PONTE VEDRA BEACH, Fla. -- Actual rate decisions can't be reduced to a formula, CUNA Senior Economist Steven Rick pointed out at a session during the Education Credit Union annual conference.
Experience and judgment rule, he said. But he did provide some pointers credit unions can keep in mind when making pricing decisions:
o Rate decisions should begin with estimates of the relevant wholesale cost of funds. Consider the term to maturity of both wholesale and deposit funds. Adjust for deposit servicing costs.
o Choose a desired spread to achieve.
o Take careful account of what competitors are offering.
o Consider deposit flow for various deposits and the schedule of maturing deposits over the coming months.
o Do not take variations in short-term funding needs into account in setting consumer deposit rates. Make such adjustments in the wholesale market.
o Rate decisions should be reviewed frequently, probably weekly, although actual rate changes may be less frequent.