YORK, Penn.-First Capital FCU has rolled out a program designed to bolster the bottom line while also promoting self-sufficiency and deeper relationships at the credit union-but CU officials acknowledge it may not be a hit with everyone.
Known as "First Capital Star Rewards," the program uses a point system to place members in one of three categories. Points are assigned based on the member's tenure at the CU, how many products and services they have at the credit union, balance totals and various behaviors the CU is trying to promote.
Each tier is based on a point total, with 45 points or lower classified as One Star, 46-85 points as Two Stars, and 86 points or more as Three Stars. For example, a member of nine years (10 points for seven years or more), e-statements (10 points), active direct deposit (15 points), a vehicle loan (15 points) and HELOC (20 points) would count as a Two Star member with a total of 70 points. Those members receive free money orders and free corporate checks (both of which One Star members must pay for) but pay $30 NSF fees and $5 for statement reprints, two of the services which Three Star members receive for free.
Three Star members also receive a 0.15% discount on fixed loan rates and a 0.10% bump on certificates, which One and Two Star members do not. Delinquent loans and negative balances will cause members to drop one star level, and One Star members pay a $2 transaction fee for services such as check cashing, a new fee at the credit union.
Not Just A Check Casher
"If you go to a check-cashing facility, you're going to pay more than that," said Tara Houser, marketing director at the 19,000-member, $138-million CU. "We think that $2 is more than generous. We're still getting something out of that relationship more than them using us as a check-cashing facility."
Members younger than 26 years old are exempt from Star Rewards "in consideration of all of our youths who we feel are not in a position financially to be able to meet our requirements for active checking accounts, loans, money markets, all sorts of savings accounts and balances," said CEO Dennis Flickinger. "Even though some go out of high school and join the workforce, we're giving them a break and not requiring them to meet these requirements."
"We could lose some members, and we knew that going into this," added Houser. "But we 're trying to get them to become more engaged, trying to have them utilize us as their PFI, and if they're not going to do that and just want to use us as a check-cashing facility, maybe another institution is the way they need to go."
Houser stressed First Capital is trying to push self-service options such as e-branching, e-statements and online bill pay, which save the CU money while also building member loyalty.
"Some of our members don't like change, so we expect to see a bit of impact there, but the overall response has been very good," said Flickinger. He noted that a few members have left the CU since Star Rewards debuted on October 1, but said that those numbers are on track with the credit union's normal monthly attrition rate and don't reflect any mass exodus of members.
First Capital also has a task force monitoring attrition, and Houser called the program "a fluid document that's definitely going to be changing periodically" based on what works for the CU and how members respond.
"It isn't for everyone, but we hope most people will become more engaged and improve our bottom line," said Flickinger.
More info: http://www.firstcapitalfcu.com/starrewards.asp
See also: "Loyalty Pays Off For All Involved At Farmers Insurance Group FCU," Oct. 8