Consider these factors before opening a new bank account for a sweet sign-on bonus.
When economic times are tough, any extra money coming can help pay the bills. Free money is even better, and that’s exactly what you’ll get when you open a new account at a bank that offers a bonus for meeting certain eligibility requirements.
By taking advantage of a new account bonus offer, you could receive $100 to $300, or in some cases, much more. Bonus offers typically come with at least a couple of requirements, however. You may have to open an account with a large number of funds, for example. And most require a certain number of direct deposits from eligible sources within a specific time frame.
For example, as of September 2022, Chase Bank is offering a $200 bonus for opening certain new checking accounts and meeting certain transaction requirements. College students under 25 years old can earn a $100 bonus for opening the Chase College Checking Account and meeting certain requirements.
Other banks pay much larger bonuses for opening certain accounts and meeting direct deposit and/or other transaction requirements. For example, Citibank offers up to a $2,000 bonus if you open a new checking account by January 9, 2023. The bonus amount starts at $200 but has a minimum deposit amount of $10,000 and you must maintain at least that minimum balance.
With this offer, the more you deposit to open the account, the higher the bonus. If you meet all transaction requirements and make and maintain a $30,000 deposit, the bonus is $500. A $75,000 deposit earns a $1,000 bonus. And if you move a significant amount, you’ll really cash in: Make and maintain a $300,000 deposit and minimum balance to earn a $2,000 bonus.
If all that free money sounds too good to be true, it’s not. These offers are a win-win for the bank and account holders alike. However, that doesn’t mean the offers don’t come with a few drawbacks, too.
Here are six pros and cons to consider before opening a new bank account for the bonus offer.
1. Some bonus offers don’t have high requirements
For example, you can get a $200 bonus for opening a new Convenience Checking account at TD Bank through October 2022, receiving $500 in qualifying direct deposits within 60 days and maintaining a $100 minimum daily balance. If you receive $2,500 in qualifying direct deposits in the same period on a new TD Beyond Checking account and maintain that amount as a minimum balance, the bonus is $300.
Find out: 7 Ways to Snag Up to Hundreds of Dollars in Free Money
2. You might prefer the new bank
If you’ve banked at the same bank for years, you may be out of the loop on today’s popular banking features. When you open an account at a new bank, you’ll learn about and likely receive new features that could line up more closely with your banking needs.
3. You can build savings
When you open a new account at another bank and begin receiving direct deposits, your account can grow quickly. This can allow you to build emergency savings or save for things like vacations, holiday spending and major purchases.
Find out: Why You Need to Be Careful About Moving Bank Accounts
1. You may not be eligible
Just because you find a great bank bonus offer online doesn’t mean you’ll qualify. Some bank bonus offers are only available to residents of certain states, for example. In many cases, you must also be a new customer of the bank.
2. There may be fees
Some banks offering bonuses for opening a new account also charge monthly fees. The bonus may still outweigh any fees, but ask if you can get the monthly fee waived and find out all requirements for the bonus offer, including account closure fees, before opening the account.
3. Requirements may be too high
Let’s face it. Not everyone has $75,000 to move to a new account so they can score a $1,000 bonus. You also may not be able to maintain a high balance to meet bonus requirements.
But keep in mind that there are offers out there that don’t require a large deposit or a high dollar for direct deposits. Before opening a new bank account, take some time to compare shop bank bonus offers online. Then apply for one that has a minimum deposit, minimum balance and transaction requirements that you can meet.
Find out: Which is Better, a Credit Union or a Bank?
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Published by Debt.com, LLC