Banking is a competitive business. To lure new customers, some banks will pay you hundreds of dollars in a cash bonus to open a new checking or savings account.
Are these offers smart for consumers?
“As the old expression goes, ‘There’s no such thing as a free lunch,'” says Daniel M. Yerger, president of MY Wealth Planners in Longmont, Colorado. “Incentives often require minimum deposits of several or tens of thousands of dollars in addition to minimum balance requirements for weeks or months, or the incentive is pulled back or never granted.”
One key factor to consider is whether you’ll get more than you would earn in interest if you leave your funds where they are.
“Add up the bonus and interest earned for the required period, and divide (that) by the required balance to get an idea of the percentage rate of return,” says David Wattenbarger, president of DRW Financial in Chattanooga, Tennessee. “If it’s not meaningfully better than the rate in (your) current account, it may not be worth the effort.”
The effort involved could include opening the account, depositing funds, setting up new direct deposits and payees for online banking, and remembering your new online banking login and password.
What Are Some Rules That Apply to Bank Account Bonuses?
To earn a cash bonus when you open an account, you may have to:
- Make a minimum initial deposit.
- Keep the account open for a minimum period of time.
- Make a minimum amount in direct deposits each month.
- Maintain a minimum balance.
- Wait weeks or months to receive the bonus.
- Open the account online or at a branch.
- Use a promo code.
- Pay monthly account maintenance fees that may be waived if you complete specified account activities. Fees may be as high as $50 each month.
Cash incentives are considered a form of interest, so you may owe income tax on the bonus, too.
6 Banks That Offer Bonuses
These promotions typically are just for new customers and may be available only for a limited time. Promotions may not be available in all states.
- Citibank: cash bonuses of $300, $700 or $1,500 for new checking accounts in eligible account packages with an initial minimum deposit of $15,000, $50,000 or $200,000, respectively, and required activities. Cash bonuses of $20 to $2,000 for new savings accounts with an initial minimum deposit of $10,000 to $1 million. (Offers are available through Jan. 4, 2022.)
- HSBC: a $450 bonus after you make recurring monthly direct deposits totaling at least $5,000 for at least three consecutive months after a new Premier checking account is opened. (Jan. 5)
- PNC: bonuses of $50, $200 or $300 for new PNC Virtual Wallet accounts. The Wallet package must be opened online via links on the bonus offer page. Bonuses require direct deposits into the Spend account that total $500, $2,000 or $5,000, respectively, within the first 60 days. (Dec. 31)
- Chase: a $225 bonus for new Total Checking accounts opened online with a coupon code. You must set up direct deposit of a payroll, pension or government benefit check within 90 days. The bonus will be forfeited if the account is closed within six months. (Jan. 19)
- Huntington Bank: bonuses for a new regular ($150) or interest-bearing ($200 or $300) checking account, opened online with an automatically generated coupon code. The $150 and $200 bonuses require cumulative new-money deposits of at least $1,000 within 60 days of opening the account. The $300 bonus requires cumulative new-money deposits of at least $25,000 within 60 days of opening the account. (Feb. 7)
- TD Bank: cash bonuses of $150 or $300 for new checking accounts, and $200 for new savings accounts. Requirements: $500 or $2,500 in qualifying direct deposits within 60 days for the $150 or $300 bonus, respectively; deposits totaling $20,000 or more within 20 days for the $200 bonus. (Nov. 30)
Despite their appeal, new account bonuses may not be worth the effort unless there’s more to the offer than just the extra cash.
“These offers really only make sense for consumers if the other features of the bank account – service level, locations of branches, interest rates offered – are appealing,” Yerger says. “People should say yes if it’s icing on the cake where their banking decision is concerned; but if they’d only open the account for the cash bonus, it’s seldom worth it.”
Monthly service fees should be a consideration as well.
“Signing up for a new account to get a bonus doesn’t make sense if there are expenses and fees that erode the value of the bonus,” Wattenbarger says.
If you find a cash bonus offer that you like, be sure to read the terms and conditions of the account and the offer before you sign up.