RALEIGH, N.C. -
Member response to the product, which is indexed to the performance of the Standard & Poor’s 500 Index, has been strong since introduction on April 1, with 1,174 accounts initially opened generating $1.7 million in new deposits. “I was very pleased with those numbers; for a brand new product, to have that much interest in one month,” said Joan McCool, senior vice president of SECU IRA & Investment Services.
McCool said by the end of third quarter there were some 4,744 Bridge Accounts opened with $6.62 million in deposits. McCool attributed the growth to members who are shopping for savings products that are earning above what traditional market accounts are yielding.
State Employees CU introduced the Bridge Account in hopes it will satisfy both the bulls and the bears among its members. It is one of the first credit union accounts tied to the returns of the stock market. To make it easier for members to participate, SECU has kept low the minimums to open.
SECU’s Bridge Account mixes aspects of a share account, with those of a brokerage, or stock account, and pays dividends based on the quarterly return of the S&P 500 Index.
There are no fees to open a Bridge Account and no surrender charges. The minimum balance is $25, while the maximum is $3,000. “That’s pretty much the maximum that most of our members can afford,” said McCool, who promotes the account as a way for the small saver to benefit from the stock market.
There is a maximum return of 3% APR per quarter, and 12.55% APY per year. If the S&P Index declines for the quarter, then no dividends are paid; the principal remains unaffected. The S&P 500 has grown 4.18% YTD, according to Standard and Poor’s.
“We’re excited about this,” said McCool. SECU’s Investment Services recently introduced brokerage services to the credit union giant’s 1.3-million members. The account, with its federal insurance coverage and small cap on deposits, is safe for members, according to McCool. “The only cost to them is the lost opportunity when the stock market declines,” she said.
nd it’s safe for the CU because of the cap on dividends and on the deposit limits, she asserted. McCool said she thinks growth will continue and that as long as the market continues to grow, it will stimulate interest in the product. “4Q is still in doubt, but we hope at the very least it will be an education for members and they will go for the $3,000 (the maximum deposit) eventually.”
While SECU is now offering brokerage services through XCU Capital, it is offering the Bridge Accounts through the CU side of the business.
