Art by Jonan Everett
Many people hate going to the mailbox — either physical or digital — because it often contains bills they don’t want to pay. You might call me weird, but I actually like going to mine because I occasionally find ways to earn free money in my mail. I recently got an offer I haven’t received in a while: money to open a new bank account.
In the past, I’ve received bank bonus offers to open new accounts, but I usually discarded them. Banks wanted to pay me only $50 to open an account with them. And in order to get that money, I had to jump through multiple hoops. It just wasn’t worth the effort.
However, the bank bonus offer I just received was for up to $400 in Visa gift cards. I was intrigued. Here’s how I evaluated whether the deal was worth it to me. Follow the same steps to assess any similar bank bonus offers that may come your way.
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The Basics of the $400 Bank Bonus Offer
The first thing I do when I receive an offer like this is to read the whole thing, fine print and all. After reading this one, I realized that it was actually two separate bank bonus offers.
The first one was for a $300 Visa gift card for opening a checking account in person at the regional bank. I was required to open the account with money not already at that bank, enroll in online banking, opt for online statements, and make five eligible purchases on my debit card within the next three months.
The second offer was for a $100 Visa gift card. In this case, I had to open a specific type of savings account, with a total deposit of $20,000 or more of money not already at that bank, and maintain the balance for six months.
Right away, I knew this was a bad deal because the bank in question offers poor interest rates. In fact, I would actually earn $120 by leaving $20,000 in my current savings account.
Back to the $300 Offer
Next, I decided to review the fine print of the $300 bank bonus offer. Just as with many offers of free money, the amount always seems to shrink as you dig into the details.
The fine print is incredibly important because you’ll often find out information that makes an offer less attractive.
The first thing I discovered was that it takes four to six weeks after the end date of the offer to get my gift card, which was a bit of a bummer.
After further reading, I learned that the checking accounts have service fees that range from $10 to $21, which would detract from the value of my free gift card. The bank would also charge me a $20 fee if I didn’t keep my account open for at least six months.
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The Offer Might Be Worth It
Despite the fees, I’d still end up with a decent amount of money, so I decided to investigate the bank’s checking accounts a bit more by visiting its website.
I actually found some good news there. While the interest rates on the bank’s checking accounts were awful, the monthly service fees could be waived by keeping a $250 minimum daily balance in the account.
I realized that all I had to do was deposit $250, plus enough to make five debit card transactions, and leave the money in the account for six months. Doing that would earn me $300 with no fees.
I’ll definitely take advantage of this offer.
Things to Watch Out for in Bank Bonus Offers
Bank bonus offers aren’t always what they seem. They can usually be withdrawn at any time without notice, and you may have to meet some obscure requirement to get the money. Read the fine print of an offer and when opening the account to make sure you don’t fall into a trap.
Sometimes bank bonus offers aren't worth the time and other costs involved in getting them. I’ll lose interest on the money sitting in the checking account for six months and have to go to a physical bank to deal with the time-consuming application process. Still, it’s worth $300 to me.
Finally, realize that these bonuses are sometimes classified as taxable interest by the banks. That means that come tax time, you’ll get a 1099-INT and have to pay taxes on that free money you received.
Since the banks don’t withhold any money for taxes, make sure you set some aside yourself. That way, you won't be surprised when April 15 rolls around.
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Banks use these bonus offers to attract new customers. Take advantage of a deal if it’s good for you personally. If you like the bank, stick with it. If you don’t like what you find after the offer is complete, satisfy the requirements for the bonus offer and then close the account.