Bank Bonus

Your bank hasn’t given you any problems. But its competitor is offering you $200 to sign up for a checking account with them. That offer of free cash is tempting.

Be careful, though. Sure, lucrative sign-up bonuses are nice, and they can make opening a new checking or savings account at a rival bank a smart financial move. But before you accept one of these sign-up bonuses, study the checking and savings account guidelines of your potential new bank carefully.

If you skip all that fine print? You might accidentally sign up for a checking or savings account that requires a high minimum balance or one that charges hefty service fees. The terms might be onerous enough to make that sign-up bonus seem a lot less attractive.

Remember this, too: Even a $200 sign-up bonus isn’t exactly a fortune. You’ll have to report that sign-up bonus on your income taxes as income, which means you’ll have to pay taxes on it. That could shrink your $100 sign-up bonus to an actual payout of just $70 or so.

Banks offering big sign-up bonuses

Banks have long offered generous sign-up bonuses to encourage new customers to take out checking or savings accounts with them. At any given time, there’s a financial institution offering a $50, $100 or more in free cash to entice you to become one of their customers.

  • These bonuses can provide a quick infusion of cash to your new checking accounts. But banks will require that you actually use your new checking account once you open it. To make sure of this, most will require that you make a certain number of deposits in the account to qualify for the sign-up bonus. So don’t plan on opening several checking accounts, ignoring them and collecting your bonus. Banks won’t send you the sign-up bonus if you don’t actually make your required deposits.

But if you do meet the requirements and make your necessary deposits, you can earn some solid rewards today for opening a new checking account.

Here are some examples of current sign-up bonuses:

  • Chase. Sign up for a Chase Total Checking account between now until April 13, you can receive a $150 bonus. You must not have had a Chase checking or fiduciary account in the past 90 days to qualify for the bank’s offer. And you must open a  the account with an introductory deposit of at least $25. You must also make at least one direct deposit into the account within 60 days of opening it. If you do, Chase will deposit your bonus in your checking account.
  • BMO Harris Bank.If you open a checking account with this bank through April 30, you can qualify for a bonus of $200. You aren’t eligible, though, if you’ve had a BMO Harris personal checking account in the last 12 months. You’ll also need to make at least one direct deposit of at least $300 a month within 60 days of opening the account to qualify for the sign-up bonus.
  • Fifth Third Bank. If you open a Fifth Third Bank Essential Checking account, you can receive a sign-up bonus of $200. You’ll need to make an initial deposit of at least $50 to open your new account. To participate, you must not have an existing checking account with Fifth Third Bank and you must not have closed a checking account with the institution within the last 12 months. The bonus offer will expire on April 9.
  • SunTrust Bank. SunTrust Bank is heavily involved in the bonus business, too, offering new checking account customers a sign-up bonus of as much as $200. Your new checking account, though, must come with a direct deposit option to qualify for the bonus. This offer expires soon, March 14. So if you’re interested, you’ll have to act fast. If you open a Select Checking account, you’ll qualify for a $200 sign-up bonus if you make $2,000 or more in direct deposits within 60 days of opening the account. If you open an Essential Checking account with SunTrust and make $500 or more in direct deposits within 60 days of opening your account, you’ll receive a sign-up bonus of $100.

These bonuses certainly sound enticing. But don’t let the prospect of a big sign-up treat cause you to open an account with a bank that’s not right for you. There are times when a sign-up bonus isn’t worth it. You’ll need to look carefully at your new bank and your new checking account before deciding whether to make the move to a new financial institution.

Fees, services and locations are more important factors in choosing a bank than are sign-up bonuses. Remember, your sign-up bonus is a one-time offer. The fees that your bank charges, or the minimum-balance requirements that they enforce, can last forever.

When you should pass on the sign-up bonus

A sign-up bonus certainly isn’t worth if you’ll end up paying more in bank fees with your new checking account.

It can be easy to run into higher fees if you’re not careful about reading the fine print before signing up for a new checking account.

Consider the sign-up bonus from Fifth Third Bank. It’s certainly a good offer for many customers. But it might not be a good fit for you depending on your savings and spending habits. The Fifth Third Bank Essential Checking account won’t charge you a monthly fee if you meet certain requirements, such as maintaining a combined monthly average balance of at least $1,500 across your deposit and investment accounts with the bank. You won’t face a monthly fee, either, if you spend at least $500 a month on a Fifth Third credit card or have a mortgage loan with Fifth Third Bank with an outstanding balance.

But if you don’t meet the requirements associated with the new checking account, you might face an $11 monthly service charge. Now, that $11 isn’t much. But it could add up. And if you’re not careful about meeting your requirements, it could add up over time to more than that $200 sign-up bonus.

Your new checking account might also charge hefty overdraft fees – usually, these fees run about $35 – that you could be hit with if you write a check that you can’t cover with the funds in your account. If you’re a bit sloppy with your recordkeeping, you might want to avoid a checking account that comes with overdraft fees, even if this account offers a sign-up bonus.

Other checking accounts will require that you maintain a minimum balance. If you don’t maintain this balance, you could be hit with a costly fee. This is fine if you always have plenty of money in your bank accounts. But if you live paycheck-to-paycheck and end each month with $200 or less in your checking account, an account with a minimum balance requirement could cost you plenty in fees. Even if that sign-up bonus looks good, it’s best to search for a checking account that doesn’t give you a financial hit when your funds dwindle.

Look carefully at the fine print with sign-up bonuses and you’ll discover that many banks require a certain number of transactions each month with your account. If you don’t hit this number you’ll have to pay another fee. Look at your banking habits before opening such an account. If you don’t make many debit transactions or write checks often, you might end up losing that sign-up bonus to costly monthly fees.

Finally, consider the convenience factor before signing up with any bank, even one that is trying to lure you in with a lucrative sign-up bonus. Does the bank you are considering offer a robust online banking platform? Does it have plenty of locations and ATMs near you? How do its hours of operation mesh with your work schedule?

You want to work with a bank that is convenient as possible, one in which it’s easy to make deposits with your phone and pay your bills online each month. If your new bank doesn’t offer the services you use the most each month, pass on the sign-up bonus and find a different financial institution.

Banks will continue to offer sign-up bonuses for new customers. This is good news for you; you can be selective when searching for a new checking or savings account. You might like one sign-up offer but not like the fees or restrictions associated with the checking account affiliated with it. Don’t despair. Search around. The odds are good that you’ll find a new checking account offer that fits better with you banking habits.

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  • Jason Smith

    We’re looking to open an account at a different bank, as we’ve had some major problems with our current one. Good post here. And I find it ridiculous that they dare charge you an extra fee if you don’t make the required number of transactions in a month… much for trying to save your money. We’ll definitely look closer at all the fine print and see which banks charge us more in bank fees.