Depending on where you bank in Central Iowa, you might receive a a Home Depot gift card, a cooler or a plush toy for opening an account. Prefer cash to merchandise? Then you might want to go to an institution that deposits money to your account for switching banks, or that offers a rebate on every purchase made with your debit card.

Using gifts, known in the banking industry as “premiums,” to lure new accounts is a practice that has seen a resurgence in some markets, particularly among larger metropolitan banks that are fighting for market share.

In Central Iowa, where new branches open practically every month, the competition is heating up to capture lucrative consumer accounts. Though many banks offer gifts or incentives for opening accounts, others say they minimize the freebies, and instead put the money that would have been spent on premiums into offering more free services.

Premiums have proved to be an effective strategy, said Stacy Sporer, an account executive with Mills Financial Marketing. The Storm Lake company, which specializes in promotions for the banking industry, recommends that its clients use gifts ranging from $25 to $50 in value.

“We’ve seen tremendous success and growth,” she said. “We’re talking 300 to 400 new checking accounts (for a bank) within a six-week period. And what that brings in is $1 million in new deposits, typically.”

Greater Iowa Credit Union, based in Ames, has given away Home Depot gift cards and gasoline cards in the past, said Amy Juhnke, its marketing and public relations director. Because credit union regulations prohibit Greater Iowa from giving away anything valued at more than $10, the institution has to be creative, she said. For instance, members that use Greater Iowa’s online bill paying system are enrolled in a sweepstakes each time they pay a bill. And the credit union’s Visa credit card holders become eligible to win a trip for two to the Super Bowl each time they make a purchase.

Other institutions have decided that cash speaks louder than premiums. For about the past six months, Bankers Trust Co. has been offering to pay new customers $25 when they move their accounts from another bank. To receive the incentive in their checking account, customers must agree to bring in their old debit card and checks to be shredded, and fill out a form to have their automatic deposits and payments switched over. Additionally, customers can get $20 for signing up for bill pay and using it at least once.

“Some customers put a higher value on cash than a premium piece,” said Paul Erickson, Bankers Trust senior vice president for its consumer division. “Banks are looking for a way to differentiate themselves, and that’s one of the ways we’re trying to do that. It’s inconvenient to switch banks. All we’re trying to do is give them an incentive to try it. We feel that once they’re here, they feel it will be worthwhile.”

Rob Oltjen, Bank of America’s president for Iowa, said he’s noticed many free offers from other institutions around Greater Des Moines.

“I’ve even seen offers of no interest for six months on regular loans, which is something I hadn’t seen before,” he said. “That really struck me as, ‘Boy, banks are really going all out to try to get business.’”

Oltjen said Bank of America rarely offers premiums. “We think our products and services stand for themselves,” he said. One strategy it’s used to gain market share, he said, has been to offer free online banking and bill paying to all customers, as well as no closing costs on home equity lines of credit over $10,000.

At U.S. Bank branches, new customers aren’t likely to be offered freebies, but existing customers may get an extra $5 deposited to their accounts if they have to wait in line more than five minutes, said Mike Helak, president of the bank’s Des Moines operations.

“What we really try to do is to be viewed as more than giving away toasters, but adding value to what people want every day,” he said. “We’d rather build our business with a core group of clients that can really value what we bring to the table.”

One of its more popular programs, he said, has been its Checking That Pays Visa check card, which provides an annual cash rebate deposited to customers’ accounts, based on the value of debit card transactions they make. The bank will pay more than $23 million in rebates to its U.S. customers this month for purchases made in 2004.

Commercial Federal Bank, which has offered premiums ranging from coolers to umbrellas in the past couple of years, recently did away with freebies after a customer poll indicated account holders would prefer free services, said Steve Blazek, the bank’s Iowa retail director.

“So this last part of the year, we’ve been really focusing on delivering value to our customers rather than a premium item,” he said. With the shift, “we’ve seen more accounts, and a better quality of accounts, versus just someone coming in to open a checking account to get that free gift.”

Jeanne Wells, president of Wells Fargo Bank in Indianola, whose institution gives away a Wells Fargo plush pony or a commemorative Iowa quarter set when a customer opens a new account, shares that view.

“They’re usually not of much monetary value, but they’re fun,” she said. In other instances, a new loan customer might get a $50 or $100 Home Depot gift card.

“It’s just a way of thanking them for their business,” she said. “It’s less a sales promotion than it is gratitude for doing business with us.

“There’s a fine line there,” Wells added. “If you’re building a relationship with them, have you really done that if you’ve bought that business? There has to be a relationship of trust and equal responsibility.”