Bank Sign-Up Bonuses: 5 Things to Look Out For

Some banks offer bonuses for opening a new account, but there are details you should consider before you sign up.
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Bank sign-up bonuses of $100, $200 or even more can be appealing, but before you open a new account, scan the fine print for any pitfalls. Here's what to look out for when you’re considering opening a bank account to earn a sign-up bonus.

1. You could end up paying more in bank fees

Many banks that offer sign-up bonuses for checking accounts require you to maintain a minimum balance — $1,500 at some banks — or pay a monthly fee. If you're not prepared, that $12 or so per month could eat into your bonus, so you might want to look for ways to avoid checking account fees.

If you’re trying to cut expenses, a free checking account at a bank that doesn’t offer a sign-up bonus could be a better deal.

2. The sign-up bonus may not be as big as it seems

Bank bonuses are considered interest or taxable income. That means your $100 bonus will end up being less than that after you pay taxes on it.

And when it comes to savings, a large signing bonus won’t make up for a lackluster annual percentage yield over time — especially if you have a lot to deposit. For example, you could deposit $20,000 into an account that doesn't earn any interest but comes with a $100 bonus for signing up. But if you deposit that money into an account that earns 5% APY instead (which some of the best savings accounts currently offer), you'd earn about $1,000 in the first year. If you plan to keep your money in savings, you could be better off opening an account that has a high interest rate and no bonus, rather than opening an account just to get a one-time cash award. (Learn more about when to skip a bank sign-up bonus.)

3. You will likely have to meet certain requirements and wait a long time

Some banks require you to enroll in direct deposit before you can receive a checking bonus. If an automatic deposit isn’t received within a certain time frame — say, 60 days — you might not get the bonus at all. Checking account bonuses also sometimes require you to complete a certain number of qualifying transactions, such as debit card purchases or mobile check deposits.

Banks may also require you to keep your checking or savings account open for 90 days or longer before you’re eligible for the bonus. Even then, it could take an extra couple of weeks — or months — for the funds to arrive. So after meeting all the requirements, you’ll also need to wait a while to receive the cash bonus.

» MORE: Check out the best bank promotions

4. You could get hit with an account closing fee

If you choose to switch from one bank to another to get a sign-up bonus but you opened your last account within the past year, your old bank may charge you money to close the account. Some financial institutions have fees of around $25 — though some charge as much as $300 — to close an account that was opened within the previous 180 days. Similarly, if you close the new account you opened (to earn a sign up bonus) too soon, you could get hit with an early closure fee.

5. You could get a bonus without opening a new account

It’s possible to earn a bank bonus without actually signing up for a new account. Some banks offer a referral bonus for existing customers. If your bank is offering such a promotion, as an account holder, you’d get a cash reward if someone signs up for a new account on your recommendation.

If you come across a sign-up bonus offer that’s enticing, pause for a moment to compare that bank and bank account with your current one and see what else is out there. You may decide that it’s better to stick with what you have or find a different financial institution that’ll give you more for your money.

» Want a high APY? Consider the best high-yield online savings accounts

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