By: Kelly Anderson
As part of efforts to bring in new customers, many banks and credit unions are working to offer reward programs to their customers and members in order to attract new business. As some analysts now say, the overwhelming motivator in many of these programs is cash.
One example of a recent reward program is Ohio's SuttonBank, which offers rewards on both its savings and linked checking accounts, which can have significant benefits for customers. The emphasis on cash back instead of other incentives, analysts told Bankrate.com, is a growing trend in the industry, which has moved away from prize-based incentives.
"In years past, bank incentives were toasters or iPods," says Greg McBride, senior financial analyst at Bankrate. "Now it's cold, hard cash. It resonates most with customers."
Some analysts also told the site that banks offering a cash incentive for moving a savings account may very attractive to some consumers, since a bonus of even $100 could be better than a person could earn with a one-year certificate of deposit anyway. Less-restrictive program requirements such as direct deposit can help keep costs lower for financial institutions.
The benefits of the advantageous reward checking program structures offered by credit unions and community banks may be even more evident if many consumers were able to change banks more easily, which is not the case. A recent poll released by the Consumer Reports National Research Center found that 20 percent of checking account customers had considered changing financial institutions during the previous 12 months.
However, only about half of those people ended up actually making the change. Their lack of movement was due to the challenges of changing automatic payments or transfer fees which would have levied by their financial institutions.