Forget a toaster. Banks are now offering hundreds of dollars when you open qualifying accounts. Why are they doing this and how do you know if now is the right time to make a banking change?
You’ve probably noticed a lot of mail from banks lately. Studies recently have shown that large banks and regional banks have shifted to a model of starting to offer cash advances to say, “Why don't you come over in bank with us?”
It used to be like $200 dollars and now it's sometimes $300 or $400. They've been as high as $500 dollars, just to transfer an account over to the bank.
This conversation unpacks the bank promotion details and shares my advice on finding the right bank partner over a good bank promo.
did you Read The Fine Print?
It's not just “Come open an account. We’ll send you 500 bucks. Have a great day!”
Usually you've got to either have a direct deposit going into that account or you've got to have a certain balance in the account for a period of time.
In essence what they're trying to do is pull you in and become your new primary bank that you direct deposit your check every other week into.
And this totally makes sense and that's good marketing. It's very tempting to move over but let me just say this. We talked about banks before because banks drive me a little bit batty. Especially big banks, because banks have fee problems.
Banks have remarkable, crazy, abilities to charge you fees on top of fees on top of fees. Everything from overdraft fees (which are the worst ever) to wire fees. And, if you're a business owner you get transaction fees. There's all sorts of fees the banks find creative ways to charge you stupid amounts of money.
This is especially a problem at larger banks that have become amazing at this.
Whether you should move to a bank, should have a lot more to do with the long-term relationship you're going to have with that bank than with the short-term offer they're putting out there.
But these offers are getting so good that a lot of folks regularly ask me about changing banks.
the ugly truth You Need to know
To give you a little framework here, one of these banks is local to Atlanta. SunTrust literally has admitted that they pay for these advanced programs out of the fees they charge customers. Is that not ironic?
It's kind of like, we’ll pay for you to come over, but trust us, you'll pay us back later.
Fees are an epidemic at banks, especially because banks often don't treat you like you matter once you’ve signed over your money to them.
We see this with the crazy scandals that Wells Fargo has gone through in the last few years. You've probably experienced this yourself. So, I would say that working with a bank that knows you, with people that will go out of their way to give you customer service, people that will use common sense is probably worth more than $30, if you overdraft accidentally.
I've had clients come in that accidentally overdraft and were charged tons of fees. And the bank kind of throws up their hands, saying, “Sorry! We can't help you.”
A bank that has common sense and says “Hey, we see this was a mistake. How can we help you fix it?” That is worth its weight in gold.
So, before you jump to a new bank because they offer you $200 or $300 dollars. Please, please pause and think about the banking experience you really want.
Great Banking Alternatives to consider
I've talked about a few banks before that I've been impressed with.
1. Ally Bank
One large national bank is Ally Bank. They're all online. Some people hate that. But if you don't mind that, they charge really low fees and they're really reasonable. They're great to work with. They also pay your atm fees anywhere in the country. It’s great!
2. Local Banks
There are also local banks. I've talked about Vinings Bank in a recent interview on why small banks are so valuable, it’s a small, local Atlanta bank. They actually pay your fees and are extremely reasonable.
The common thread here is there are actual humans wanting to do business with you.
Please, if you can find a great bank that's offering you two or 300 bucks to come over, that's great! But they know once they get you they probably have you forever because it's so annoying to switch banks. You have to switch your direct deposits, get a new debit card, change your bill pay. Nobody does it because of that.
So if you're going to make a change do it for something far more valuable than 300 dollars. Do it for a true long-term relationship with a company that wants your money and actually gives you service for it.
There are banks that want you as a customer. There are banks that will treat you well. There are banks that are going to listen to you when you have issues.
Choose the right bank.