When Ent Federal Credit Union noticed last year that only 500 of its 195,000 members were using its free automatic savings transfer service, the cooperative went back to the drawing board to figure out ways to encourage more members to stock money away for a rainy day.
After gauging feedback from members on what it would take to get them to save and looking at models created by the Filene Research Institute's i3 innovation team, the $2.8 billion credit union launched its own "My Savings Builder" certificate in August. Members can open the six-month product with as little as $25. A monthly automatic transfer deposit of at least $5 is required from another Ent account.
"Through our member research, we found that higher interest rates would really motivate them to save," said Cathy Grossman, director of corporate communication at Ent in Colorado Springs, Colo.
There is a special dividend rate (currently at 2.47%) on balances up to $1,000. The certificate renews every six months until the member reaches $1,000, when the transition is made to a regular certificate. As of Sept. 2, 111 certificates have been opened totaling $35,000. Thirty-nine of the accounts were opened with a minimum of $25 and 69 with less than $250, Grossman said. The average opening balance started out at $292 and is now at $315.
Ent is encouraged that it is hitting that target audience of those who do not save on a regular basis, Grossman said. It took more than a year for the credit union to get to this point. Ent looked at cash incentives for signing up for automatic savings transfers, matching annual deposits, downloads for iTunes and a number of other incentives. It finally looked within at one of its certificates that mirrored the old-school Christmas club savings account. The credit union added several features, and now My Savings Builder is a permanent product at Ent.
Ent has not abandoned its automatic savings transfer. With an entire campaign geared toward encouraging members to save, the service is now signing up 100 members each month, Grossman said.
"In today's economic climate, it more important than ever to have an emergency savings account to fall back on. But with limited resources, sometimes it's hard to put aside funds for a rainy day," Grossman pointed out. "Ent has developed a unique savings product that can help beginner savers, or those with limited resources, easily build up an emergency savings account in a short amount of time."
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