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Banks and credit unions commonly offer cash bonuses as a way to bring in new customers and new deposits. Customers may be drawn to a bank initially thanks to a bonus, and they may even end up keeping the checking or savings account for many years. As a consumer, you can benefit greatly from a bank account bonus, especially when the requirements are straightforward, and you can meet them with relatively little effort.
Bank account bonuses are often in amounts from $50 to $500, although it’s possible to find bonuses for thousands of dollars. Here we’ll provide five tips that can help you qualify for and earn bank account bonuses.
How do bank account bonuses work?
Banks may offer bonuses to those who open personal or business accounts and meet specified requirements. In addition to bonuses for those who open new savings or checking accounts, some banks also offer referral bonuses to existing customers who bring in new customers.
The ways to qualify for a bank bonus can vary from bank to bank, although you may need to open an account and do one or more of the following within a set timeframe:
- Deposit a certain amount of money into the account and maintain that balance. You might qualify for the bonus once you’ve deposited at least $10,000 into the account and kept it there for 30 days.
- Receive a set minimum amount in direct deposits into the account. For example, a bank may require you receive $4,000 in direct deposits within the first 120 days.
- Make a set minimum number of debit card purchases. For instance, you may need to make at least 15 debit card purchases within 60 days of opening the account.
To qualify for a bonus, you may also be required to deposit new money into the account, rather than transferring funds from any existing accounts you may already have with the bank.
Tips for earning bank account bonuses
Understanding exactly what’s required of you to earn a bank bonus is important before you even decide to go for it. This way, you won’t devote time and money to bonuses that aren’t a good fit. What’s more, being organized can also ensure your success in achieving a bonus. If you’re interested in pursuing one or more bank bonuses, consider these five rules of thumb:
1. Know where to look
Bankrate keeps a running list of best bank account bonuses, including ones offered on new personal or business accounts, as well as bonuses for referring friends or family members to the bank as new customers.Banks and credit unions in your neighborhood may also offer account bonuses from time to time. They may send advertisements for such bonuses in the mail, or you can find them by periodically checking on your local banks’ websites.
Keep in mind:
When opening a new checking account to replace your old one, be sure you’ve transferred your direct deposits and automatic bills to the new account before closing the old one. This may take some time, but it can help prevent overdrafts to the old account.
2. Look for bonuses you can attain
Seek out bank bonuses with requirements that you can easily meet when it comes to a minimum opening deposit or a minimum amount in direct deposits. For instance, if a bonus requires a larger opening deposit than you’re comfortable with, you’re probably better off skipping it altogether. Likewise, a bonus isn’t worth pursuing if you need to keep the funds in the account for 120 days but you might need to withdraw them sooner.
3. Read the T&Cs closely
Before trying for a bonus, read the terms and conditions thoroughly to make sure there aren’t any rules that could make the bonus too difficult for you to attain. Other things to watch out for include:
- Monthly maintenance fees:If there’s a monthly maintenance fee on an account you’re opening, this could eat into your balance unless you meet requirements to have the fee waived. Such a fee could even disqualify you for the bonus if it makes the balance fall below the daily minimum amount to earn the bonus. Dropping below, even temporarily during a single day in a billing cycle could void the bonus or result in a fee.
- Early account closure fee:Look out for an early account closure fee if you plan to close the account after you’ve received the bonus. When banks impose such a fee, they often charge between $5 and $50 if you close the account within 90 days of opening it — although the fee could be higher and the time frame longer.
- Hard credit inquiries: Sometimes, the bank will perform such a credit check when you apply for the account. Hard credit inquiries could potentially damage one’s credit score, and having too many of them on your credit report can indicate a higher credit risk.
4. Be organized
Maintaining a spreadsheet with the details of your bonus can help ensure you meet the requirements within the allotted time frame — especially if you’re working toward multiple bonuses at any given time. If you plan to close the account after earning the bonus, take note of any early account closure fee, as well as how long to keep the account open to avoid it.
Information to record in a spreadsheet includes:
- Name of bank
- Dollar amount of bonus
- Requirements to earn a bonus
- Date account was opened
- Deadline for requirements to be met
- Date bonus was earned
- Date bonus was received
- Early account closure fee, if applicable
Having all of the pertinent details in one place can help you stay on track in earning the bonus before the set deadline. Be sure to keep track of your login information when you sign up with a new bank.
5. Set aside money for taxes
When you earn a bank bonus, the Internal Revenue Service (IRS) taxes that bonus at the same rate you pay in income taxes. Setting aside money for this purpose as soon as you receive the bonus ensures you’ll have the funds you need come tax time.As tax season approaches, your bank may send you a 1099-INT form or a 1099-MISC form regarding the bonus. If you don’t receive an IRS form, you’re still responsible for paying taxes on any bank account bonus you’ve earned. A 1040 form provides a place for reporting income that resulted from prizes or awards.
Bottom line
Earning a bank bonus can be worth your while if it’s simple and not too time consuming. Knowing where to look for such bonuses can help ensure you won’t miss the right ones for you. Being organized is also important in staying on track to meet requirements regarding minimum direct deposits or debit card purchases. Reading the fine print closely and setting aside some of the money for taxes also help ensure success.
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