By Ray Birch
ROCKY HILL, Conn.—Paying almost 5% on checking is helping one credit union overcome consumer misperceptions that CUs are difficult to join and that they offer fewer services than banks.
The $368-million Nutmeg State FCU has launched First Choice Checking, which pays 4.99% APY. CEO John Holt explained that the rate not only catches consumers’ eyes and gets them calling and learning about the credit union, it has members using a lot of services.
“There is a large portion of the population here that uses the big banks,” said Holt. “And we know many of them mistakenly think the credit union is not easy to join and that we don’t offer what the banks do. So we set out to fix that.”
The community charted CU began offering the eye-popping offer in August. First Choice Checking delivers the rate—one of the highest checking rates in the country—on the first $10,000. Balances above $10,000 receive 0.01%. To receive the high rate, account holders must take e-statements, perform at least 12 debit card transactions, and at least seven electronic transactions—ACH, e-pay, e-banking, direct deposit—per month.
Members must also choose any two of the following services: Visa credit card, consumer loan, mortgage, money market, IRA, share certificate or ID theft program.
“We have opened 518 accounts since August for total balances of $3.5 million, and most is new money,” said Holt, who explained the average balance is $7,000—more than $5,000 higher than standard checking balances. “That is good, solid growth.”
But what Holt likes best is all the services the checking members are using. “Of course this is about building deep relationships and getting people to use us as their PFI. But we are also saying to the community that you get a lot by doing business with Nutmeg State FCU, and that message is working.”
Prior to First Choice Checking, the CU’s average number of services per member was 3.5. Its goal is to grow that figure to five by the end of the year. Not only is the account driving deeper relationships, it is encouraging members to use more electronic services—which saves NSFCU money and covers some of the costs for the program. It also lets members know the credit union can be reached outside of branches.
That was a key reason Nutmeg State added the requirement for seven monthly electronic transactions, said Holt.
“Accessibility is always an issue when you compete with the big banks,” said Holt. “We have ten locations. But often that puts the bank closer to the member than the credit union.”
First Choice Checking is priced to break even, explained Holt. “We are not using this as a loss leader, and we have to monitor it regularly to see if we need to make any adjustments. We’d probably never change the rate or the $10,000 ceiling, but we may look at ways to make the relationship even stronger and the product stickier.”
First Choice Checking members also are eligible for an 0.25% APY increase on new and renewed certificates (minimum 1 year), 0.50% APY discount on new consumer loans, and $25 for every successful member referral.
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