Bank Bonuses Starter Guide

When I first heard of bank bonuses, that banks were willing to give money to people who sign up, I got the impression that it would take a lot of money and that it was full of complicated rules. I didn’t think it would be worth trying.

Happily, none of those things are true.

While having more money will open more bonuses to you, many can be done with small amounts of cash, or even none at all. And as far as complexity goes, getting a bank bonus only seems complicated at first. Once you’ve learned a few concepts and gone through the process a couple of times, getting the bonus is a breeze.

Is it worth trying? Absolutely! For the time and effort, it’s one of the easiest ways to make money. You also get to try out different accounts, and you might find one you love.

If you’ve never done it before it can be intimidating and the descriptions of the bonuses can have some jargon. That’s why I made this guide.

Nearly anyone can do this. I promise, if you take a few minutes to learn about how bank bonuses work, it could pay off for years to come.

Let’s get started!

What types of bank bonuses are there?

There are three basic kinds of bank accounts that give sign up bonuses: checking accounts, savings accounts, and brokerage accounts. I’ll break down each kind below, but here’s a table to show the basic differences.

Checking account bank bonuses

Checking account sign-up bonuses commonly require some form of direct deposit, though there are exceptions. What the accounts are looking for here is some kind of paycheck or salary deposited from an employer. They don’t want transfers between individuals (P2P or Peer-to-Peer payments) or transfers from one account to another owned by the same person. However, even if you don’t have a typical direct deposit (or don’t want to convince your HR department to change it) some forms of transferring money may still qualify as a direct deposit for the sake of the bonus. It just depends on the bank.

Sometimes a bonus might require the debit card that comes with the account to be used a certain number of times within a given time period.

While some accounts are entirely fee-free (Yay! We like those), others may charge monthly maintenance fees. If the account does charge fees there’s often a way to exempt yourself from them, usually by keeping a certain amount of money in the account (a minimum balance requirement) or by direct depositing a certain amount each month.

Checking account bonuses are probably the most common type of bank bonuses. They don’t generally require much money on hand to start the account.

Savings Account Bank Bonuses

Savings account bonuses typically want you to put some money into your new savings account and keep it there for several months. Something that makes theses bonuses stand out is that there is often a high minimum to qualify for the bonus. $10,000 is a frequent number seen, so if that’s out of reach you might want to focus on the other types.

Sometimes savings accounts are bundled with checking accounts in a bonus. You might get a certain amount for signing up with each of the accounts on their own, and then an extra bonus if you do both.

Because these are savings accounts and not made for frequent withdrawals, be careful to check if there’s a limit to fee-free withdrawals for the account.

Brokerage account bank bonuses

A brokerage account is a type of account that lets you buy and sell investments. By investments I mean things like stocks and bonds. Like with the other bank accounts you can deposit money into it, but with this kind you can use that money to purchase stocks.

Brokerage account bonuses generally want you to make an initial deposit. Most of the time the required deposits aren’t very large, with a lot of companies wanting $50-100 in the account. Sometimes they want you to buy stocks with it, but other times they’re satisfied with just cash in the account.

While many brokerage accounts don’t charge monthly fees, they might charge transaction fees when you buy or sell stocks.

Do I need to pay taxes on bank bonuses?

The short answer is yes.

Bank bonuses are considered a form of taxable income. The bank may or may not issue you a tax form about the bonus, but regardless it still needs to be included on your tax return.

You can list bank bonuses under “other income” and you can give a description of, you guessed it, bank bonuses.

Also don’t forget that if you sell investments in a brokerage account, that’ll be subject to capital gains taxes.

Does signing up for a bank account affect your credit score?

Most of the time signing up for an account won’t affect your credit score in any way, but there are a few exceptions.

• A small number of banks do a hard credit check when someone applies for an account. This isn’t the norm, and most do a soft check that won’t affect your score at all. On my postings I’ll tell you what sort of check they do if I know, but you can always try looking it up if you’re not sure.
• If you overdraw the account and then don’t pay the overdraft fees, the bank will eventually send the debt to collections, which will affect your credit score. Hopefully that’s not going to happen though!
• On some brokerage accounts, the sign up process will ask if you want margin trading ability. If you say yes they’ll perform a hard check on your credit, so make sure to uncheck that if you’d like to avoid it.

What’s the sign up process like?

The process of signing up for an account is pretty universal.

The form will ask for your personal information (name, address, social security number). They’ll also probably ask your income and employment status. If you’re worried about that, don’t be. The banks generally use that info for statistical purposes and won’t be used to deny you an account.

They’ll want you to create a username and password for the account, just standard stuff here.

Usually they’ll ask you to connect an existing account to fund your new account. This is usually done through a service like Square. It’ll have you select your old account from a list and then enter your log-in information for that account. If for some reason that’s not working there’s also an older method of verifying a linked account that involves the company making small deposits. Then the bank will have you confirm the amounts. The newer method is instant while the older method takes at least a couple business days.

At the end they’ll ask you to confirm that everything you stated is true and then you can submit the application.

Some banks will process the application immediately and others take a few days.

A Note about brokerages

Brokerage accounts often ask a few things that other accounts don’t ask.

If the account offers the ability to write checks or have a debit card the form might ask if you would like those things.

Brokerage accounts also might ask you about what kind of investment strategy you prefer (conservative and slow vs riskier and quicker) .

They may ask you if you want to enable margins and option trading too.

If you’re not sure what they’re talking about just stick with the regular no-frills account (and see my note about a hard credit check in the section above).

So what could cause my account to be denied?

When banks are deciding whether to approve an application for a new account, they sometimes use national consumer reporting agencies called ChexSystems and EWS (Early Warning System). These places will provide a report on the applicant that includes information about their financial history.

What these systems are particularly interested in is “negative” history. Negative history could include things like evidence of fraud, overdrafts, or generally suspicious financial behavior.

As far as bank bonuses go, it’s not a good idea to open too many accounts in a short period of time because that can look suspicious to a bank.

If you get denied it’s likely that there’s something negative on one or both of these reports. You can actually request both of these reports for free, just like credit reports, and you can also dispute inaccurate information.

Glossary

A Cash Managment Account, or CMA, is a type of account typically offered by brokerage or investment firms. It’s a bit like a combo of checking and savings, as you can keep money in and spend money from the account easily. They can offer neat perks like higher APY or free checks. Sometimes they’re connected to an investment account and used to transfer money into and out of that account.

Tips for a better bank bonus experience

Keep a master list of your accounts. It’s easy to remember if you have them all in one place.

The fine print is king! Before you sign up take a moment to carefully read the terms for the bonus and any mentions of fees for the account. Doing this will save you a lot of grief later.

Don’t want until just before the deadline to do the bonus. Sometimes banks don’t move very quickly, and it might take a few business days for the account to be set up or for your money to be transferred. If you wait until the deadline you might miss out.

Beware of the dreaded claw-backs. A claw-back is when the bank takes your bonus away from you. The most typical reason is that the account was closed too soon after opening it. Any claw-back conditions will be listed in the fine print, so if you followed tip 2 up above you should have nothing to worry about.

The claws coming for your bonus, according to the Picsart AI

Summing up

I hope I’ve convinced you that bank bonuses aren’t too scary to navigate. Try it for yourself and you’ll see that it’s a fantastic way to earn some extra cash and find accounts with interesting benefits.

I feature bonuses I think are promising on the site, and I’ll be sure to point out anything I notice that I think you should know.

Still have questions about bank bonuses? Just ask below in the comments and I’ll be happy to help if I can!