Banks dangle a carrot before you to make sure you stick

Date Published: {J}

It should be one of the most important decisions of your life – what bank you’re going to attach yourself to until the day you keel over or pay off your mortgage – but all too often this decision is based on whatever carrot they dangle in front of you when you’re still a mere child.

Back in the day the inducement was a tenner; then it became a record voucher, a cheap stereo, fifty quid – and now it’s a phone. So you sell your soul to the devil for the price of a cheap phone.

New mothers have opened bank accounts for the little bundles of joy on the basis of a bank voucher stuck into that free samples bag that they find at the bottom of their maternity hospital bed.

Students would willingly take out a five figure overdraft once they got a handful of drink vouchers in exchange.

It’s so easy for the lending institutions to lure new customers that it’s like taking candy from a baby – and once you’ve signed on the dotted line at the Bank of Hotel California, you can check out any time you like but you can never leave.

Back in the late seventies, I opened a deposit account with one bank in return for that aforementioned tenner.

Since then, I’ve had five mortgages, more than half a dozen car loans, more home insurance and life insurance policies than a small brokerage and now an education savings scheme – without ever looking anywhere else for a more competitive offer.

That wasn’t because I thought I was with the best bank – although that might equally have been true – but more because I was too lazy to bother looking. And like a financial version of the Scientologists, once I took that first initial step for a tenner, I could never escape from a path that took me in deeper every time.

Now history is repeating itself because our eldest had a junior savings account with this same bank – the proceeds of his Communion and Confirmation – but, on the day after he turned 14 last week, he received a letter of congratulations from said bank informing him that he was now the proud holder of a student account.

As part of this he was now entitled to an ATM card – which would be like letting an alcoholic loose in an off licence – or a debit card, which would be only marginally less combustive.

But because he’s not fully addicted to this bank yet, a rival bank offered to take his class on a ‘tour’ of their premises – albeit one that left out the only part of the bank that teenage boys wanted to see…..where they kept the money.

And a leaflet presented to him on his departure informed him that he could also get his hands on a free phone if he opened an account for a fiver with this bank. This was a no brainer and now he’s in the process of moving his assets from one state-controlled financial institution to the other – presumably never to return.

If only his own bank had offered him an iTunes voucher or a Jack & Jones discount card or taken him on a tour of the vaults to see where the Troika’s money is kept, he might have been theirs forever.

Because while it’s possible to move a few hundred quid at 14 years of age, once you have ten standing orders, a mortgage, an electricity bill, a phone bill and a car loan stacked up against you, moving to another bank would be on a par with learning to play the flute.

Indeed such was the difficulty in doing this, the Central Bank came up with legislation in 1989 to punish banks who frustrated this process. They have to produce an information pack and ‘easy to read and sign’ documents for anyone wishing to move – but really they just have to baffle you with statistics until you lose the will to live.

For more, read this week’s Connacht Tribune.