Automatic savings plan tied to auto loans
A coalition of Indiana CUs have developed an automatic savings product tied to auto loans called DriveUp Savings. With the account, you can contribute up to 10% of the amount of your loan payment to a savings account every time you pay your loan. (The amount you contribute is in addition to your loan payment, not deducted from it.) Your savings rate is equal to your loan rate.
Some people have complained that savings programs tied to loans is a band-aid solution to promoting thrift. Others have suggested that the only way you can get Americans to save is to make it automatic, and link it to spending behaviors.
Six Indiana credit unions are piloting the program:
- Members United FCU – July 2008
- Purdue Employees FCU – July 2008
- Three Rivers FCU – August 2008
- Kemba Federal Credit Union – Q4 2008 (ETA)
- Eli Lilly Federal Credit Union – Q4 2008 (ETA)
- VIA Credit Union – 2009 (ETA)
For other financial institutions considering the product, the coalition of credit unions beind DriveUp Savings offers a simple implementation plan and low-cost marketing materials. You can check it all you at their website:
If you want some more information, check out this brief presentation (PDF).
Apparently, uptake was 30% of all new auto loans for one of the pilot CUs. The participating credit unions also predict an increase in- and added stability to deposit portfolios.
Previous related stories from The Financial Brand:
- Wachovia ties new automatic savings product to debits
- Get $1 for each Facebook friend from TD Canada
- Get a green loan and a tree planted in your name
- Economy driving credit union promo
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Tags: auto loans, deposits, Indiana
Filed under: Innovation, Product Marketing
October 15th, 2008 at 2:03 pm
Thanks for covering our site and financial solution. Would love to hear what others think and if any other credit unions have implemented.
October 15th, 2008 at 2:08 pm
[...] The Financial Brand has posted a nice profile of DriveUp Savings. [...]
October 15th, 2008 at 2:12 pm
[...] product tied to auto loans called DriveUp Savings. With the account, you can contribute . . . | New automatic savings plan tied to auto loans [The Financial Brand: [...]
January 11th, 2010 at 7:53 am
[...] “Kasasa” are integrating automatic savings options. You can even include automatic savings into your auto loans. Previous related stories from The Financial Brand:Wachovia ties new automatic savings product [...]