How to Stack Bank Account Bonuses - The Broke Professional

How to Stack Bank Account Bonuses

The result of chasing bank account bonuses.

Banks know how to make money off of regular people.  They get some money every time you swipe a credit card and a lot more money from interest payments.

They get money from ATM fees and from being able to lend out money that we deposit with them at high interest rates.  And many banks also pay out really crappy interest rates to consumers.  So it’s a win-win-win all around for them.

But there is a way we can make some money off the banks.  One way is chasing credit card rewards.  I’ve previously written here and here about the strategies you can use to get credit card rewards.  As long as you don’t spend more than you need and never carry a balance, you can make out pretty well.

Banks also like to give out rewards when you sign up for checking and savings accounts.  Many of them will give a cash bonus if you direct deposit a certain amount or use their debit card a certain number of times.

Just like with credit card rewards, you need to pick the best offers and be pretty organized so you don’t make any mistakes.  Personally, I’ve been able to get close to $1,000 in checking account rewards this year with a little online legwork.  But there are people that get $5,000 or more.

Here are the important things to remember when trying to maximize rewards from bank accounts:

1.  Find the best offers

Most banks offer some type of incentive to sign up for their accounts.  But many offers are not worth the time to chase.  I’ve seen offers as little as $20 to sign up for a checking account at a local credit union.  These types of offers are not worth the time.  Good bonuses will have offers from $100-$500 depending on the amount of hoops to jump through.

My favorite place to look at bank offers is Doctor of Credit.  They have it nicely organized by nationwide offers and state specific offers.  And they’re constantly updating so you can usually find all you need there.  It’s my one stop shop for bank account offers.

2.  Get Organized

Being organized is important in the credit card rewards game.  But it’s even more important in the bank account bonus game.  Many of these offers can have multiple requirements such as direct deposit and debit card swipes.  And you usually have to do them in a certain amount of time.  If you have to keep the account open for a few months, you also have to make sure you don’t get hit with any minimum balance fees.  That;s a lot of stuff to keep track of.

So keep a list of the requirements and date you have to complete them by.  It’s also a good idea to note down the username and password you used to sign up for the account.  Since banks have different password requirements, it can be tough to keep track of them even if you’re using the same password.  Which you probably shouldn’t be.

Make things easy on yourself and keep records of everything.

3.  Early Account Closure Fees

This is a fee that some banks charge if you close an account too soon after opening.  They’re obviously trying to discourage people from opening accounts for the bonus and then closing them, which is what we’re trying to do.

Most early closure fees I’ve seen are assessed 90-180 days after account opening.  If you close the account too early, the bank will take the bonus back.

Simply note the time period in your spreadsheet or list and make sure not to close it before then.  Losing a bonus you earned because you forgot to take the early closure fee into account does not sound like fun.

4.  Electronic Direct Deposit

One thing that can make getting bank account bonuses a lot easier is unfortunately out of your control.  And that is how you change your direct deposit information.

Since most of these bonuses require you to direct deposit a certain amount of money in a certain time frame, being able to edit that online makes the process a lot easier.  However, many employers are stuck in the 20th century and still require you to update direct deposit information by paper.  This could be a major hassle especially if you’re trying to get multiple bank bonuses.

Not being able to edit direct deposit info electronically won’t disqualify for trying for bank bonuses.  But it will increase the hassle factor so it’s something to keep in mind.

5.  Rewards are taxable

Credit card sign up bonuses are great because they’re pretty simple to get and the rewards can be substantial.  Best yet, the rewards are not taxable!  So if you get a sign up bonus of $200 on a credit card, that’s $200 free and clear.  Uncle Sam does not ask for his share.

Bank account bonuses don’t work like this unfortunately.  Bank bonuses usually fall under the “interest payments” category so you will get a tax form to file with the IRS.  So that $200 is more like $150 after taxes, depending on your tax bracket of course.

One way I like to work around this is to deposit any bank account bonuses into our Traditional IRA.  Any deposits will be deducted from our taxes, so it’s kind of a tax free reward I guess.

Conclusion

Credit card rewards can be lucrative and fun to accumulate, but bank account bonuses are something to look into as well.  Even though bank account rewards are usually taxable, some of them are easy to get and if you’re organized, you can make out pretty well.

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Comments

  1. The challenge with bank reward is having to switch all your auto payment over if you have intention to keep it for an extended period of time. Credit card rewards are a little hassle, except for those few bills that allow you to auto pay from card.

    • That is something to consider, especially if you’re trying to get a bunch of bonuses at once. I’ve never had a big problem with that since you can transfer money pretty quickly between banks. I just transfer the direct deposit back into my primary checking account as soon as it hits the other account.

  2. I have a credit union. I think I should call them and see what kind of rewards they can offer. I’ve been with them for years and it’s time to be like “what have you done for me lately?” 🙂

    • Yeah doesn’t hurt to ask. A lot of these sign up offers are for new customers though so you can still pick and choose the best ones at other banks.

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