Australians are being lured with free cash and other financial incentives to switch accounts as the battle of the banks continues to heat up.
Institutions are offering up to $100 to attract new transaction account customers away from rival banks, as well as waiving fees and charges – among these are ING Direct, ME Bank and HSBC. The big four banks are yet to announce any special transaction offers.
Australian Bankers' Association chief executive Steven Munchenberg said the banks are eager to top up deposits and are doing whatever they can to encourage customers to switch.
"Due to ongoing concerns to raise money overseas, banks are very keen to maximise the number of deposits they have got in Australia," he told News Ltd.
"It's also easier to switch transaction accounts. Banks are also wanting to draw attention to themselves and make sure when customers are thinking of switching, they are the ones they switch to."
It is easier to switch since July 1, when the federal government introduced "tick and flick" legislation.
Under the new law customers are no longer required to seek help from their former bank to move their account elsewhere. Instead, they simply go to their new bank and authorise it to do the work on their behalf.
The customer's new bank will contact the previous institution and transfer any existing direct debits and credits over to the new account.
ING Direct is giving Orange Everyday customers 5 percent cash back on contactless purchases up to $100 every day until June 30, 2013, while ME Bank has abolished its monthly account-keeping fee on the Everyday Transaction account. HSBC is giving Day to Day account customers $20 a month of up to $100 if they deposit $5000 or more in the first five months and last month Suncorp Bank offered $50 payments for most new transaction accounts where a deposit of $2000 or more was made (now expired).
While most of these are "one-off" inducements to win new business, other institutions offer ongoing financial incentives to customers which meet certain requirements, according to Michelle Hutchison, spokeswoman for RateCity.
"There are some great deals in the deposit space at the moment and anything that gets people to revisit their finances regularly and demand a better deal is a good thing for competition," she said.
"While these one-off bonus deals are appealing, we'd still encourage people to shop around, compare transaction accounts using sites like RateCity and make sure they are getting an ongoing deal that suits their circumstances."