With new restrictions and customers with tighter budgets, many banks are finding it hard to pull in new customers. In an attempt to bring in new business, several banks are offering deals where you can get free cash (often ranging between $50 and $200) to new customers. However, as this article from MSNMoney.com warns, many of those banks offset the free cash by introducing new fees, minimum balance rules, direct deposit requirements, etc.
For decades, banks have been trying to get consumers to open checking accounts with freebies like toasters, George Foreman grills and even iPods and Home Depot gift cards.
Now, they're upping the ante with offers of $100, $150 or more in cold, hard cash. This month, Capital One launched a promotion offering a $200 bonus to customers who open a Rewards Checking account through Feb. 28. Bank of America offers $100 to anyone who opens a checking account through Feb. 28.
While cash incentives aren't new -- Chase has been offering cash bonuses for four or five years, according to spokesman Tom Kelly -- at a time when consumers are starting to receive their holiday shopping bills and are mindful of their budgets, such promotions may seem particularly attractive. And thanks to new credit card legislation coming into effect next month and new regulations limiting banks' ability to charge overdraft fees, banks are likely to make such offers even sweeter.
"Banks are wondering how they'll recoup some of their lost revenue, so they're focusing on generating revenue through checking accounts and debit card activity," says Ron Shevlin, a senior analyst with market research firm Aite Group. (See "Credit card rates, fees soar as new law looms.")
Yet consumers shouldn't jump at such offers without reading the fine print. "These deals sound very attractive, but they come with behavioral restrictions and requirements," says Shevlin. "It's great that you'll get $200 upfront, but will you pay $200 in ATM and safety-deposit fees?" Many banks require consumers to set up direct deposit, maintain a minimum account balance or make a certain number of debit-card purchases each month.