Loan Tiered Rates: Motivating Members to Use That Line of Credit

What do you do when a member uses the credit union's time and resources to set up a $50,000 line of credit Home Equity loan, and then only borrows $3,500 over the life of the loan?

Once a credit union's line of credit lending program takes off, the key to its continued success is no longer getting the members in the door and signed up, but rather getting members to use their available credit.

Market, market, market! How about giving the member a rate incentive?

With the CU*BASE Loan Tiered Rates feature, a member's loan rate can be adjusted automatically every time a payment change is calculated. This software, configured at the loan category level, will evaluate the member's current loan balance and assign the rate according to the balance—the higher the balance, the lower the rate. This gives members a dollars-and-cents incentive to use more of the line of credit that is already waiting for them at the credit union.

Configuration Considerations

Configuring the Loan Category

Tiered Rates are configured from the final screen in Loan Category Configuration.

To use Tiered Loan Rates, first be sure that the Change activated on field is set to “D” for Disbursements only. Check the Use tiered rates in payment recalculation field, then use Tiered Rates (F14). Then use the Tiered Rates window shown to set up the rates.


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