3 Times It’s Worth Chasing That Checking Account Bonus

checking account bonus

After being a loyal Bank of America customer for nearly two decades, I opened checking accounts with Chase and Wells Fargo within two weeks of each other. Many people have multiple bank accounts, of course, but why was I opening mine? In a word — bonuses.

More banks are offering checking account bonuses for new members. Opening an account requires the usual task of visiting a banker in person and supplying reams of personal information. But for your trouble, you could earn a $200 or $300 bonus.

Here are three occasions when it’s wise to go after checking account promotions, with some advice on potential pitfalls along the way.

1. You actually need a new checking account

My mom drove me to our local Bank of America when I was 13 to open my first savings account. It wasn’t until I was heading to college that I opened a Bank of America checking account. It was my preferred method to pay for on-campus expenses.

You may have your own reason for needing a checking account. Maybe you don’t like using a credit card but need a safer, more convenient alternative to carrying around cash. Whatever your reason, choosing a bank that offers a checking account bonus will help fund your account.

Be aware, however, that the bonus you earn can be lost if you fail to meet the account’s criteria.

When I opened my Chase Total Checking account, I had to set up direct deposit within 60 days of opening my account. This deposit would need to be at least $500 to avoid a $12 monthly service fee. I could also avoid the fee by meeting a minimum daily balance of $1,500.

When reviewing checking account offers, make sure you’ll be able to avoid monthly service fees. You don’t want to sign up for an account only to owe fees on it each month.

2. You need multiple checking accounts

Maybe you want a joint account with your significant other, or perhaps you moved into a new neighborhood and want to have close access to an ATM. One reason I opened a new checking account was that I had a specific purpose in mind: My new landlord banked with Chase and asked to receive rent via Chase Quickpay.

I was also spurred to open an account with Chase because it offered a $200 sign-up bonus. That amount hit my account four days after I set up a direct deposit with my employer.

Now, you might be wondering, “Why not just cash in on a bunch of checking account promotions?” Though there’s nothing inherently wrong with this practice — called “churning” — it can be hard to pull off.

If I closed my Chase account within six months, for example, the bank would take the bonus back. Watch out for this early-termination fee if you’re comparing the best checking account offers. Also, know that you’re typically only eligible for one bonus from each bank.

Non-debt banking information doesn’t appear on your credit report, according to Experian. But if you’ve churned previously, your next bank will know about it. It’s likely to review your transaction history using a check verification service such as TeleCheck or Chexsystem.

Think of it as a credit report for your banking past. If the service finds evidence of churning — or worse, negative balances — a bank may not bring you on as a customer, making it harder to open new accounts.

Putting your long-term personal finance health at risk for a few bonus offers isn’t worth it in the long run.

3. You have short- and long-term financial goals

Some bank customers funnel their income into different accounts for various financial goals. By keeping the accounts separate, it becomes easier to track each goal separately.

With this in mind, I opened a Wells Fargo Everyday Checking account. Whereas my Chase account covered my rent, I used my Wells Fargo account to set aside $1,000 per month for a rainy-day fund.

After four months, seven direct deposits, and a $250 checking account bonus from Wells Fargo, I decided to move the fledgling fund into a high-yield savings account.

The Wells Fargo bonus — like Chase’s — will be reported as interest or taxable income to the IRS in April. Still, opening the account made sense for my situation. It was a low-maintenance way to save money while keeping savings accessible.

If you have a similar financial goal, signing up for a checking account with a bonus could be the right decision for you.

Pick the best account first, then focus on the checking account bonus

If you’re willing to put in the work, you can take advantage of checking account sign-up bonuses and come out ahead with hundreds of dollars.

Of course, do your due diligence and read the fine print for every checking account offer you consider. If you need to maintain a minimum daily balance, make sure you can afford to park some cash in your new checking account. And if you need to set up direct deposit, have all of your banking information on hand so you can enroll as soon as possible.

You’ll also want to consider your reasoning for opening a new checking account. If you’re looking to make a quick buck off checking account promotions, set up a calendar reminder so you know when you can safely withdraw your money and close your account.

If you’re opening a checking account for a financial goal, then you should evaluate all available account offers. Consider each account’s interest rate, fees, and so forth. That way, your money has the most opportunity to grow — and you can build on that sign-up bonus.

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