Wednesday, October , 13S0
daily nebraskan
page 7
Bank gift premiums a
defensive maneuver
By Charles Vaughn
Have you ever wondered why banks give
gifts?
The object behind it is to attract new
customers. But Rich Nordby, premium co
ordinator at Lincoln National Bank of
Commerce, offers another reason.
"We do it more for a defensive," Nordby
said.
"Everyone else is doing it, so we do it.
Otherwise we would be cutting our own
throats."
lie said he would prefer not to have gift
promotions.
"We are in the financial business. We
would rather concentrate on that."
Nordby admits premiums sometimes
can increase business considerably.
Ml you hit something that touches the
hot button on the public it would increase
our business."
Despite this, Nordby still says "prem
iums are a real pain."
Representatives from Commercial Fed
eral and State Federal savings and loan
companies say they feel the same way
about premiums.
program. We would like to think it was
partly because of the premiums. I do think
they work," she said.
BaUey, however, maintains a definite
stance about premiums. He said he took a
stand against the gifts when attempts were
made recently to have them banned.
"Premiums are to attract new business,
but they have gotten out of hand. Once
you become a customer you end up paying
for them.
"You may not be getting a service you
could be getting, or it may be at some time
down the road. But, eventually, you pay."
Choosing the right item to be a prem
ium can be difficult, Nordby said.
We have a lot of salesmen who call on
us. We try to select a product that has been
created as a need by someone else."
Decision complicated
Making the decision more complicated
are guidelines set by the Depository Insti
tutions Deregulation Committee that estab
lishes limits on the value of premiums. The
current limits stipulate that for a deposit
of less than $5,000, the value of the gift
cannot exceed $5. For a deposit of more
than $5,000, the value cannot exceed $10.
"I would like to see them outlawed " These limits are subject to change begin
said Steve Baily, assistant vice president at ning next year. Nordby said the limits pro
State Federal. bably will be doubled at that time.
"Then we could pay more on savings.
Everyone would benefit."
Lois Anderson, an employee with Com
mercial Federal, said none of Lincoln's sav
ings and loan companies would dare not
offer premiums to customers.
"Then we would not feel competitive,"
she said. "But every customer wants a little
bit more, so they can be a pain."
Mixed feelings
Anderson said she has mixed feelings
about premiums.
"We have had an increase in customers
since we have been running our current
The reason for these limits is to prevent
banks from avoiding interest rates that are
set by federal agencies, he explained.
Several premium programs are offered
locally.
"you can have a give-away, a one-shot
or a continuity. It depends on the pro
duct," Nordby said.
State Federal favors a cumulative pro
gram that encourages large deposits, Bailey
said.
"As long as they (premiums) are going
to be here, we try to make the most out of
them "he said.
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