While credit card rewards offer an easy way to earn points for travel, an alternative way to earn free money is by pursuing bank bonuses. Just like banks will give you a signup bonus for spending money on your credit card, some banks will award you with cash for opening a new account and meeting certain requirements.
Bank bonuses vary widely and may or may not be worth it depending on the terms. For example, my husband once received a targeted $1,000 bank bonus for keeping $5,000 in business funds on deposit with Huntington Bank for six months and making six debit purchases in the first three months. With those requirements, that deal was an absolute no-brainer, right?
Sadly, $1,000 isn’t the norm. Most of the time, you’ll receive more like $150 – $300 for opening a new account and jumping through a few hoops. By and large, if you have to figure out what those hoops are before you can decide if it’s worth it.
Here are five steps to determining whether you should bother with a bank bonus – or not:
Read the fine print and figure out if the requirements are reasonable.
While some bank bonuses offer a low requirement for entry, others want you to do some seriously crazy things. An example: One targeted bank bonus I received recently wanted me to set up 5 different direct deposits each month to earn it. Ummm, no.
Personally, I like bank bonuses that only require me to put cash on deposit for a certain length of time, say six months. I’m also willing to consider making several debit card purchases to earn a bonus provided the debit card itself is free.
Add up the banking fees.
When you really dig into the fine print of these offers, you will find that some bank accounts offering these bonuses cost a pretty penny. While paying a few banking fees can be worth it to earn several hundred bucks, you should weigh the pros and cons before you move forward.
Determine whether the money you earn will be worth the time spent.
Opening a bank account can take a few hours if your bank is slow. Is the time spent really worth the money you’ll get in return? At the end of the day, only you can answer that question.
Decide whether you can “lose” your money for long enough to earn the bonus.
With some bank bonuses requiring you to put down $5,000 or more for up to 18 months, it’s important to figure out if you can afford to “lose” that money before you pull the trigger. If you withdraw your cash early, you can miss out on the bonus altogether and accrue banking fees if you don’t meet minimum balance standards.
Figure out your opportunity cost.
Putting money on deposit with a bank means you might earn less interest on your money than you would if you left it elsewhere. Since banking interest rates are at historic lows, however, this isn’t a huge consideration for the time being.
Still, it’s worth considering. Take the famous Chase banking bonus, for example. With this offer, you’ll get a $150 checking bonus if you open a new account and deposit $25, plus set up at least one direct deposit to your account within the first 60 days. To avoid the $12 monthly checking fee, however, you need to have direct deposits totaling $500 or more or keep at least $1,500 on deposit.
As a huge caveat, Chase says you need to keep your account open for six months to keep your bonus. If you put $1,500 in your account for those 6 months, your $150 bonus equals a full 10 percent return on that amount. Since you’re likely earning a whole lot less than that with your regular checking account, this is probably a good deal.
Final Thoughts
Checking bonuses offer yet another way for frugal people to earn free money, yet they aren’t always worth it. Make sure to understand your offer and read all of the terms and conditions before you sign up. Like with anything else, the devil is often found in the details.
What is the biggest bank account bonus you have ever earned? Do you pursue bank bonuses often?
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