If you’re looking for an extra hundred dollars or so to stash into your pocket, earning a cash bonus by opening up a new bank account might be a viable option for you. Many banks offer one-time cash bonuses as an incentive to new potential customers. In this article, we’ll break down exactly what this entails, how it might benefit you, and what to watch out for.
What Is a Cash Bonus?
A cash bonus is a cash reward that banks offer to new clients for opening up a checking or savings account with them. For example, one particular bank offers a $150 bonus for first-time customers opening up a savings account. Cash bonuses tend to range from anywhere between $50 to even $750. How Do The Cash Bonuses Work? These are usually one-time rewards offered for setting up a direct deposit and following certain guidelines, such as maintaining a specific minimum balance or keeping the account open for a certain period of time. Banks normally offer these incentives to first-time customers opening up a checking or savings account.
Why Do Banks Have Cash Bonuses?
Banks offer these cash bonuses to help attract new customers to their banks. Basically, they want your business. And customers are often attracted to immediate cash incentives that can get them to switch over.
What to Watch Out For
Don’t worry, you won’t lose much sleep trying to figure out how banks make money off of giving cash to everyone. It will be pretty obvious as you look at the fine print on these promotions, which is why it is vital that you pay close attention to the bank’s requirements.
You’ll want to keep your eye out for a few important factors. First of all, pay attention to potential monthly fees and dormant account fees--this is often how the banks earn their money back. Many banks also have an incredibly high minimum balance requirement, as well as additional fees for closing an account.
There are also certain guidelines surrounding the cash back promotion. For example, a bank might offer $350 if you open a new checking account with a deposit of $10,000 and maintain that balance for 90 days. You might also be required to make a certain number of debit card purchases within a certain number of days.
If you’re looking into a bank that offers a cash back bonus for opening a new checking account, you’ll want to make sure the bank has plenty of branches and ATMs in your area, that way you aren’t stuck paying ATM fees for withdrawing from other banks. You might want to look into online checking accounts, which tend to waive out-of-network ATM fees.
Keep in mind that you will need to pay taxes on the bonus amount. You’ll receive a 1099-MISC tax form in the mail to include in your tax return.
Doing a little match can also help you figure out if this is a good option for you. You could earn more money overall by opening up a high-yield savings account. Quite often banks prefer to offer cash bonuses instead of higher interest rates since consumers like that it’s an immediate amount of money; however, you might find that a higher interest rate will give you more money in the long run.
Impact on Credit Score
Some individuals use cash bonuses as a way to make money. They open an account to receive the bonus, hold it open for the required amount of time, and then close the account and move the money to another new account at a different bank and get a cash bonus.
But does opening and closing all of these bank accounts hurt your credit score?
The short answer: not usually.
Bank accounts are not included in your credit report unless you have a negative balance and are sent to collections. But be careful--some banks do check your credit. If it’s a “soft pull”, it won’t hurt your credit score, but if it’s a “hard pull”, it will. Usually, banks do just a soft pull, but you’ll want to double check first.
Utilizing cash bonuses by opening new bank accounts is one short-term option available to you to earn some extra money, but pay attention to bank guidelines and fees. For a more long-term option with a higher yield, consider looking into a high-interest savings account.
1. https://www.investopedia.com/articles/personal-finance/080114/10-banks-will-pay-you-cash-open-account.asp 2. https://www.nerdwallet.com/blog/banking/best-bank-bonuses-promotions/ 3. https://www.bankrate.com/banking/best-bank-account-bonuses/ 4. https://www.thesimpledollar.com/banking/how-to-earn-free-money-with-a-bank-bonus/ 5. https://www.thepennyhoarder.com/smart-money/bank-accounts/best-bank-promotions/ 6. https://www.thebalance.com/how-to-tell-if-a-bank-account-bonus-is-a-good-deal-4178967