5.- DO BANKS MAKE 'GIFTS'?

(Escrito en English)

The subject of this post has to do with the measures taken by banks in recent years aimed at fund-raising from savers with bank deposits which are remunerated with 'gifts'.

Each year, and in some cases on a regular basis, banks launch campaigns designed specifically to attract new customers. The system is very simple: the customer deposits money in the bank in exchange for a 'gift'. You have a lot of different 'gifts'. Do you want a TV?. A tablet?. A  robot vacuum cleaner?. A car?. Do not worry. Make a deposit into a bank and you will get a 'gift'.

I worked in banks some years ago and I drew two conclusions: banks rarely lose (although there are some exceptions); and banks never give anything. So, be careful because these could be expensive 'gifts'.

Let's do an analysis. When we open a term deposit we are committed to provide the bank an amount of money and we should receive some interest in return. This was what usually happened. But, what is happening today?. What banks  do is pay the interests as payment in kind, i.e., banks do not get you the money in cash, but in ‘products’, and this payment in kind must be included in your tax return. But, it was a gift, wasn’t it?. Let’s go a step further. As it is considered that the bank is giving you a good, you must pay VAT on goods received (a percentage of the market value). And, what is more, there are strong penalties to deter customers who want to withdraw money before the agreed period. In view of the above, it always appears some problems because banks often do not explain clearly to their customers all the conditions of these kinds of term deposits. And I am not saying that these deposits are never profitable for the customers. What I am trying to explain is that the ‘gift’ has cost and it will only generate a profit when the value of the final retribution received is higher than if we open a ‘traditional deposit’, or when we are interested in the product and the price of the product at the end of the transaction is less than the market value of that product if we bought it in a store. All this, considering that you must wait a specified period until you can have access to that money in the bank unless we want to pay a penalty.

On the other hand, don’t you think that banks forget ‘quality management systems’ or ‘customer loyalty’ when they offer these kinds of deposits?. I mean, what if a customer who has had his money in a bank  account for years felt that new customers are treated better than old customers?. My experience tells me that regular customers may feel angry, especially if banks advertise something like ‘make a deposit of 3,000 euros in the ‘Bank X’ and get this fantastic free gift’. Regular customers often feel slighted.

To sum up, I would say that, from now on, if you open this kind of deposit you should calculate the return on your investment. And, be careful, don’t think that banks are NGOs because I think that the only gifts they make are gifts that have been made to mitigate the anger of a dissatisfied customer.