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Should You Chase Bank Promotions?

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Benjamins!As the economy recovers and banks are taken off life support, in the good way, financial institutions are becoming more aggressive with their promotional offers. The days of toasters and coffee mugs are long gone. The big banks are offering a Benjamin for new accounts. Sometimes two, if you’re happy jumping through their hoops.

What does the prototypical bank promotion look like? The bank wants to get new accounts and it wants those new accounts to stick. The typical bank promotion will require a minimum balance, a scheduled direct deposit each month, and that you keep the account open for at least a hundred days. A few banks will deviate from this prototype a little, perhaps adding in a bill payment or two or debit card activity, but they all follow this pattern.

Is it worth trying to sign up for a bunch of these?

What To Watch For

There are two things you need to watch for whenever you consider a bank promotion:

  • Fees: Some banks will require a low minimum balance but fail to tell you that there’s a fee unless you have a higher balance. Getting $100 is nice but not if you’re stuck paying $4.95 in a fee each month.
  • Onerus Requirements: The prototype may seem simple but watch for any strange requirements that might be used against you when it’s time to collect the promotional money. I’ve seen some promotions require you to register for online banking and log in once a month. Others require paperless statements and may disqualify you if you failed to sign up before your first statement. Watch for these gotchas.

Is It Worth It?

The promotional money, or the retail value of the promotion item, will be reported on a 1099-INT and you’ll have to pay income taxes on it. If you’re in the 25% tax bracket, a $100 bonus is really worth $75 after taxes.

There’s also the hassle of setting up direct deposits and bill payment accounts. You probably don’t have a bunch of direct deposits laying around to use and with the time requirement, like keeping the direct deposit active for 180 days, you won’t be able to take advantage of many of these too often.

I personally believe a bonus is great when you’re already looking at opening an account somewhere, such as after a move. It’s hard to “make money” off bank promotions with any regularity.

(Photo: srish)

{ 12 comments, please add your thoughts now! }

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12 Responses to “Should You Chase Bank Promotions?”

  1. cubiclegeoff says:

    I figure it’s not worth doing unless there is an overall benefit and it doesn’t take too much time. Most of the time it takes too much effort and time, making the $100-taxes not really worth it.

  2. Jon says:

    This used to be something I thought about with respect to chasing interest rates from bank to bank, when they were all trying to offer better rates to get business a few years ago. It always seemed to me that the hassle of opening and funding accounts and complying with their rules to get the rate were just too many things to add to an already complex life.

  3. Strebkr says:

    Agree – Many people here are well versed in games like this. Lately its just too much work for not enough reward.

    • cdiver says:

      i agree i would rather borrow their money for free and have them pay me interest on their money

  4. BrianC says:

    I wouldn’t sign up for multiple offers at once, but I might open a few accounts per year if the bonus is good enough.

  5. daenyll says:

    I’ve done it a few times in the past, but right now there isn’t enough of an interest difference between my main bank and anything else to even bother with the hassle of chasing a bonus incentive and dealing with added accounts to track(and eventually close)

  6. skylog says:

    i agree with just about everyone else has said to this point. in the past, i did chase offers, as it was “not that much” work for an ok reward; however, after chasing several of those offers, i found it indeed was too much work and the rewards did not justify the effort.

    that said, i chased ING direct and i have now been with them for many years and could not be happier.

  7. zapeta says:

    I used to chase saving account rates but these days it seems that if I move the money the rate I’m earning will drop. I haven’t really done any other bank promotion chasing, the requirements are usually worth less to me than the hassle of meeting them.

  8. JOJIBRO says:

    I’ve been “making money” off of bank promos for well over a decade.
    This activity generates $1000-$3000/yr.
    It can be challenging to find the requirements which best suit your circumstances.
    Yes, it is usually taxable, but so what!
    Most income is taxable.
    That’s not a reason to pass up free money regardless of your personal tax status.
    If you are willing to do the homework, I highly recommend taking advantage of whatever’s out there, however slim the pickings are these days.

    • BOBe says:

      I have been following these promotions and made money doing it. If banks, etc. are giving away money for my little bit of effort, I will take it.

  9. Abe says:

    I do only promos that require minimum balance of 5K or less, that way I can stash my emergency fund and have more % in return than just sitting in any high yield savings/checking acct. Minimum period also is enforced to 6 mos aprox. being 100 the minimum offer, 5k gives $200 to $300 a year, nive 4-6% return for 2 transfers a year instead of 1.5% that most of high yield accounts give (even beating CDs)

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