Banking is a competitive business. To lure new customers, some banks will pay you hundreds of dollars as a cash bonus to open a checking or savings account.
Are these offers smart for consumers? Maybe yes. Maybe no.
“As the old expression goes, ‘There’s no such thing as a free lunch,'” says Daniel M. Yerger, president of MY Wealth Planners in Longmont, Colorado. “Incentives often require minimum deposits of several or tens of thousands of dollars, in addition to minimum balance requirements for weeks or months, or the incentive is pulled back or never granted.”
Here’s what to know before you pursue bonus cash.
Are Bank Bonuses Worth It?
One key factor to consider is whether you’ll get more than you would earn in interest if you leave your funds where they are.
“Add up the bonus and interest earned for the required period, and divide (that) by the required balance to get an idea of the percentage rate of return,” says David Wattenbarger, president of DRW Financial in Chattanooga, Tennessee. “If it’s not meaningfully better than the rate in (your) current account, it may not be worth the effort.”
The effort involved could include opening the account, depositing funds, setting up new direct deposits and withdrawals for online banking, and remembering your new online banking login and password.
What Are Some Rules That Apply to Bank Account Bonuses?
To earn a cash bonus when you open an account, you may have to:
- Make a minimum initial deposit.
- Keep the account open for a minimum period of time.
- Complete a minimum amount of direct deposits each month.
- Maintain a minimum balance.
- Wait weeks or months to receive the bonus.
- Open the account online or at a branch.
- Use a promo code.
- Pay monthly account maintenance fees that may be waived if you complete specified account activities. Fees can vary by bank and type of account.
Cash incentives are considered a form of interest, so you may owe income tax on the bonus, too.
6 Banks That Offer Bonuses
These promotions typically are just for new customers and may be available only for a limited time. Promotions may not be available in all states.
- Chase: Open a Chase Private Client Checking account by July 19, 2023, to earn a welcome bonus of up to $3,000 based on your deposit. You’ll also need to meet with a private client banker by the promotional deadline and transfer at least $150,000 in cash or securities from outside of the bank within 45 days to Chase. Then, maintain the money for 90 days. A $200 bonus is available for opening a Chase Total Checking account by July 19, 2023, and setting up direct deposit within 90 days. You’ll need to use the coupon on Chase’s website to claim the offer.
- Citibank: Earn a cash bonus of $200, $500, $1,000, $1,500 or $2,000 when you open an eligible checking account by July 23, 2023. Deposit funds within 20 days of account opening; the balance on your 20th day will determine your cash bonus. Then, maintain your account balance for an additional 60 days.
- M&T Bank: Open a new M&T EZChoice Checking, MyChoice Plus Checking or MyChoice Premium Checking before Aug. 31, 2023 using the promo code to receive a $200 bonus. To qualify, make at least $500 in direct deposits within 90 days of opening your account. The account must still be open when the bonus is rewarded. There is a $50 early close-out fee if the account is closed within 180 days of opening.
- PNC: Earn bonuses of $50, $200 or $400 for new PNC Virtual Wallet accounts opened before July 1, 2023. The Wallet package must be opened online via links on the bonus offer page. Bonuses require direct deposits into the Spend account that total $500, $2,000 or $5,000, respectively, within the first 60 days.
- TD Bank: Open a TD Signature Savings or TD Simple Savings account and earn $200 when you deposit at least $10,000 from outside of TD Bank within 20 days and then maintain that balance for 90 days. The offer is good through Oct. 31, 2023. You can also open either a TD Convenience Checking or TD Beyond Checking account through Oct. 31, 2023, and earn up to $300 with qualifying direct deposits. Make $500 in qualifying deposits within 60 days to your TD Convenience Checking account for $200 and make $2,500 in qualifying direct deposits within 60 days to your TD Beyond Checking account for $300. You won’t qualify if you received a previous personal checking, savings or money market account bonus.
- Truist: Receive $400 when you open a Truist One Checking account online by July 25, 2023, using the promo code. Make at least two qualifying direct deposits totaling $1,000 or more in the first 90 days of opening your account to earn the bonus. It will be awarded within four weeks of verifying the direct deposit requirement. Your account must still be open and have a positive balance to receive the bonus.
Should You Open a Bank Account for the Bonus?
Despite their appeal, new account bonuses may not be worth the effort unless the offer has more to it than just extra cash.
“These offers really only make sense for consumers if the other features of the bank account – service level, locations of branches, interest rates offered – are appealing,” Yerger says. “People should say yes if it’s icing on the cake where their banking decision is concerned; but if they’d only open the account for the cash bonus, it’s seldom worth it.”
Monthly service fees should be a consideration as well.
“Signing up for a new account to get a bonus doesn’t make sense if there are expenses and fees that erode the value of the bonus,” Wattenbarger says.
If you find a cash bonus offer that you like, be sure to read the terms and conditions of the account and the offer before you sign up.