HELOC Activation Promotions; Driving Loan Balances

Equity lines already approved and opened are an essential and rich source of new loan balances. Reminding members/customers of the credit available to them and how to access it provides an impetus for customers to activate their lines.

Promoting Line Usage

Targeting customers for a HELOC Activation promotion is a relatively straightforward process. A query of an institution’s customer database will yield existing HELOC customers and the balance and line of credit limits. Selecting customers with a certain minimum amount of line available (i.e., greater than $5,000) is recommended. Understanding the amount of money available and communicating that information simply to customers is the secret to driving line usage. An 8.5 x 11 letter mailed in a window envelope has proven to be a very effective mailing package for this offer. The available balance information is critical to the offer copy, so placing this information in an easy-to-spot place on the letter will immediately alert the reader to the available amount. An excellent place for this available amount is in the upper right-hand corner of the letter, across from the address block.

This communication can effectively motivate customers who have opened a line but haven’t accessed it to consider using their credit. It also reminds individuals who have used part of their credit line that additional funds are available. Letter copy can highlight common equity uses for the loans, including home improvement projects, college funding, debt consolidation, and vacations. Message timing should consider holiday seasons, spring-time projects, and when college tuition bills are due.

Response Rates Are Impressive

HELOC Activation promotions can realize 15% or more response rates, where a mailed customer will increase their HELOC balance. With the impressive response rates of the promotion, there are parallel increased balances as well. A Midwest client had the following mailing results in 2020: 2,897 customers mailed, 645 customers increasing HELOC balances (22.6%), a total increase of $17,740,815.

Applying an estimated revenue spread percentage to the incremental balance generated offers a perspective on the significant ROI this promotion can generate.

HELOC activation campaigns can benefit customers looking for an easy way to finance various needs and will also help institutions with additionally engaged households and higher loan balances.