Need Deposits? Get More Creative Than CD Promotions

There was a time not too long ago when every credit union was flush with deposits. But those stimulus-fueled binges are over, and many credit unions are once again in need of deposits.

So, what are we to do? Hit that certificate of deposit (CD) panic button of course! Rates are rising after all, and you’ll attract big savers (assuming you have the best rates).

Don’t let this tendency fool you! CD promotions can be amazing, but they’re not all they’re made out to be.

CD Promotions Are Band-Aids, Not Stitches

With their high rates and potential to attract large savings amounts, CDs seem like a quick fix to deposit issues. And maybe this is all you need. But if you’re consistently bleeding deposits, it’s time to stitch up the wound.

Why can’t CDs do that?

The first problem is one hinted at earlier – unless you really do have the best rates around, rate shopping consumers will go where the grass is greener. Even if you do hook some rate shoppers, there’s a very low loyalty threshold. Once their term is up, they’ll skip town and look for something better.

The second problem is a demographic one. A 2020 MagnifyMoney survey showed 50% of people found CDs confusing and three out of 10 people had never even heard of a CD. Besides that, CDs seem unnecessarily restrictive to young people or those with lower savings.

Data from Bankrate showed couples with children have a median of $7,500 saved. Those below 35 have a median $3,240 saved. Some minorities and those without a college education have saved even less than that.

This is all to say many people are unwilling or unable to tie up their money for months or years at a time. If you run a CD promotion, realize your credit union or community bank might not be speaking to them. You might wind up getting older, when one of your overall strategic initiatives is to get younger.

Get a Little, Give a Little

The best way to get what you want is to give other people what they want. And your members want to win. In fact, they want to Save-to-Win.

This option is great because it encourages consumers to save, lets them earn interest and gives them the chance to win some extra money too. Some of our clients offer Save-to-Win accounts, and their members regularly win $500 quarterly prizes.

If you don’t want to do Save-to-Win, you can offer your own in-house prize savings. Randomly choose a winner out of those saving in the account. There are also company partnerships that let you offer cruises or travel to winners.

People like prizes, so give them what they want. Then, you’ll get the deposits you want. For example, Neighborhood Credit Union has successfully offered its prize savings accounts for years. Its message: The more you save, the more chances you have to win. It now even offers weekly prizes. One added bonus: The credit union garners a great deal of positive public relations and press coverage.

Go High (Yield)

Amazing rates aren’t a territory exclusive to CDs; your premier savings or checking accounts can offer great rates as well. Even better, these accounts come with the extra bonus of not tying up your consumers’ money.

The thing is, many credit unions already have premier accounts … but they’re not marketed well.

Institutions (rightfully) spend a lot of time on loan promotions, but they miss the chance to market other sticky products. High yield accounts give normal consumers the chance to grow their money while increasing their attachment to you. Yes, they can take their money out. But they can also deposit more in the future.

Focus on the benefits of these accounts. Make sure people know about them. Perform a long-term play for deposits.

Pursue a Holistic Growth Strategy

A worthwhile question to ask is why you need emergency CD promotions in the first place. Where are all your deposits going? Let’s look.

Even during the height of the pandemic and its large stimulus payments, big banks (Wells Fargo, Chase, etc.) consumed 83% of new deposits, according to Raddon Research. Fintech competitors like PayPal offer a convenient place to store money, an account that includes direct deposit and a debit card. And Walmart (yes, you heard me right), is opening 9,000 checking accounts a day.

This is a serious problem requiring more than a CD promotion. Your credit union needs a comprehensive strategy to gain members, establish loyalty and grow deposits.

So, it’s time to quit applying duct tape to your deposit leaks. Don’t go for the quick fix of a CD promotion. Instead, look for creative ways to attract your deposit dollars.

Mark Arnold is founder and president of On the Mark Strategies, a Dallas, Texas-based consulting firm specializing in branding and strategic planning for credit unions.