Posted by Jon Cook, CUES editorial intern
I decided to do a little follow-up on my previous blog post on the stimulus payments. After thinking more on the topic, and talking to CUs, I found two more that are specifically using the stimulus payments to encourage their members to save for the future.
These products come as direct competition to most other industries that are trying to get people to spend their rebates right away.
Meridian Trust Federal Credit Union has come out with a 20 percent share certificate special for a three- or six-month term ($10 per $100 deposited). Primary members can open one account and deposit the amount of their stimulus payment (max $600). Now that's an eye-catching rate!
"We are encouraging savings and financial restraint, to delay spending, so members can use the money for the holidays or college," says CUES member Kim Withers, president of $171 million Meridian Trust FCU, Cheyenne, Wyo.
Withers says she was encouraged to promote a special product after talking to branch employees who planned to save their stimulus payments. She was optimistic that local people were following the national trend and at least thinking of saving the payments.
The idea behind the promotion is that members will save the money for the upcoming holidays or the fall semester of college, because they may need the money more then than they do now. "We are trying to tell members that they don't have to spend all of the money at once, or at least get them to pause before they spend it and think about saving."
"While the money hasn't come in droves yet, the promotion has created a positive buzz in our local market," says Withers. "Nothing like this is happening in our market that we know of."
After running for 10 days, the credit union opened 76 share certificates for a total of $44,452. The goal of the promotion is $500,000 in new deposits.
Seventeen of the 76 share certificates (22 percent) were opened by members in their 20s and 30s. "We are focusing on the 20- and 30-year-olds, so these are good numbers for us," she says. It is encouraging for the CU to be able to motivate younger people to save the stimulus payments. In contrast, 35 of the share certificates opened (46 percent) were opened by the 40- and 50-year-olds, the age group with the greatest CU membership penetration in the industry.
The marketers at Meridian Trust FCU have focused on advertising the promotion via newspaper, lobby flyers, word of mouth, and ads on the CU Web site.
Withers says the major complaint with the promotion has come from the older age groups, because they want to be able to put more money into the certificate.
Arizona State Credit Union is also trying to get its members to put their entire payment away, but hoping that members will at least save a little. The marketing team developed its product, believing most Americans wanted to save the stimulus money or use it to pay down debt. For many CUs, the thought that members will use the money to save or pay down debt is encouraging, because many CUs are hoping members will begin saving as a way of life.
"There is no better time to start saving than when you have money," says CUES Member Paul Stull, SVP/marketing for $1.1 billion Arizona State CU, Phoenix, Ariz. "This is a very special deal. We wanted to go after it, and try to encourage our members to start saving."
On May 5, Arizona State CU unveiled an account that pays 5 percent on balances up to $1,000. To keep earning the 5 percent members need to continue adding money to the account. There is no minimum deposit, but members need to add their target dollar amount to the account every month. The monthly deposit could be as low as $5. "We want people to keep saving at least in small amounts, and we wanted to target the small savers," says Stull.
The title of the promotion is "'Mommy, where do stimulus rebates come from?' 'I don't know, but I know how to make 'em bigger.'"
Arizona State CU took out full-page ads in newspapers across Arizona, including in the Arizona Republic, and also marketed with humorous radio ads. "We don't want this to be totally serious. We want to have a little fun with it," says Stull.
"We are using this promotion to try and plant the seed in individuals' minds that saving is good. We want them to stop and think before spending the money," he says.
Stull summed up both promotions by saying, "We've run pretty hard with this idea, and if it doesn't pay off, it wasn't for lack of trying."
In face of uncertain economic times, it is apparent that Americans are seriously considering saving the money for the possible economic rainy days to come. This is a great opportunity for CUs to help their members help themselves and begin saving as a way of life.
