RACINE, Wis.-Add $1.4-billion Educators Credit Union to the list of CUs that are effectively using loan transfer programs to save members on interest payments while building loan portfolios.
In the first six months of this year, Educators CU calculates it has saved its members $30 million in interest, far surpassing the goal of $20 million for 12 months.
Marketing Manager Shannon Huot told Credit Union Journal 2012 is the fourth "season" for ECU's "Fast Lane Financing" program.
"As awesome as saving $30 million in six months is, in four years we have saved our members $66 million," she said.
Fast Lane Financing started as a small program aimed at getting ECU members to refinance auto loans from other lenders. The initial goal of that program was $1 million in interest savings, a threshold it exceeded in just three months.
"We first raised the goal, then the next year, upon the staff's request, we opened it up to all loans," Huot said.
Part of the 'Culture'
Linda Hoover, VP of lending, said the first year of the program brought in $7 million, all auto loans, before it was brought to a close. "Now it is part of our culture," she said. "It is ongoing and does not start and stop."
Huot attributed much of the success of the loan program to the fact ECU's employees "really buy into this."
"The staff has embraced the program and really looks for ways to help our members save," Huot said. "Linda tells the staff we are not asking members to take out new debt, we are asking them to be more savvy about the debt they already have."
After the $7 million in auto loans in 2009, in 2010 ECU saved its members $12 million. In the third year the savings total was $17 million.
Hoover said all of these refinances are from other institutions, so the program is helping enhance ECU's loan portfolio.
"So not only are we helping members save money, it is like a recapture program," she said. "This is a way to enhance members' lives, and we certainly like the loan volume as well. I would say in the first years it added about 10% to our loan portfolio, but this year it has accounted for 25% of our new loans in the first half. That is significant."
'WHIP Team' Very Effective
Educators CU has a recapture program utilizing TransUnion, plus it has a "WHIP team" that follows up a mailing with a phone call, Hoover said.
"All of which has been very effective," she declared. "The programs all go together. It is something that is here to stay. Even if a member only saves a couple hundred dollars, the members appreciate it, and they have the convenience of having everything here. This has helped our accounts per member and our loyalty. Some people are so ecstatic they move over their checking account to us."
Huot said the partnership with TransUnion includes a program called "What's My Score?" ECU directs its staff to ask members if they have reviewed their credit report recently. If the members agree, "we pull the report and see if we can help save them money with a better rate. If we can't, we tell them they are already getting a great deal," Huot said. "This helps build respect. Working with the members in this way is more effective that cold calling. They know we are trying to help them."
If the refinancing member was referred by another member, each receives a bonus of $25.
Hoover said ECU also reaches out with credit card offers, which she noted come with rates "significantly better" than the major banks.
"Our cards are a perfect opportunity to save people money-8.9% versus 25% or more."