By Ray Birch
ROME, N.Y.—One credit union seeking to rebalance deposits from certificates toward core deposits has revamped its checking line, but instead of just dangling a high-rate account, it is also offering a rewards option—and more members have been choosing the latter.
As CUToday.info reported, AmeriCU Credit Union has streamlined its checking offerings and members can now pick their perks between earning dividends or rewards.
“We’ve been around for a long time, serving the needs of our members since 1950,” said Kristy Nole, AVP of marketing. “We have grown to more than $2.7 billion in assets and over 160,000 members throughout not only New York State but beyond. We've attributed this success to always providing our members with competitive products and services that meet their needs.”
In AmeriCU’s case, that has meant a broad menu of checking offerings.
“But it had been quite some time since we had evaluated these programs,” Nole said. “So, when we did a deep dive, we learned that although we offered our members a lot of checking options, it was almost too many.”
In response, AmeriCU decided to cut the line to two offerings, one with a 4% rate, and another that offers rewards. Nole said the credit union also realized it needed to make changes to keep attracting deposits in a “hyper competitive environment,” pointing out the “plethora” of choices consumers now have from all over the country and from many non-financial institutions, as well.
Reducing Costs, Remaining Competitive
“Our core deposits were remaining flat in this environment, and we were seeing primarily the bulk of the growth come from certificates. We are remaining competitive, paying 500 to 600 basis points on those dollars. As I said, our certificates were continuing to drive deposit growth, but these new checking accounts will help shift that focus over to our core deposits, which are far more sustainable,” Nole said. “They reduce our cost of funds and they provide members with a high rate alternative on more liquid funds.”
Kristy Nole
Nole acknowledged that many members want a high-rate liquid account.
“We want to be able to continue to offer members great rates and also meet their lifestyle needs. Not every member wants to tie their money up in those certificates, they want to have access to those funds,” she said. “And, from a liquidity and financial management perspective, it's a far greater opportunity for us to do something with those funds at a lower cost.”
Shift Taking Place
Nole said that two months into the new accounts, significant funds have been flowing into checking, shifting away from the share certificates.
“We've had more than 3,000 members in the past two months convert their checking accounts from their old program into the new one. That emphasizes that these products hit the mark,” she said.
Both the rewards and high-rate products have similar requirements:
- Members conduct 12 or more signature-based debit swipes in the course of the month
- Members ust opt for e-statements.
If members don't meet the criteria for any given month, they don't earn the rewards points for that month or receive the high rate.
How Account Works
“For the rewards checking, members earn one point for every $5 spent on their signature-based debit transactions,” Nole explained. “Members can trade rewards points for cash back, merchandise or travel. We have a link right within our online and mobile banking that they can go to quickly and easily to redeem those points with the click of a button. We also have a message that goes directly to members when they're at the check-out register, letting them know their points value, so they can apply those points to transactions.”
Nole said some participating merchants offer AmeriCU members real-time rewards.
“When members go to the register, they’re notified that the merchant is offering an additional reward they can use, such as money off their transaction,” she said. “Participating fuel merchants are delivering discounts right at the pump. Also, because it is the same rewards program we offer on our credit card holders, members can combine those points for even greater purchasing power.”
How High-Rate Account is Priced
Members who choose the high-rate account get the dividend for every dollar up to $10,000. Above that the rate is .15%.
In addition to the 4% APY, members can also receive an extra 1% on every dollar up to the first $10,000 if they also have a consumer loan relationship of $5,000 or more that's in good standing.
Nole said 65%, have opted for the rewards checking option. She added that both accounts cost the credit union the same to offer.
Starting Slow
According to Nole, AmeriCU has “started slowly” with the new offers to see how they perform and how the CU’s costs are impacted, doing things like limiting the high rate to the first $10,000.
“This gives us a little more control over cost, but still allows us to return more to the members,” she said. “Those are things that we will continue to evaluate as we go forward. Maybe there will be even greater opportunities for us to give back more.
Both accounts offer additional perks, including ATM rebates and the ability to receive a paycheck a day early for those with direct deposit.