Indiana CU Drops Rates to Discourage Newcomers
East Allen County Federal Credit Union said it has dropped its interest rate to .1% in an effort to manage the surge in new money that came in over the past year.
EACFCU CEO Karen Bishop said in September 2008, the New Haven, Ind.-based CU had $11.9 million in assets and by November 2009, it had grown by $2 million or 16%, wane.com reported.
According to NCUA June data, the CU had nearly $14 million in assets and 2,423 members. Bishop said the financial crisis led many to move their money out of banks into credit unions.
"A credit union our size cannot handle that kind of growth in that short of time," Bishop said. "Pricing has a lot to do with where people will put their money. So, that's when we decided that maybe if we offered a little bit lower than market rate, the money would move out."
One frustrated member of the CU for more than 30 years actually did move his money to another financial institution, according to the online article. Bishop said she is hopeful members who do move will come back. She expects EACFCU to keep the .1% interest rate until at least February 2011.
"We've even had comments [like] 'How much do you need us to move? And when? We'll get it done and when things are corrected we'll bring it back,'" Bishop said.