It used to be small radios and toasters, and then came camping gear and milkshake makers; now it is all about Visa gift cards and iPods. According to CreditGUARD of America, Inc., opening a new checking or savings account has never been so attractive as of present day and many consumers are drawn to these new perks offered by various banks. Banks are competing tooth and nail to win over these new customers and are willing to sacrifice short-term profits in the hope of long-term customers.
These perks are not entirely directed towards new untapped customers. Most banks have increased their incentive packages in the hope of attracting customers from their competitors. Bankers know that regular customers will not leave their current bank based on few incentives and free checks. However, they are hoping to attract those few customers who might not be too pleased with their current bank’s services and are contemplating on a change.
Even though traditional gifts such as camping equipment and kitchen gadgets are still the norm in the banking industry, many banks have realized that what customers are really drawn to is, free money. As a result, many banks offer cash, merchant gift cards and Visa gift cards for any new customer who opens a checking or savings account with them. Some banks even offer traditional gifts along with cash cards to sweeten up the deal.
For instance, a well known bank, based in South Florida has been merciless in getting their message across; a $77 MasterCard gift card, free checks, up to $25 for unused checks and a thank you gift are all part of the incentive package offered to new customers. The new promotional campaign has worked wonders for this half a century old bank which has doubled its customer base to more than 500,000 in the last three years alone, an extraordinary market share growth in any industry standard.
Even though banks have sweetened up the perks to attract new customers, most of the new customers will face the unpleasant after effects of this generosity as the months go by. Most banks have increased their minimum balance on checking and savings accounts to cover up their high advertising budgets. In addition, most banks will raise certain fees such as for bounced checks, ATM’s and monthly service fees.
The lesson here is pretty simple, despite all the new customer incentives, giveaways and marketing hype, consumers should carefully review all the terms and conditions stated on the account contract. Consumers should also carefully consider the costs of changing banks and all the extra trouble that goes with it. For instance, changing banks means new locations, ATM’s, branch hours and etc. In summary, it would be wise to say ‘There is no such thing as Free Lunch!’