Classes that Students Recommend to Friends

It all began as a board directive in 1996 - to develop a program for teenagers to increase youth membership in Burbank City Employees Federal Credit Union (BCEFCU). Suzanne McClure, vice president of marketing, was in charge of developing this new program.

"The management team felt the best thing we could do for teens was to educate them," McClure says. "But not just educate them. Provide them with the information they need to become financially independent and then give them the tools to put that knowledge to the test." Thus, the Independent Advantage program was born.

What Independent Advantage classes are like

From the beginning, teachers have been either credit union management staff or outside agents. The credit union hired a part-time youth marketing coordinator to organize and teach the classes.

Originally, the credit union offered students between the ages of 15 and 18 seven classes, but cut back to four. This made it possible to olfer the program nine times a year to as many as 150 students annually. These four courses give students the basic knowledge they need to begin handling their own finances. Once they complete the undergraduate program, they are eligible to take graduate courses.

Each of the four Independent Advantage classes runs from 5:45 p.m. to 8:30 p.m. We feed students dinner before each class. Each student receives a notebook with a calculator and a pen. At the beginning of each session, students receive a handout containing all the information to be covered.

Before the first class, students who are not currently members of the credit union must open a share account with a minimum deposit of $25. In addition, students under the age of 18 must have a parent or legal guardian sign a consent lorm. This allows each student to receive a checking account, VISA check card, and VISA credit card in lus or her name only upon completion of the course. This ensures that parents are aware of what their teenagers learn in class. They can then decide if their teenagers are mature enough to handle these linancial products.

Course content

Checking 101. Students learn the basics about checking accounts, such as the parts of a check, how to complete a check, how to use a check register, how to balance a checking account, and the consequences of bouncing a check. At the end of this class, they apply for a checking account with checks, a VISA check card, the credit union's online service, and the automated phone service.

Electronic Services 101. Here, students get hands-on experience using the ATM, on-line access service, and automated phone service. In groups they rotate among various electronic workstations. Credit union employees demonstrate and teach the students how to use each of the services. Tom Moioffer, President/CEO of BCEFCU, enjoys showing students how to use the ATM.

"I have each student practice making a withdrawal, deposit, and transfer at the ATM," Moioffer says. "Since many of the kids have a limited income, they often don't have enough money in their accounts to withdraw $20. So as a gift, the credit union deposits $20 into each student's account prior to class, so they'll have money to practice with during the evening."

Credit 101. Topics include the definition of credit, the different types of credit, credit terms, credit reports, the importance of credit, how to use credit wisely, and what happens if you don't use it wisely. Students participate in a game of Jeopardy to help reinforce what they've learned in class. They then complete an application for a VISA credit card. Students' credit limits are based on age: Fifteen-year olds have a $200 limit, which increases by $100 each year to age 18.

Budgeting 101. Through lecture, group activity, and a video, students learn the importance of saving, tracking expenses, setting financial goals, and creating a budget. At the end of the class, students receive a VISA credit card and a certificate of completion.

BCEFCU offers graduate courses in Investments, insurance, and auto-buying on a single evening one or two times a year.

The benefits of Independent Advantage

Has Independent Advantage been a success so far?

"Yes indeed," says Moioffer. "Not only are we meeting the credit union's goal of building our youth membership base, but we are also helping our community by giving our youth the financial education they need to make wise financial decisions."

Nearly 400 students have graduated from the program since its inception. In addition to a basic savings account, checking account, and VISA credit card, 18 percent of the students also have another type of savings account, such as a secondary share, IRA, or certificate account. Nine percent also have a vehicle loan with BCEFCU.

In 2003, 123 students attended the Independent Advantage program. Sixty-three percent of those students opened an account with the credit union for the first time. "We're opening new accounts and retaining them," Moioffer says. "Only 10 students have closed their accounts with the credit union."

Both parents and students are pleased with the program. Marsha Bakly's son, Adam, attended Independent Advantage in July 2003. "Ever since Adam took the class, I've noticed a difference in his savings habits," his mother says. "Before when I would give him his weekly $20 allowance, he would just spend the whole thing. But now, he usually has about $5 leftover at the end of the week, so he'll give it to me to put in his savings account."

Christina S., another former student of Independent Advantage, says the program has helped her manage her finances more responsibly and to be a better consumer. "I am more conscious about APR and making sure that if I have a balance on my VISA card, that I pay it off as quickly as possible to avoid interest," Christina explains. "If I can't pay the balance in full, then I at least make more than the minimum payment."

Of course, there are a handful of students who don't always "practice what is preached." The credit union has had to charge off six VISA credit cards held by students in the past seven years.

"We are more strict with the students then we are with our adult members," Moioffer explains. "If the student has several late payments on their VISA card, we'll usually just take the card away. A pattern of late payments tells us that the student isn't quite ready for the card. We don't want the student to ruin their credit at such an early age, so we try to eliminate the problem before it becomes a charge-off. In addition to our charge-offs, we've had to cancel about 15 cards."

There have been some losses, but Independent Advantage definitely has more of a positive affect on the credit union then a negative one. The programs best marketing is word-of-mouth. Once students take the class, they tell their friends about the program and then their friends want to take the class too. An employee or friend has referred the majority of students who sign up for Independent Advantage.

According to Moioffer, "Right now we're meeting our students savings, credit card, and auto loan needs. We hope to one day meet their home loan needs as well."

Linda Lewis (llewis@bcelcu.org) is Burbank City EFCU's youth marketing coordinator.

Copyright Credit Union National Association, Inc. Jan 2004
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