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updated 8/2/2005 1:20:29 PM ET 2005-08-02T17:20:29

You won't see many banks giving away free toasters to new customers these days. The 1970s-era "toaster giveaway" -- designed to lure customers from competing banks -- has become a banking-world cliche.

But you will see banks giving away everything from new cars to George Foreman grills to iPods.

Many banks have super-sized their customer incentives in hopes of standing out in an increasingly competitive field. New players Commerce Bancorp and PNC Financial are entering the Baltimore-Washington market, and competition for deposits is heating up along with interest rates. And realizing the power of word-of-mouth referrals, banks are increasingly gearing incentives toward existing customers who refer them new business.

Baltimore-based Provident Bank decided late last year to rev up its "tell-a-friend" program, which rewards customers who refer a friend to the bank with a gift such as a duffel bag. Provident will give away a new Pontiac Vibe this fall. Customers are entered in a drawing for the car when the person they refer opens a personal checking account.

"We're looking for those who know us best to tell others about us," said Shelley Martin, segment manager.

First Mariner Bank launched its own "tell-a-friend" giveaway program a couple of years ago. Most banks now offer free checking -- meaning banks have to do more to set themselves apart, said Fran Crawford, product director for the Baltimore bank.

The bank has a new giveaway every month -- from shredders and binoculars to the wildly popular George Foreman grill. The bank spends about $50,000 to $75,000 a year on incentives, Crawford said.

This summer, giants Citibank and Bank One have offered an Apple iPod Shuffle to those who open new accounts. Buffalo-based M&T Bank Corp. is giving away Digitech organizers -- similar to PalmPilots -- to anyone who opens a new account or refers a new customer.

This summer, Charlotte, N.C.-based Wachovia Corp. is offering 15 free song downloads from Apple's iTunes to college students who open an account.

"For a lot of people, [college] is their first experience with a bank," said spokesman Scott Silvestri.

K Bank in Owings Mills relies on competitive CD rates to attract customers, eschewing giveaways beyond a free order of checks for a new customer. "Ultimately, I think the customer is looking for a very competitive rate," CEO David H. Wells said.

© 2007 Baltimore Business Journal

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