WAYNESBORO, Va.-A low-rate signature loan-in some cases 0%-helped a branch of DuPont Community CU to more than double its monthly member growth rate.

Dupont Community signed up more than 50 new members, 33 from a promotion in which it partnered with Rockingham County Public Schools to offer 2.99% loans (up to $2,500) for a home technology purchase. School system employees used the money to buy laptops, desktop computers, iPads, and printers for their personal use.

The partnership was struck as a community outreach effort, and to gain a stronger foothold in the Harrisonburg, Va., market, where DCCU has a new branch.

"The loan was a great fit for us," said Peter Santana, credit manager. "We are new in that marketplace, just opening the branch a few years ago, and the promotion picked up new members and showed employees of the school system what the credit union is about."

A total of 38 employees, five of whom were existing members, took advantage of the loan for almost $60,000 in balances, with the average loan being $1,600. DCCU cut the rate to 0% if the member opened a checking account with direct deposit; nine members qualified. "We'll still lower the rate for anyone who comes back and decides they want a checking account with payroll deduction," added Santana, who acknowledged the promotion is a loss leader.

Loan terms were 10 and 22 months, and Santana estimated annual expense to the credit union due to the low rates will be around $1,500. "To make an impact with an employer group for $1,500 is not costly," noted Santana. "We would have to pay a lot more in advertising to have the same effect. We expect to get a lot of word-of-mouth publicity within the school system."

The idea for the promotion came from the school system, which reached out to the credit union seeking a way to offer employees a benefit during times in which staff had seen pay freezes and benefit reductions. The Waynesboro, Va.-based DCCU provided loan applications to the school system, which promoted the offer to employees. The loans not only provide a benefit to school employees when they need one, but also help staff stay abreast of new technology that is being used in the classrooms and by students. The school system secured discounts from Dell and Apple, and advertised the products that were discounted. Once the all loans were approved, DCCU cut checks to Apple and Dell.

Santana said DCCU expects to run the loan special again next year, and is considering similar offers with other employers. Loan payments are made through payroll deduction, and if employees leave the school system before the loan is paid off, the remaining balance is deducted from their final paycheck. "We are covered on risk," Santana said.

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