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.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.
Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate||Visit SoFi|
|2.47% – 5.87%1||Undergrad & Graduate||Visit Earnest|
|2.47% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.95% – 6.37%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.72% – 8.32%6||Undergrad & Graduate||Visit Citizens|