out to people who don't have a history of savings," Waldo said. "People are very excited about it. This is really getting people to act."

Waldo said the idea was generated at a regular monthly meeting during which staff brainstormed strategies to increase deposits and encourage young members with low savings. Too often the typical certificate promotion attracts members who have larger balances and who can afford to park funds for a while, leaving out the smaller or first-time investor, she said. The low-cost CDs deepen member relationships and creates loyalty to the credit union, Waldo added.

"You get people running in the door with $100,000. We have those people, but they probably don't need it (a special promotion)," she said. "We don't want to exclude any young people. A lot of the time, people with a little money are the most loyal."

"Build Your Nest Egg" is mainly being marketed by word of mouth, Waldo said, with support from print advertisements in a local newspaper. The average deposit so far has been around $3,000, and no member has opened an account with the $100 minimum

M/A-COM has yet to set a cut-off date for the certificate. Waldo said members are seeing it as a custom service provided by their credit union and have been highly complimentary about it.

"We're going to see how successful it is. So far it's been extremely successful," Waldo said.

Waldo said members can't add on to the CDs since the $19.5 million M/A-COM FCU doesn't have software capable of tracking a large number of changes to the accounts. Members seeking to take further advantage of the high rate can buy a separate CD but are still limited to a $10,000 aggregate maximum deposit. M/A-COM FCU was formed in1958 to serve the employees of Macom Inc., a defense and communications company. The CU has two on-site branches and recently opened a third in a restored mill in downtown Lowell, Mass.

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