There are banks that want to give you more than $100 to open a new account. The problem? You may be required to make a minimum deposit. Or receive a direct deposit. Or keep your deposited money for a while. Or all of the above.
For some customers, the demands are worth it. “I got free money,” says Anika Jindal, a Houston personal finance blogger who recently took advantage of a bank’s bonus offer. She says she opened an online account at a major bank and made a deposit in order to qualify for a cash bonus.
“It was easy. They gave me back $200 in two months,” she says. With a few smart moves, you can do the same. the bank, hoops and all, suits you.
Look online for the best banking promotions
Some banks will send targeted offers directly to certain customers. But you don’t have to wait for an invitation. You can search online for “banking bonuses” to get an idea of what financial institutions have to offer. It’s not uncommon to find bonuses of $100, $200, and even $300 for new customers who open savings or checking accounts.
A large bank bonus can be like earning a stellar rate. For example, a $200 bonus in exchange for depositing $2,500 into an account in the first three months is equivalent to earning an annual percentage return of 8% on that same amount for an entire year. To compare, the best savings accounts currently have rates slightly below 1%.
You’ll want to read the fine print. With many banking promotions, the key to winning a big bonus of over $100 is to make an even bigger deposit first, say $1,000 or more. You can be expected to make this deposit within the first two to three months of opening your account, and the bonus funds would be deposited a few weeks after that.
If you can deposit a large deposit into your account for the required period, the advantage could be worth it. But if this amount is exaggerated, it may not be worth tying up your money.
Know what fees you might end up paying
Some accounts that offer bonuses and perks also have monthly service fees. If you are unable to reverse these charges – by keeping your account balance above a minimum of a few hundred dollars, for example – you will likely end up giving your bonus money back to the bank, says Jeff Kronenberg, founder and president of Imagine Wealth Group LLC, a financial planning firm in Ridgefield, Connecticut.
“Banks are really good at making money,” he says. “If you get a $100 bonus, but the monthly fee is $30, which I’ve seen, then after four months you’ve lost the entire benefit.”
Maximize your entire balance
If you plan to continue using the savings account after earning the bonus, look for an account that does not place limits on how much of your money will earn its highest rate. For example, a financial institution might offer a rate of 1%, but only for the first $5,000 deposited. Anything above this amount may generate a lower rate.
Since savings account rates should start to rise to fight inflation, if you have a large amount of money to deposit, you don’t want to end up with a lower return on part of your balance, says René Nourse, certified financial planner and founder and CEO of Urban Wealth Management in El Segundo, California.
It may be interesting to go for a high interest savings account that pays a high rate on your entire balance and may not have a bonus, instead of an account with a bonus and interest rate for a lower amount. “We had a few years where your rainy day account gained very little,” Nourse says. “But now is the right time to look for a better option.”
Follow up if needed
Once you have met the qualifying criteria, be on the lookout for the bank to deposit your bonus. Many offers indicate that the institution will pay the premium in a few weeks. You can check transactions online or view your monthly or quarterly bank statement. If you don’t see the bonus, contact the bank’s customer service department for an explanation.
Earning a savings bonus can be like earning extra interest, more than even the best savings accounts offer. As long as you meet the requirements and do not return the funds as bank charges, bank bonuses can be a great way to boost your bank balance.