While welcome bonuses on credit cards are more common (and discussed more often), you can sometimes also get a chunk of money when you open a new bank account. Let’s say you can get $300 to open a new checking account. You should jump on that opportunity just for the sake of it, right? Well, no. And here’s why.
A new bank account should be a longer-term commitment
Opening a new bank account can come with a certain amount of hassle, and it takes time to get your financial house in order with a new bank. For example, if you have bills debited out of your checking account, you’ll need to switch them when you open a new one. That means making sure your utilities, credit cards, and subscriptions (as well as any other recurring payments) are all changed over. Forget one of them, and you could find yourself missing payments and owing late fees.
You’ll also have to get used to using a new bank’s website and mobile app to manage your finances. You probably don’t want to go through this whole process all that often.
And if you’re frequently opening and closing bank accounts, it could result in trouble for you down the road. Many people don’t realize that their banking activities go on a report with ChexSystems — which is sort of like a credit bureau, but for bank accounts. If you have a history of overdrafting your account, for example, your ChexSystems report will reflect that.
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Similarly, if you’re “churning” bank accounts (opening new ones, getting the bonus, then closing the account), that behavior will show up there, too. And a bad ChexSystems report can make it more difficult for you to open accounts in the future. According to ChexSystems, it keeps a record of closed bank accounts for five years — so that’s a solid chunk of time you could be negatively impacted by that information.
Earning bank bonuses requires some work
It isn’t always easy to qualify for bank bonuses — many require you to jump through multiple hoops. You often have to set up direct deposits and arrange to have a certain amount of money hit the new account within a certain period of time. You might also have to complete a set number of qualifying transactions within that time, such as making debit card purchases from a checking account.
You might also need to maintain a minimum balance to earn the reward. If it’s a checking account, that might mean losing out on interest income elsewhere (such as in a high-yield savings account). If we’re talking about a balance of several thousand dollars, that’s not an insignificant amount.
Bear in mind that you’ll have to pay income taxes on any bonus cash you get. Plus, if the new account has maintenance fees, that’ll eat into your bonus, too. Whenever you open a new account (whether it has a bonus or not), be sure to read all the fine print. Even accounts that have monthly fees often offer ways to get the fee waived, such as by receiving direct deposits or maintaining a certain balance.
New account bonuses can certainly be a sweet deal, and if you’re seeking a new banking relationship anyway, it’s worth exploring your options to make some cash on the deal. A great place to start looking is our list of the best bank account bonuses available right now. But I don’t think it’s worth opening a new account just for the bonus. Focus on finding the right account to meet your long-term needs instead.
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