From Cradle to Car: Credit Unions Court Generation Y

Credit Unions have been serving the Baby Boomers for ages. Find out how and why they are reaching out to Generation Y.


That "boom" you're hearing at credit unions around the country is the sound of savings accounts being locked by an aging membership. But credit unions are responding by reaching out and opening the door to Generation Y.

As they approach retirement, spending and lending needs are changing for baby boomers - individuals born between 1946 and 1964. Many of the baby boomers are no longer in the prime borrowing period of their lives. Instead they are devoting more of their financial resources to savings. Today, the average credit union member is around 44 years old.

In steps Generation Y - those born between approximately 1980 and 1995. At an estimated 71 million Americans, this generation outnumbers the previous generation by at least 25 to 30 million and, importantly, is in earning (and spending) mode. Generation Y appears undeterred by the recent economic downturn, spending nearly $172 billion last year alone. Consequently, every industry from automakers to clothing designers is courting the group, hoping to build lifelong loyalty.

Credit unions have jumped on the bandwagon. Realizing that future vitality lies in the hands of future members - today's youth - credit unions are developing programs to teach children and teenagers to save money.

Nearing 10 years of age, even the youngest members of Generation Y have probably started a kiddy savings account. Credit unions are focused on maintaining these relationships and growing accounts by offering kids club events, newsletters or Web pages. Some go as far as offering prizes for meeting savings goals.

Teenagers - who make up the majority of Generation Y - are enthusiastic about summer jobs and financial freedom from their first paychecks. Research indicates that most do not want to keep large sums of money in their pockets, preferring, rather, to deposit money into an account where they can access it regularly. Credit cards for this age group are common: 33 percent of high school seniors and 78 percent of college students have at least one.

Money management is becoming a key concern for young adults and their parents. Successfully reaching out to this age group can involve partnerships with local educational institutions or in house seminars about financial organization that can provide a lifetime of benefit: budgeting, investing and using credit.

The oldest members of Generation Y recently entered the adult world - struggling to balance their checkbooks, pay rent and learn the ropes on their first "real" job. For many, these first few years on their own will include their first major financial transactions; for instance, the purchase of an automobile - a key moment for credit unions.

This is when the years of credit union kiddy accounts, teen finance classes and other relationship building tactics pay off, putting credit unions in the driver's seat for the loan.

Regardless of the strength of the customer bond, credit unions still have to overcome zero percent financing, slick dealership F&I officers and other outside pressures. To help win the auto loan - and potentially other future financial accounts for these 20-somethings - more and more credit unions are steering buyers to Enterprise Car Sales, which guarantees the credit union receives 100 percent of used car loans 100 percent of the time. An added bonus for reaching this internet savvy generation is the Enterprise Car Sales web site linked to partner credit unions nationwide offering an easy online car shopping experience.

Enterprise Car Sales, a division of Enterprise Rent-A-Car, helps credit unions increase their loan portfolio and optimize member loyalty by creating tailored used car buying/loan programs. These include special car sales, free car buying seminars, and membership communications, among other value-added services designed to enhance lifelong membership relationships.

From kiddy accounts to automobile loans and beyond, credit unions are sending a clear message "why" credit unions can be a lifelong partner for Generation Y.



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Aug. 16, 2004


  • To the comment below.. Dealership financing at 0% is only for customers who have fico scores of 680 or higher. Gen y customers usually do not qualify for these rates. Most 1st time buyer programs are double digit interest rates, require 10%-20% down payment and 60 months max. on terms. Credit unions have a huge opportunity to capture the Gen y customer.
  • Much as the residential mortgage is tha anchor product for many family members dealing with C.U's, I believe the anchor product for young people with first time jobs is the car loan. Most C.U.'s do not recognize this and as you have alluded to 0% dealership financing as well as cash back from major banks are really hard to compete with. We need a new angle for financing this product.