Share certificates are the quickest way to raise deposits as loan volume increases, according to Steve Stone, CEO of $1 billion 1st United Services Credit Union in Pleasanton, Calif., because they tend to be larger deposits.
Besides looking at certificates, here are four more things to consider when working out your CU’s deposit strategy in this rising-rate environment:
1. Optimize high interest checking. While these accounts are part of today’s stepped-up competition for deposits, they’re not usually a game-changer, says Kirk Kordeleski, CCE, senior managing partner and chief strategy officer at BIG Consulting, Tampa, Fla. “In most major markets, one or two financial institutions will offer it, but it has strings, and a third of the account holders don’t even qualify for the higher rate,” he notes. It’s rate-based competition for deposits, but financial institutions also want the direct deposit and the multiple debit card transactions that usually are required.
Credit unions under $10 billion in assets still earn close to 1 percent interchange on the debits, he notes. A checking account with direct deposits and debit card activity is seen as an anchor product and the key to becoming the consumer’s primary financial institution, he points out, so checking accounts are gold and offering high yields may be more about getting the accounts than raising deposits.
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