Banks Boost Customer Incentives, But Rates on Savings Remain Low

December 27, 2004 12:36 PM

Banks Boost Customer Incentives, But Rates on Savings Remain Low

Excerpt: Banks are aggressively competing on the consumer side of their businesses, and many have stepped up incentives to lure new customers, offering come-ons ranging from free checking to flat-screen TVs.

Managing your financial accounts can be particularly taxing at year-end. In the fourth installment of a five-part series, Taking Account, we examine the trends in consumer banking, from cash incentives for opening a new account to fees for using a debit-card PIN.

What's Going On

Banks are aggressively competing on the consumer side of their businesses, and many have stepped up incentives to lure new customers, offering come-ons ranging from free checking to flat-screen TVs.

Citigroup's Citibank unit, for example, is offering $200 to new customers who open an online checking account with $1,500 and make bill payments online for 15 months. Those who open a checking account with $2,500 and pay bills online for 12 consecutive months can get a free Apple iPod mini. Customers of JP Morgan Chase and Bank One can get a $50 cash bonus to open a free checking account with direct deposit, and those who open more than one account may also get a Best Buy or Target gift card ranging from $20 to $100.

Why the eagerness to sign up new depositors? "The strongest source of [bank] profits the past couple years has been the retail customer," which includes individuals and small businesses, says Tracey Mills, a spokeswoman for the American Bankers Association. With big businesses skittish on the economy, banks have seen their commercial lending stagnate, she says. Also, as stock-market returns dwindled in the past few years, anxious consumers opted for the relative safety of deposit accounts, causing banks to "compete heavily" for those deposits, Ms. Mills says.

READ FULL STORY ...

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Read all 22 posts in the same category of Banking:

Going Online To Balance Family Budget - Feb 17, 2005
Banks Speed Process For Opening Online Accounts - Feb 04, 2005
Online Banks Are Boosting Yields - Jan 15, 2005
Online Banks Are Boosting Yields - Jan 15, 2005
Momentum Is Gaining for Cellphones as Credit Cards - Jan 10, 2005
Rebels With A Cause, And A Business Plan - Jan 01, 2005
Online Bill Paying: How To Get Started - Dec 27, 2004
Banks Test ID Device for Online Security - Dec 24, 2004
Paper Checks Going Bye-Bye? - Dec 08, 2004
Check It Out: Incentives to Pay Bills Online - Dec 07, 2004
'Gift Cards' May Come Loaded With Fees - Nov 29, 2004
Where To Keep Your Rainy Day Fund - Nov 29, 2004
What's Your Bill-Paying Personality? - Nov 28, 2004
Debit Cards Lack Protections Of Credit Cards - Nov 28, 2004
A New Era In Banking Begins - Nov 25, 2004
Automatic Debit Scams - Nov 22, 2004
Bank Accounts Fail To Follow Fed's Lead - Nov 12, 2004
ChexSystems Puts Him In Penalty Box - Nov 09, 2004
"Check 21" Starting in Late October - Nov 03, 2004
Gift Cards 04 - Nov 03, 2004
Save Electronic Checks for Your Taxes - Nov 01, 2004

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