• by Aaron Baar , March 20, 2008

Economists and financial advisers, it seems, are always telling Americans to save more money. According to new Mintel Comperemedia research, it seems the banks are trying to get you to do it as well.

According to the company, 86% of direct mail savings account offers from banks offered rates between 4% and 5% (at least when it came to mailings with advertised rates), compared with 60% of such offers in 2006. Comparatively, an additional 10% promoted rates above 5%. In 2004, 99% of direct mail offers promoted rates of 3% or less, and in 2005, 67% were 3% or below.

The rise in rates can be attributed to more competition among banks to secure new customers, says Farah Huq, market research manager at Comperemedia. "It's the new vehicle to lure customers in," Huq tells Marketing Daily. "[They think], hopefully, by getting customers in the bank, they can later sell them a mortgage or some other product."

In addition to the high savings rates, the banks are hoping to lure customers with low or no minimum balances (as are required on certificates of deposits) and none of the restrictions that are usually found on money market accounts. According to Mintel Comperemedia's research, 76% of the direct mail offers in 2007 did not list a minimum deposit. Of the ones that did, a third of them required only a $100 minimum balance, while only 5% required $10,000.

"These savings accounts could become the new money market or CD accounts," Huq says. "They are offering competitive rates with very few restrictions."

The trend toward higher-yield savings accounts began with ING Direct's Orange Savings account. The company has been consistently aggressive with its high-rates promotions in its direct mail campaigns. In 2005, the company promoted rates higher than 3% in just over one-fifth of its mailings. Last year, 99% of the company's direct mail promotions advertised rates above 4%.

Since then, more companies--not just banks, but brokerages and other financial services companies--have begun touting higher-yield savings accounts. The competition has become so fierce that many are offering other incentives (such as additional cash for opening an account) to lure customers. "It will be interesting to see where people take their money," Huq says. "I'm sure people will begin looking for the best perks."

However, if the economy continues to slow, and the Federal Reserve continues to cut the prime rate, promotions for the high-rate savings accounts may slow down, Huq says. "It will be interesting to see if we're seeing the same high rates in 2008," she says. "It's possible we'll see some drop off in Q2."