Small appliances are toast as banks lure clients with cash
2/10/2009When banks compete, you win. Or in the case of two banks, you get extra cash.
With recession-weary consumers unsure where to store hard-earned money, two large banks serving the Toledo area are trying to attract customers not with toasters or tote bags but with good old cash.
National City Bank, owned by PNC Financial Services Group, has been offering a $150 Visa gift card for opening a checking account by March 12. Not to be outdone, KeyBank will give up to a $200 MasterCard gift card for those opening a checking account by March 6.
Each offer has strings attached, however.
A $150 to $200 gift card may sound like an extravagant lure and needless expenditure for banks, but "if it's priced properly, the bank makes out and the customer makes out," said Dennis Kane, chairman of the Bank Marketing Association of New Jersey.
Giving out cash gift cards for new accounts is the part of a marketing cycle that goes back decades, said Mr. Kane, director of marketing for Amboy Bank of Old Bridge, N.J.
"The old joke was: Come in and get a toaster," he said. However, such premiums were replaced for a while by better interest rates on savings or with various free services, such as checking.
"But in a low-interest-rate environment it may be difficult now to convince someone to start an account with your bank," Mr. Kane said. "A gift card creates perceived value to come and open an account at a bank."
Dan Davis, a spokesman for KeyBank, based in Cleveland, said the promotion was aimed at certain prospective customers. "It's something we all have to do to attract new customers." he said.
The National City effort also was a mailing aimed at new customers, said Fred Solomon, a spokesman for PNC Financial, which is based in Pittsburgh. "Everybody wants new customers," he said.
Still, not all banks tackle the issue the same way.
For example, Shannon Loar-Tenney, a local spokesman for Huntington National Bank, said the bank tries to reach new customers through existing customers and a Refer-a-Friend promotion. Existing customers get a $25 gift card - up to $575 worth in a year - for each new customer they refer who opens an account.
Karen Fraker, a spokesman for Fifth Third Bank, said the bank doesn't talk about its promotions, but said it is not doing a targeted mailing currently.
"You see those things change all the time," she said. "A few years ago, it was providing totally free checking. Then it was offering an item or dollars to open a checking account. Then we had rate wars."
In the summer and fall, KeyBank turned to technology - free iPod Nanos - to attract customers. "Anyone could get one, but it was aimed specifically at student checking account in the summertime," Mr. Davis said.
Mr. Kane said cash gift cards are the latest incentive in the industry and that several banks nationwide have begun offering them.
Contact Jon Chavez at:
jchavez@theblade.com
or 419-724-6128.