TAMPA, Fla.—With rewards on the minds of most consumers today, USF FCU decided it was time the credit union offered a relationship-based rewards program of its own, but it wanted to put a different local spin on its offer.
Instead of a straight cash back deal or extra benefits from the credit union, which are already being offered in its market areas, the $600-million USF FCU has opted to offer a loan rebate based on a member’s relationship—and it pays the money quarterly. Members who have a relationship—either a loan balance or combination of loan and deposit balance—above $50,000, can receive 5% back on their quarterly interest paid.
Bill Steiger, brand and promotions manager, believes the rebate and quarterly payout make USF FCU’s offer—called Catalyst Member Rewards—stand out in this market.
“Our CEO had heard from several long-time members that they would like us to create a rewards program,” said Steiger. “It’s hard to say what consumers are exactly thinking today when it comes to rewards, whether they be from their financial institution or retail chain. They get them everywhere, even from their gas stations. But we know they want them, and that it drives loyalty. We think the loan rebate and paying it quarterly is a good way to set us apart here.”
More Than Year In Development
USF FCU did not dive immediately into offering Catalyst Member Rewards once it felt its members and the CU would benefit from the program. The credit union took more than a year to plan and structure the offer and develop the back-end system to work with its core system.
“As with most relationship-based rewards program, what we want to do is reward those members who are highly engaged with us already—those with high loan and deposit balances—and encourage those who are not as engaged to get more engaged with us,” said Steiger.
Members with $10,000-$24,999 in balances (called “C1”) receive 1% back on the loan interest they paid during the quarter. Those with $25,000-$49,999 in balances (C2) get back 3%, and those above $50,000 (C3) receive a 5% rebate. To qualify for C2, members must have a loan, while C3 members must have a loan and a checking account.
“Members are automatically enrolled when their balances qualify,” said Steiger. “They don’t have to take any steps to take advantage of Catalyst Member Rewards.”
The program offers additional rewards, too. Along with the partial refund of interest, the rewards program also features out-of-network ATM fee reimbursements, overdraft transfer fee waivers, free money orders and official checks. Members with a loan account also get free access to their FICO score, which is updated every quarter.
Steiger explained that the extra rewards can vary based on the member’s balance level. For example, members at the highest tier receive unlimited ATM fee reimbursements, while those at the entry level get only one per month.
The program was launched at the close of May, so the credit union has yet to return loan interest. But Steiger explained that USF FCU calculated various potential cost scenarios prior to launch of Catalyst Member Rewards.
For example, a C3 member with a $40,000 auto loan balance and a $10,000 loan balance paying 3.5% interest would take home $17.50 per quarter, explained Steiger.
Positive Feedback
While it’s too soon to gauge results, Steiger said member feedback has been very positive. He said that besides the money back, members are also talking a lot about the free FICO score and ATM fee rebates.
What Steiger hopes USF FCU will see in the months and years to come is that members will migrate up a tier to gain more rewards.
“Even someone with a $9,000 balance we hope will move up and get more engaged with us,” he said.
USF FCU has 60,000 members—12,470 in C1, 5,744 in C2 and 3,680 in C3.
“We will monitor this program closely to see if we can add additional rewards, and if members ask for other rewards we will consider those as well,” said Steiger. “We think this program will be with us long term, not only as a way to deepen existing relationships but to bring in new members too.”