Banks are giving out a sizable chunk of free money to attract people and turn them into long-term depositing customers. Getting $100-$200 or even more money just as a bank sign-up bonus is tempting, isn’t it? But wait, before you open a new account, cautiously read every sentence. It will help you to avoid any pitfalls in the future. Here are 5 key things you must notice.
Paying higher bank fees
Some banks charge fees up to $12 or more if you fail to maintain a minimum balance. It can be $1500 for a checking account against the bank sign-up bonuses you get, though the final amount varies per bank. Some banks may also charge a flat monthly fee which might reduce the benefits you are getting.
If you are not sure about maintaining a minimum balance, you can open a free checking account without the sign-up benefits.
You Have to meet specific requirements
Different banks have different criteria for crediting you with the bonus which may include a certain number of debit card transactions each month. Some banks may also require you to stay in business with them by keeping the checking account open for at least 90 days, only then you can qualify for the reward.
Usually, many banks expect you to enroll in a direct deposit system, which can make an automatic deposit of the bonus in around 60 days. If it is not received in the stated time frame, there is a high probability that your account may not get credited by the bank at all.
You may not receive what you expect
At times, you might not receive bonuses as you were promised while signing up. Sometimes, the taxes may also reduce what you will actually get credited to your bank account. Maybe you got a deal of a $50 sign-up bonus, but the bank may give you the reason for an income tax application and a credit of only $30.
Thus you need to understand that an outsized small signing bonus will not deliver you a high annual percentage yield over time. So do not fall for it, getting less bonus is still okay but in many cases, other changes can reduce your deposit amount, too.
You may have to pay a closing fee
These lucrative sign-up bonuses are rewarding, and you may feel like switching from one bank to another. But this can lead to closing fees. If you try to shut your account within one year, the bank imposes a closing fee for the procedure. Some institutions may charge up to $25 if you close your account if you close within 90 to 180 days of initiating it.
Is there any other way to get money?
Switching bank accounts is not the only way to get bonuses. An easy way to get a bonus is by referring your bank to someone you know and getting them on board as a customer. In return, you may receive some money as a bonus deposited into your account. It’s great to stay in the same bank if your bank offers you all the benefits and competitive interest rates.
The bottom line
The word free sign-up bonuses may not be as lucrative as it looks. For gaining free money, you must be willing to fulfill every prerequisite specified by the bank and that is not always possible. There is nothing like free money in this world so make sure of all the nitty-gritty before opening a checking account just for getting a sign-up bonus.