We have been conditioned to think that even though bank accounts are necessary that they are a drain on our resources. For example, most bank accounts come with high monthly fees, unless a user maintains a significant minimum monthly balance or meets other restrictions. Users may also be hit with heavy fees if they overdraw their accounts. Many banks charge overdraft fees in excess of $30 [1].
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But, not all bank accounts are costly. In fact, some checking accounts may actually earn users money. This primarily happens via bonuses that customers receive when they open checking accounts.
Checking Accounts With Bonuses
Not all banks offer bonuses for customers to open new checking accounts, and not all bonuses are created equally. This means that it is important for a customer to shop around. Comparison shopping also means looking at more than just the upfront bonus. Customers should also consider how they will likely be using the account and what the long-term associated fees will be.
The bonuses that are offered generally range from $100 to $250. However, some banks may offer even more attractive bonuses, particularly to high net worth customers. For example, HSBC Bank currently offers a $750 bonus for its premier checking account. However, customers need to be aware that they will be charged a $50 monthly fee unless they maintain a $100,000 minimum account balance [2]. This minimum is outside the means for most customers.
The Best Bonus for You
When opening a checking account, particularly one with good bonuses attached, they may want to check your credit score up front. If they use a hard pull on your credit, this will make your score dip lower temporarily. If your score was already not the best and you were planning on using it soon, like if you were considering buying a car or renting an apartment, then you may want to check with other banks first or hold off on the checking account until things are settled.
Banks aren’t known for giving money away for free, so don’t expect this to come without other types of attachments [3]. For instance, there’ll be fees on the account like monthly maintenance charges which might take up the whole bonus, if not more. Not to mention that the bonus is technically considered interest, so the government will want to take out taxes on this so-called free money. Lastly, consider interest rates at various banks. Some banks that offer no bonuses but has competitive rates may earn you more money than vice versa.
Other Caveats
Minimum monthly balances are only one issue that consumers need to take into account when they are shopping for a new checking account with a sign-on bonus. Banks often put other requirements or caveats on these accounts, some of which are more stringent or restrictive than others. Many of these accounts will require that customers have at least one direct deposit enter their account each month. Since most employers now pay via direct deposit, this is not a difficult requirement to meet.
Another requirement that customers need to take note of is the minimum amount of time that an account needs to be open. Many banks require customers cashing in on these sign-on bonuses to keep an account for six months or more, while some banks set the minimum to one year. Customers who close their accounts before then may be required to pay back their initial bonus.
These aren’t reasons turn away an account with a sign-on bonus. They are simply buyer-beware caveats. Make sure to read the fine print about any account before opening one.
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In the End
Customers should treat shopping for a new bank just like they treat any other shopping experience. They should work to collect as much information as possible and weigh this information against their own unique needs. What works for one customer may not be the appropriate answer for another. Consumers have the opportunity to pick the bank account that best meets their long-term needs, ideally one that offers an attractive account opening bonus for new customers.
