By: Daryl Tolliver
Saving money frequently makes the�top three financial resolutions most people make during the year, but many individuals fall behind on this goal�after only a short period. Studies reveal that a large segment of Americans lack the savings to cover more than three months of their living expenses, and many consumers noted that they carry less than $500 in their traditional savings account. To promote customers' financial security, while also retaining and acquiring more members, many banks and credit unions are providing cash incentives for customers who contribute to a savings account.�
A new report conducted by Mintel Comperemedia found that bank offers for new savings accounts that featured incentives increased to 40 percent in 2012, compared to 32 percent in 2011 and 24 percent in 2010. Many of these cash incentives range from $25 to $250 for opening a savings account or maintaining a certain balance, the research found.�
"For the most part, recent direct mail offers tracked by Mintel Comperemedia illustrate key themes among savings account offers, with cash incentives among the most popular," said Susan Wolfe, vice president of financial services at Mintel. "However, banks are also offering rate bonuses or promising rates that are higher than the national average, especially for higher deposits. Savings accounts haven't been actively promoted over the past several years, likely due to low interest rates. That doesn't mean, however, that the product has completely lost its appeal."
Wolfe noted that incentivized savings affords banks and credit unions the opportunity to appeal to a larger demographic that has been affected by the economic climate. Young adults with limited incomes, boomers who lost money when the market collapsed in 2008 and conservative investors may view incentivized savings accounts as a more attractive product because it provides the safety, liquidity and low threshold that many stocks and investments lack.�
Savings and checking benefits may boost satisfaction, retention at community banks, credit unions
Many Americans opened accounts with community banks and credit unions in droves to take advantage of rewards checking and cash back rewards programs that many national banks eliminated. Supplementing these already-popular programs with savings incentives may be another step local institutions can take to build loyalty and satisfaction among existing customers, while also attracting new consumers. As consumers focus more heavily on frugality and maximizing value in their financial dealings, bolstering incentives may be a simplified banking strategy for relationship building and gaining a larger market share.�