Banks Offer Incentives to Attract Savers
Posted on Thursday, September 10th, 2009 at 5:09 pm in Financial Planning
After years of declining savings rates, Americans are finally starting to save more of their hard-earned cash. The financial crisis has made many people sit up and think about the prospect of losing their incomes, and consider just how they would cope in a worst-case scenario. Accordingly, the banks are now competing to offer the most attractive perks ranging from sign-up bonuses to enhanced interest rates in order to lure savers to their doors.
Gone are the days when banks would promise you a free toaster or clock radio (remember those?) in return for opening an account. Right now you can snag up to $100 in cash or over 6% interest (even now with the Fed Funds rate at an all-time low of 0-0.25%) just for setting up an account and depositing a modest sum of money. Of course the banks are hoping that by giving you a good deal now, they’ll be able to build a so-called primary relationship with you. That would enable the bank to make money from setting up direct deposits and bill-pay facilities on your checking account, as well as sell you mortgages and other financial products in years to come.
Here are some ways you can pocket some of the freebies on offer:
Open a reward account: As long you you’re OK with jumping through a couple of hoops, you can earn as much as 6% on your deposit when you open a reward account. Basically, you have to agree to make a certain number of debit card purchases every month, sign up for direct deposit, receive your statements online and not by mail, or similar stipulations. If you don’t play by the stated rules every month, you might only get 0.50% in interest.
For example, Kansas State Bank will pay you interest of 6.01% on your savings if you make a minimum of 10 monthly debit card transactions, say no to mailed statements, and establish at least one automatic payment or direct deposit on your account. You also have to log in to your account on the web at least once a month.
Sign-on bonuses: Open a new savings or checking account now, and you may well find some extra cash in it. You’ve probably seen ads from major banks like HSBC and Citibank touting their account opening bonuses, but don’t forget to check with your local banks and credit unions for good bonus deals. One of the best offers comes from Wainwright Bank & Trust in Boston, which is giving a $200 savings bond to every new customer who opens a Value Checking account with at least $10 in it. Many other banks offer cash bonuses of $25-100 for new accounts with low initial balance requirements.
Online-only savings accounts: There are some great deals to be had if you open an online account – and they tend not to impose too many usage requirements on customers. GMAC Bank in Utah, for instance, offers free banking, no minimum balance and a $1 minimum to open, and pays an excellent 2.65% annual interest.
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