When interest rates rose, customers demanded banks pay more for deposits. Analysts believe lenders are reworking incentives to retain consumers’ money in their accounts after last month’s financial turmoil.
U.S. banks are giving signing incentives to attract new and frequent depositors. Customers moved $119 billion out of smaller banks after Silicon Valley Bank (SVB) and Signature Bank failed last month, forcing the promotions.
Capital One Financial Corp (COF.N) offers a $100 incentive for opening a new savings account and depositing more than $10,000 for 90 days. After that, deposits exceeding $100,000 receive a $1,000 bonus. In addition, discover Financial Services (DFS.N) and LendingClub (LC.N) give pre-bank-run incentives.
Customers who deposit $100 a month for three months and maintain a minimum level will get a $25 incentive from Citizens Financial Group (CFG.N), according to emails issued after March 10. Citizens spokesman Eleni Garbis said the promotion was pre-planned to promote healthy savings habits.
Capital One and Discover did not reply to inquiries.
Analysts say paying more for deposits helps banks retain clients.
“As rates have increased, high-yield savings accounts have become popular once again with certain banks fighting strongly to be at the top of the rate tables that customers rely on for comparison,” said Mintel’s chief insights officer, Andrew Davidson.
“An overall reduction in deposits with more organizations reaching out to customers in the previous few weeks has spurred the tight rivalry,” he continued.
Banks also clarify deposit insurance requirements, provide new products, and emphasize local community links to keep clients.
According to Federal Reserve weekly reports, smaller banks, most hit by the crisis, have stopped deposit outflows. However, industry experts continue to track outflows.
