Bank sign-up bonuses: Everything you have to know

Most banks use sign-up bonuses to differentiate themselves from their competitors. Cash bonuses also can help financial institutions to attract new customers and new deposits. In most cases, banks are usually more inclined to give bonuses in this high-interest rate environment, when there is a spread between the interest rates they give customers for depositing their money and the interest rates they can receive by lending funds widens. They can pay account holders higher yields, but some banks like to offer bonuses. 

Remember that it can be easier to quantify the bonuses than to raise the rate that you pay out on deposits. But it can be hard to qualify for several bonuses simultaneously at the same bank. Besides, bank account bonuses are usually available to new savings or checking account holders. This article discusses bank sign-up bonuses.

Bank sign-up bonuses

As explained earlier, some banks can give you a bonus for opening a new bank account, but there are a couple of details you should always know. Bank sign-up bonuses can be considered free money, though the amount tends to vary depending on the bank you are dealing with. You can visit https://joywallet.com/article/how-to-get-free-money/ to see other ways you can get free money. Before you open a new bank account, you need to be on the lookout for the following things:   

There is a chance that you can pay more money in bank fees

Most banks that give sign-up bonuses for savings or checking accounts may require you to have a certain minimum balance or pay a monthly fee. Therefore, if you are not ready, this monthly fee can end up eating into your bonus. In such a case, it’s a good idea to find other ways that can help you to avoid checking account fees. And, if you intend to reduce your expenses, then you can choose a free checking account that doesn’t come with a sign-up bonus.

That said, the sign-up bonus can be just a small account of money. A bank bonus is regarded as interest or taxable income. Therefore, the amount of the bonus can end up being less than the advertised amount after paying taxes on it. A large sign-up bonus can also fail to make up for a large annual percentage yield in the long run, especially if you desire to deposit a lot of cash. 

For instance, you can deposit a certain amount of money into your account and it doesn’t earn interest but has a sign-up bonus. But if you deposit this cash into your bank account that earns a certain annual interest, you can be earning some reasonable cash over time. If you intend to keep your cash in savings, it’s a good idea to open a bank account that gives high-interest rates without a bonus instead of opening a bank account simply because you want to get a one-time cash award. 

There are specific requirements and waiting time

You can find some banks that require you to make a direct deposit before they can give you a checking bonus. And, if you don’t make an automatic deposit within a specific period, then the bank may not offer you a bonus. Keep in mind that checking account bonuses can sometimes need you to do several qualifying transactions like mobile check deposits and debit card purchases. 

Aside from this, a bank can also require you to keep the savings or checking account open for at least ninety days or even longer before they can offer you a bonus. Regardless of this, it can still take an additional few weeks or even months for the bonus to be in your account. Therefore, after fulfilling all these requirements, you may have to wait for some time to get the cash bonus. 

There can be an account closing fee

If you decide to switch from your bank to another one because you want to receive a sign-up bonus but you had your last bank account opened within the past year, then your old bank can charge you a certain fee to close the bank account. You can find some banks that charge a fee to close a bank account that was opened at least within the last 180 days. 

It’s worth mentioning that you can still receive a bonus without opening a new bank account. You can find some banks that give a referral bonus for current customers. Hence, if your bank gives such an incentive for account holders, you can receive a cash reward if a person signs up for a new bank account on your recommendation.

But if you find a sign-up bonus that is attractive, you need to compare your current bank and bank account with the other one to see everything that is on offer. This is because you may realize that it’s better to retain what you have or even find another bank that can give you more for your cash.  

In conclusion, you should know that not every bank bonus can be a great deal. Therefore, before you decide to sign up, you must read the fine print and understand the requirements that you need to meet. You need to watch out for high minimum balance requirements as well as monthly fees that can reduce your earnings. If you want to apply for a checking account, ensure that it suits your needs. 

For instance, if you want to utilize ATMs and branches, you need to make sure that there are several of them in your area. This is because you don’t want to drive a couple of miles to meet your banker or waste your money on ATM fees for out-of-network ATMs. And, with the popularity and convenience of online banking, you should find a bank that provides good digital tools. 

And, if you want to have a new savings account, you need to figure out whether or not you need to find another financial institution that pays more interest. For example, one-time bonuses are usually provided on bank accounts that pay minimal interest. Therefore, while a cash bonus can be a good idea initially, you can also sacrifice the long-term return.