Our VP Lending would like to offer an incentive to existing HELOC customers for using their line. We have many open lines that have never been drawn on. I have no idea what kind of incentive she is thinking of but in my opinion, I think it needs to be of small value or it may raise questions as to where the bank is getting the money to offer the incentives. I also worry about fair lending issues when you start making offers to specific customers. Has anyone tried such a promotion? Are there other concerns we should think about?

"I think it needs to be of small value or it may raise questions"

Questions by whom?? This is not an uncommon practice.

"I also worry about fair lending issues when you start making offers to specific customers."

Why would you limit this to specific customers. If you want to boost your loan totals you will want to offer this to everyone that has an inactive HELOC.

I think it's possible some loan customers would question who is really paying for the incentive if the value was too high. There are some who would think they are ultimately paying and that just creates bad feelings.