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November 18, 2021
If you’re shopping for a new checking account, you’ve probably run into a promotional bonus offer or two.
Banks often offer checking account bonuses to attract new customers. After all, who doesn’t like the idea of pocketing some extra cash when opening an account?
It can be easy to think of these bank promotions as “free cash.” But it’s important to read the fine print because you usually have to check off a few things first – what are known as “qualifying activities” – to get the money. For example, you may have to set up a certain number of qualifying direct deposits (more on this later).
Ahead, we’ll go over how checking account bonuses work and highlight some things to think about when you’re considering a bonus offer.
We bet you already have a pretty good idea! A checking account bonus is an incentive offered by some banks to get you to open a checking account with them. This is often a sign-up offer to new customers.
Checking account bonuses aren’t exactly free money. That’s because in order to get the promotional bonus, you have to complete certain qualifying activities. If you don’t, you may not get your bonus. That’s why it’s important to read and understand the promotional details before you open an account.
So what kind of qualifying activities are we talking about? Well, they typically include things like:
Some banks may require you to meet some or all of these conditions in order to receive your bonus. The rules will vary from bank to bank, so definitely read the fine print to confirm the details.
The short answer? Banks want your business. (Who doesn’t? You’re great!). Because there are many banks to choose from, checking account bonuses are a way for banks to set themselves apart as they compete for your deposits.
And those qualifying activities we talked about earlier? They’re a way for banks to keep you as a customer and build on that relationship. Think about it – when you fund your account and set up some direct deposits, you’re practically going steady! Because once you’ve set up your account and use it for a while, it can feel like a hassle to switch checking accounts.
With bonus offers, our eyes tend to be drawn towards the dollar signs. A flashy $200 bonus might sound great, but how do you know you’re getting a good deal?
The thing is, not every bonus offer may be right for you and your banking needs. For example, while the initial bonus may be enticing, what if your account came with high ATM fees and a small ATM network? Or withdrawal limits? That may not be convenient if you’re someone who gets cash often.
Or let’s say you’re looking for a checking account that offers a competitive interest rate. First, does the bank with the bonus promotion even offer interest checking accounts? And if they do, how’s the rate? It’s a good idea to compare against banks that don’t have a sign-up bonus but could maybe offer a better rate.
And here’s something else to consider: If you get a cash bonus for opening a checking account, that bonus may be taxable if your bank treats it as an interest payment. That’s right – you may have to pay taxes on the extra cash, which could end up cutting down the amount you’re actually getting through the promotion.
Many of us have probably thought about switching banks at some point. Perhaps, you’ve outgrown that first checking account you opened when you were in college. And now, you want a bank that can offer more account services and features.
If you’ve been thinking about changing things up, a checking account bonus might just be the nudge you need to make the switch.
While a promotional bonus can be a way to help you score some extra cash, you’ll also want to ask yourself: Are they the type of bank you’re looking for? Are you able to commit to the qualifying activities required?
If you’ve found a bank that checks all your boxes, then you may be ready to switch checking accounts and snag that bonus. And hey, sometimes change can be a good thing!
This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this site were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA or any of their affiliates, subsidiaries or divisions.