For the first time since the Great Depression, consumers are spending more than they earn. According to today’s online edition of The Credit Union Journal (“Members Drain CU Accounts To Pay For Spending Binge”),

Data compiled by the Federal Reserve shows that consumers will spend more than they earn this year for the first time since 1933 at the height of the Great Depression. The second trend, according to Hampel, is credit unions are continuing to keep their rates near all-time lows, discouraging new deposits. While the Fed has pushed rates up on money market accounts above 4%, credit unions have kept their money market rates around 1.9. Rates paid on regular shares have also stayed historically low. The result is low savings growth, he said.

A few weeks ago, our friend Doug True wrote about attracting new deposits in a great post on his Credit Union Lending blog -

At our lending shop we are sitting at 130%+ loan-to-share and we really need deposits and from my conversations with other credit unions many of you are in the same predicament. So, what is the answer?

The articles I read all were based on the same strategy – duplicate what ING Direct (the orange brand – 5 years – $51 billion) has mastered. An excellent article on the ING Direct story is in the latest edition of Bank Technology News. The ING Direct strategy is simple, different and honest – you gotta respect it. These banks have established Internet only divisions of the bank that simply offer money market and CD rates with no access to their brick and mortar outlets or any other services.

This strategy allows them to offer an ultra competitive money market rate to attract new deposits without having to reprice their existing money market portfolio. This innovative approach is not new in the banking world, but it is in infancy in credit union land.

Sunmark FCU has started such a division called RateEdge. My friend at Sunmark FCU says it is too early to report results, but knowing this credit union they will be successful.