Is a Sign-up Bonus Worth Switching Checking Accounts?
Opening a new checking account to take advantage of a sign-up bonus can be beneficial, but before you rush to your bank or credit union for your free money, you should understand all the account details and requirements to earn the bonus.
Banks are offering ever-larger financial incentives to lure in new customers, with many banks offering $500 or more when you open a new account and meet specific requirements.
It’s tempting, but those sign-up bonuses aren’t guaranteed money. You won’t get a penny if you don’t meet the criteria established by your bank.
Let’s take a closer look at checking account bonuses and review some financial institutions offering these perks.
Why Do Banks and Credit Unions Offer These Incentives?
Consumer banking has long been a highly competitive industry, and the growth of online-only banks has only increased the battle among financial institutions to gain new customers.
To draw in more customers, many banks offer lucrative sign-up bonuses that are usually delivered as a cash deposit to your account once you meet the requirements necessary to earn the bonus.
Typically, new customers must hit specific deposit targets or have a certain amount of qualified direct deposits. However, sign-up bonus requirements vary by financial institution, so understand all the targets you must hit to earn the bonus.
Examples of New Checking Account Offers
As you can see from this example, $300 is a standard amount for new checking account bonuses. However, many of the financial institutions featured here and others offer higher account bonuses for customers who open new business checking accounts or for private wealth clients who open accounts with large sums of money and maintain those high ledger balances. As a rule, deposit requirements tend to increase significantly for higher new checking account bonuses.
Katie Freeman, a marketing executive from Reno, Nev., nabbed a $700 new account bonus by opening a checking account with $50,000 and maintaining that balance for three months.
“That was it, I didn’t have to set up direct deposits or anything like that,” Freeman said. “I just had to keep that balance.”
Freeman said she kept that account open for more than a year, and the principal amount was generating strong interest at 3% to 4%, but ultimately, she moved the money into a money market account to generate better returns.
Easily Compare the Best Checking Accounts Online
Finding the bank with the best checking account to meet your needs is as simple as skimming the table below.
Compare checking accounts and find the best bonuses and lowest fees being offered today.
Pros and Cons of Checking Account Bonuses
It may seem like a good idea to open a new account or switch banks to nab a checking account bonus, but it’s important to do some research before doing so.
The account may lack the features you need, charge account maintenance fees, or require steep minimum deposits that are unattainable for your current financial situation. Below are some potential pros and cons of new checking account bonuses.
Pros
- Earn additional money. A checking account bonus is some of the easiest money you can earn. You can get several hundred dollars just by depositing some money into a new account.
- Improve standard account features. The best checking accounts have features such as no account maintenance fees or minimum balance requiremen
Cons
- Failing to meet bonus requirements. Banks aren’t just giving away free money to anyone who opens an account. You’ll have to meet some predetermined criteria, which can include a certain number of direct deposits in a given time, keeping the account active for a certain amount of time, or maintaining a certain balance threshold.
- New account features don’t align with your needs. Switching from an account that has all the features you need to one that is lacking in certain areas or has more rigorous requirements to waive maintenance fees might not best serve your banking needs.
- Too many checking accounts. Opening multiple checking accounts just to receive new account bonuses is a practice known as account churning in the banking industry. Opening multiple accounts can be cumbersome if you have to switch direct deposit information and re-establish your network on online bill payees.
Should You Pursue New Account Bonuses?
Before you begin withdrawing cash and chasing new checking account bonuses, it’s helpful to take a close look at how you use your current checking account and ask the following questions about the new financial institution:
- Does the new bank have any ATMs nearby?
- Will you need to order new checks?
- Do you routinely visit the bank, or do you handle the majority of your banking needs online?
- If you visit physical banking branches, does the bank have locations that are convenient to visit?
- Does the new bank have a good online banking app?
- Can you meet the requirements to earn the new account bonus?
- Can you meet the requirements to waive any potential fees that would make the bonus moot over time?
Answering these questions and other pertinent ones about account usage and banking needs should help you determine if you should chase new account bonuses or just leave your money where it is.
If you have to drive across town to conduct your banking business, you’ll be spending additional money on gas as well as your time on the road.
