Gone are the days that a bank would offer you a free toaster for opening a new checking account. These days, banks have been offering more practical incentives. Sometimes with free airline miles, electronics, or cash. Although these deals can be enticing, it’s important to do your homework before taking advantage of one, and consider if it’s really worth it.
What’s the catch?
The most typical reward a bank will offer for opening a new account is money, and usually around $100 to $200. The extra money can be great if you’re looking to open a new bank account anyway, but it’s not a smart move to just open an account to get some free cash. Every bank promotion will come with requirements that you have to meet in order to get your reward. If you find one that doesn’t, you’re extremely lucky. The bank may require you to have a minimum balance. Some minimum balances can be fairly high, and if you fall below it even for one day, you may be charged a fee for the whole month. Other requirements could include making a certain number of ATM withdrawals a month, or signing up for direct deposit. If you don’t meet these requirements, your free prize will vanish, and you may be stuck in a bank agreement that is more harmful than helpful.
Another thing to remember in your quest for the perfect bank and reward is that the money you receive will be counted towards your taxable income. Considering all the hoops you may have to jump through to get $100 it also may not be worth it if that becomes $75 after taxes.
Can anyone take advantage?
These rewards will typically only be available to new customers. So simply opening a new checking account at your existing bank won’t do the trick. Chasing rewards isn’t recommended, but if you’re looking for a new bank for whatever reason, shopping for a reward to go along with it, could be a great bonus. Thanks to the Internet finding these deals isn’t that hard either.
It’s important to be aware of the fact that some banks could charge a fee for early closure of a new account. Fees of up to $25 can apply for deciding to cut and run within the first year, so don’t think you’re home free as soon as you receive your prize.
Where can I find a bank deal?
Both banks and credit unions often use bonuses or promotions to help market themselves to new customers or members. From the smallest credit union to the biggest bank to an online bank, you’re likely to find some sort of deal if you search hard enough.
One great example of a bank incentive is a CollegeSaver Savings Account from Citizens Bank. Although it’s a savings account it’s worth mentioning because of its great incentives and minimal strings attached. If you’re a parent with a young child, it could be a great way to start a college fund. You get the best deal if the child is under six, but in order to qualify your child must be under 12. On their 18th birthday the bank will gift the account with $1,000 and interest will start kicking in. The only requirement is a monthly deposit of at least $25, and you can miss one deposit per year. This is a great bank incentive because it is encouraging you to save for the future and rewarding you once that goal is met. If you only paid the minimum your child would have close to $5,000 for their 18th birthday. Furthermore, the money doesn’t have to be used for education, and could simply be an awesome birthday present.
Whether you’re looking for a bank closer to home, or one with better rates and services, shopping for bonus incentives at banks is a great way to get the most for the money you’re putting in. Just don’t let it be the only reason you choose to open an account.
John Gower is a writer for NerdWallet, a personal finance website helping consumers find the best bank deals.