MOUNTAIN VIEW, Calif.—One credit union has turned to a cash bonus instead of raising rates to attract deposits and fuel 21% loan growth.
First Technology FCU is handing out up to $1,500 to members who bring over new deposits.
“Loan demand from the membership has been very strong this year and we want to keep that going—we need to grow deposits to do that,” said Stephen Owen, chief retail and marketing officer, about the program that has a $25,000 new money minimum.
The “Depositivity Bonus Program” launched in September and runs through November. Owen said the $7-billion credit union likes to try unique promotions to better guage what members like, and First Tech determined a cash bonus in an extremely low-rate environment is more attractive than a higher rate.
“Our deposit rates are already some of the highest in the market,” said Owen. “The bonus on top of the rates makes our deposit products stand out.”
Cash bonuses are available for new deposits into any share certificate, checking or savings account made by Nov. 30, and are paid in addition to the accounts’ standard interest rates.
The Depositivity Bonus Program pays tiered bonuses based on the amount of new money deposited. The new funds must remain in the account for at least six months.
Deposits from $25,000 - $49,999 receive $200; from $50,000 - $99,999 members get $300; $500 is paid from $100,000 - $249,999; deposits from $250,000 - $999,999 receive $1,000, and $1,500 is paid for deposits of $1-million or more.
First Tech pays 1.58% APY for its rewards checking, 0.60% for a 24-month CD, and 1.85% for 60-month terms.
Owen said the cash bonus, too, is another way to give back to members. “Plus, it is a way to pay them for the time it takes to move their money. We are saying we recognize the effort you are making and we want to reward you for that.”
Saying it is too soon to cite dollar amounts, Owen said interest in the offer has been high, with deposits coming in across all of the qualified deposit categories.
First Technology’s loan-to-share ratio is approaching 90%. “This program gives us the ability to continue to grow the loan portfolio,” said Owen.
More From CUToday.info Series On Deposits
Analysts Warn Over Core Deposit Runoff
Time To Gauge Member Sensitivity To Rate Movement
Rising Rates Demand Two-Part Strategy
4.99% Checking Driving Deeper Relationships And CU Awareness