Rising interest rates on the part of the Federal Reserve for the past few years hasn’t prompted a lot of banks to raise the rates they pay on deposits account. However, some customers have been making money, thanks to a cutthroat environment in which some lenders will pull out all the stops to lure customers their way.
According to a report in The Wall Street Journal (WSJ), some lenders are offering new customers perks of one-time payments of hundreds of dollars if they open a new account. Those perks, reported WSJ, can be buried on parts of the earnings reports that aren’t scrutinized heavily and aren’t followed closely by Wall Street. Though some have been doing this for years, the practice is growing and becoming more common. The paper found — over the past six months ending in March — the number of banks that sent more than 5 million of the mail offers, rewarding new account holders with cash, has jumped 15 percent since the middle of 2015. The WSJ cited consulting firm Novantas for the data.
Meanwhile, the average bonus for regional lenders has increased to close to $300 from under $200 during the same time frame. It’s not just regional lenders that are offering these cash incentives. The WSJ noted that JPMorgan Chase, Wells Fargo, and SunTrust Banks offer bonuses that are between $150 and $500. For those people with small accounts, that is a sizeable bonus.
The bonuses are “the modern version of a toaster,” said Matt Jauchius, chief marketing officer at Fifth Third Bancorp, in an interview with WSJ. Rewind decades and banks were giving away toasters to lure new accounts their way. Fifth Third Bancorp offers a cash bonus of more than $250 when customers open new checking accounts.
The increase efforts come as bank deposits for many banks are on the decline. The WSJ noted that, while big banks continue to bring in new money, 10 of the 22 large regional banks saw deposits in the U.S. declined last year. In 2016, only two saw declines in U.S. banking deposits, noted the report.