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As anyone who has ever tried to fix a bank error knows from bitter experience, banks often don’t seem to care about individual customers. For years they have operated as arrogant giants in the market, steamrolling over customers and charging exorbitant fees for any infractions. Sadly for the backroom boys, times have changed, and customers once more have the upper hand.
Banks are facing stiff competition from credit unions, online groups, and even other bankers. According to The Wall Street Journal, the top 15 banks are rolling out special incentives for new accounts in order to get more depositors coming to them. They’ve mailed out 75.2 million special offers for savings accounts and boosted incentives for checking accounts. This begs the question: How can you win in this scenario?
Account Opening Incentives
One way to win is by opening a new checking or savings account. The average incentive value for a new checking customer is $138, according to Mintel. It often comes in the form of a cash bonus for linking direct deposit to your checking account.
Why the payout? Banks look at checking accounts as “relationship” accounts that are hard to move. They think once they get you through the door, they will be able to keep you. Most customers, after all, aren’t going to go through the three to four hours it takes to switch accounts.
Take the time, especially if you don’t like your current bank. For Chase accounts, it’s a $125 bonus for checking and saving, and PNC Bank offers $100 for a checking account with direct deposit. Smaller community banks are also getting in the game, so stop by somewhere new to see what they’re offering as a promotion.
Interest Rate Boosts
Another way to win is with rising interest rates on savings deposits. Consumer deposits are up more than $1 trillion over the last 36 months according to Market Rates Insights, and the national savings rate is on the rise. With lousy options elsewhere and a burning desire to pay down debt, Americans want to build up their stores of cash on hand. Banks want to be sure that cash stockpiles come under their control.
One way they are sweetening the pot for savers is with higher interest rates. Leader Bank, for example, is offering 1.25% on a savings account that is linked with a checking account, well above the national average rate of .09% according to Bankrate.com. No, it’s still not what you deserve as a saver, but it is a step in the right direction.
Tips for Winning
To win at the offers and promotions game with banks, it’s important to keep one step ahead of them. Bank access to capital is changing, and they need your money, but that doesn’t mean they’ve given up on the fine print or the sneaky fees. Here are a few tips to evaluate your options:
- Keep your needs first. Banks have plenty of rules, but what do you need? Don’t bank with someone for a $100 bonus if it means you’ll have to drive out of your way to find an ATM or won’t be able to use online banking.
- Mind the fine print. US Bancorp is offering $100 for a new savings account, but it’s $50 now and $50 if the balance is still above $1,000 in a year. Dip your balance and lose your bonus.
- Check for fees. Some accounts start with a bonus and then charge fees after the first year, or charge fees if there’s not a certain level of activity. Read rules carefully to walk out ahead.
- Move groups of accounts. You can move your checking, your kid’s checking, and your spouse’s savings, so why not get triple bonuses and use the money for something the family needs? Run changes by on separate days or at separate branches to make sure each movement adds up to more rewards for you.
- Be organized. Keep track of where you’ve moved things and why. This will help you evaluate the benefits of switching when new promotions are announced.
Banks want your capital, and you have the chance to shop around and make them pay for the privilege. Why not make up for a few years of bad behavior? Get out there and take advantage of every offer that makes sense — this year, next year, and every year that you can.
