RALEIGH, N.C. -
SECU's Bridge Account will mix aspects of a share (savings) account, with those of a brokerage, or stock account, and will pay dividends based on the quarterly return of the Standard & Poors 500 Index, thereby satisfying the bulls, who want to take advantage of the soaring stock market; and the bears, who worry the bull market will come to an end.
"We're excited about this," said Joan McCool, senior vice president of SECU's Investment Services, which recently introduced brokerage services to the credit union giant's 1.3 million members.
Member response has been strong since April 1, when the product was introduced, with 1,174 accounts 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 McCool.
The dividends are tied to the S&P Index, with a maximum return of 3% APR per quarter, and 12.55% APR a year. If the S&P Index declines for the quarter, then no dividends will be paid and there will be no losses. 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.
And if the current bull run continues you can expect to see other CUs adopt similar hybrid accounts, as the S&P has risen by a whopping 5.28% in the first five weeks of the second quarter.
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.
And it's safe for the CU because of the cap on dividends and on the deposit limits, she asserted.
While SECU is now offering brokerage services through XCU Capital, it is offering the Bridge Accounts through the credit union side of the business.
