4 Benefits to Bank Account Bonuses and How to Get Them

Did you know that you can often earn $50-400 by opening a bank account? Such amounts, especially when earned repeatedly, can meaningfully boost a lot of folks’ finances. Also, for those who shouldn’t sign up for credit cards because they carry debt, signing up for bank accounts with big bonuses is a viable alternative.

In this post I’ll explain what bank account bonuses are. I’ll cover their advantages and disadvantages. I’ll show you how to find the best bonuses. And I’ll assess whether bank account bonuses are a good deal.

What are Bank Account Bonuses?

Banks offer signup bonuses in an effort to attract new customers. The bonus could be a certain number of airline miles or a product, like an iPad. More often, it is $50-400 in cash.

The bank’s hope, of course, is to lure a customer in with the bonus and then turn him or her into a long-term customer. The bank is willing to pay you a bonus for the opportunity to earn your business.

In my case, the banks usually do not end up winning me over. But sometimes they do. In one extreme case, I signed up because of the bonus but ended up making that bank my family’s primary bank.

Advantages to Bank Account Bonuses

The main benefits to opening bank accounts with signup bonuses are:

1. The Bonus Itself: Whether a certain number of airline miles or $50-400 in cash, the bonus can often be worth the time required to earn it.
2. Soft Credit Inquiry: Usually, but not always, opening a bank account generates a soft inquiry on your credit report. Soft inquiries do not hurt your credit score. Hard inquiries do. When you open a credit card, by contrast, a hard inquiry is registered on your credit report.
3. No Credit Line: Opening a bank account does not extend a line of credit to you. If you don’t pay your credit card bill off in full each month, I do not recommend you open credit cards. Opening bank accounts, however, allows you to earn signup bonuses without taking out a line of credit.
4. An Additional Source of Bonuses: You don’t have to choose between earning credit card bonuses and bank account bonuses. You can earn both.

Disadvantages to Bank Account Bonuses

The main disadvantages to opening bank accounts with signup bonuses are:

• Smaller Bonuses: The bonuses are usually smaller than credit card signup bonuses, which often exceed $500. But they can still be well worth pursuing.
• Bonuses are Taxed: When bank account bonuses come in the form of cash, they are taxed as “interest income.” Credit card bonuses, by contrast, aren’t taxed, even when the bonus is cash.
• Ties up Money: Typically, to earn the bank account bonus, you have to deposit a certain amount of money with the bank and not withdraw it for a set period of time (usually 90 or 180 days). The required deposit can vary greatly. Usually the requirement is in the $500-2,000 range.
• Monthly Fee: Some banks charge a monthly fee unless you meet certain requirements. For instance, you may have to use the bank’s debit card a certain number of times each month. Or you may have to maintain a larger average balance.
• Miscellaneous Other Requirements: Often, to qualify for the bonus, you have to make a direct deposit (of your paycheck or other select funds) into the account. Sometimes you have to perform one or more online bill pays from the account. With credit cards, by contrast, earning the bonus is typically simpler. Usually you just have to spend some minimum amount within a certain number of months (e.g., $3,000 within 3 months).

How to Find Bank Account Bonuses

The most comprehensive source that I’m aware of for bank account bonuses is the “Doctor of Credit” blog. See, especially, the blog’s Current New Bank Account Promotions page. That page lists the best nationwide and state-specific bonuses.

That page contains a lot of information. Some folks may find it overwhelming to try to sift through the details in order to identify the very best bonuses.

If you’d like to know about the best bonuses without a lot of effort, I’d recommend you sign up here for my newsletter. I monitor bank account bonuses. I hope to post the offers you don’t want to miss on the blog. But in cases where I don’t post them on the blog, I’ll endeavor at least to share them via the newsletter.

How Much Money can You Earn from Bank Account Bonuses?

Doctor of Credit reports earning well over $2,000 in cash from bank account bonuses each year.

The amount you can earn is limited to some extent by the number of accounts you can open. Most of the time, when you apply for a bank account, the bank checks your “ChexSystems” report. That report shows the bank whether you are overdrawn at other banks, whether you are suspected of engaging in fraud, etc. If you have a lot of negative information on that report, you may find it difficult to open new bank accounts.

The ChexSystems report also shows the bank how many new inquiries you have at other banks. Some banks won’t approve you for an account with them if you have too many new inquires at other banks.

That said, Doctor of Credit summarizes that in his experience it is generally okay to open up to 10 bank accounts each year. That’s a lot.

Are Bank Account Bonuses Worth It?

When deciding whether to go for a bonus, what matters to me is not only how much the bonus is worth, but also how much time it takes to earn the bonus.

Consider the process. You read about a bank account bonus. You apply for the account. You fund it. You set up an online account. You meet the requirements by submitting a direct deposit or paying a bill or whatever. You check it obsessively to see if the bonus has posted. And after meeting all requirements and earning the bonus, you close the account.

That process probably takes 2-4 hours. Earning a $400 bonus in 4 hours equates to an hourly earning rate of $100 per hour. That’s a great deal unless you make more than $200,000 per year, as I discuss in this post.

But if the bonus is only $50, spending 4 hours to earn it works out to an hourly rate of $12.50 per hour. That’s only a good deal if you make less than $25,000 per year.

My Approach to Bank Account Bonuses

I, personally, should probably go for more bonuses than I do. But there are only so many hours in the day.

Looking back, all the bonuses I’ve earned have been in the $300-500 range. Sometimes that is a single account worth $300-400. Other times it is a savings and checking account from the same bank, where the signup bonus for the two accounts together totals $400-500. To maximize our return, whenever I sign up for a bonus, my wife always signs up for the same bonus as well.

Whether you take a path more similar to mine or to Doctor of Credit’s, you can add good value to your bottom line by taking advantage of bank account bonuses. And who knows, maybe you’ll end up finding a bank you really like in the process.

Question: What questions do you have about signing up for a bank account bonus? Leave a comment by clicking here, and I’ll do my best to answer your questions.

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