Have you ever thought about getting extra money just for starting a bank account? At the moment, a number of banks and other financial institutions are giving bonuses to people who open new accounts.
As a sign-up bonus, some banks are giving away as much as $6,000, while others are giving away at least $1,000. But why do banks want to give away money for free?
Banks are always trying to get new customers. Most people do not just open a new bank account out of the blue, after all. Usually, there needs to be a trigger, like the closing of a local store, a recent move, or bad customer service.
Matthew Goldberg, a senior consumer banking writer at Bankrate, says that a big bonus can be just what someone who is thinking about switching needs.
Should You Switch Banks for a Cash Bonus or Stick with High-Yield Savings?
Getting these big cash gifts, on the other hand, usually comes with some conditions. There are usually specific rules, like keeping a large minimum amount, that might make some people think twice.
There are times when the interest from a high-yield savings account might be better for you, according to experts.
- Think about the needs before making a decision.
- Look at the long-term interest earnings and possible bonuses.
If you want to switch banks to get a bonus, carefully consider the pros and cons to make sure it fits with your financial goals. Remember that even though a big bonus might seem appealing, a high-yield savings account might be better for you in the long run.
Are you sick of bank fees and ready to look for other ways to make money? You might not only save money by switching banks, but you might also get extra cash.
“If you are paying fees at your bank, think about what other options are out there,” says Goldberg. If the new bank gives you a bonus for opening an account, that could be a great reason to switch.
It is tempting to move banks just for the bonus from the highest-yielding FDIC-insured bank, but it is important to look at the big picture first.
Essential Considerations Before Switching Banks
Make sure you have done your research before making a choice. Not only is it about the prize right away, but also about knowing the rules that go along with it.
Key Factors to Evaluate
- Account Duration Requirement: Know how long you have to keep the account open in order to get the bonus.
- Forfeiture Charges: Know if there are any fees for taking money out early that could cancel out the advantages.
- Level of Comfort with Risk: Figure out how much risk you are willing to take with the new account.
An assistant professor of accounting at the University of New Haven named James N. Mohs stresses how important these things are: “How much of a sign-up bonus you get depends on how long you keep the account, how much you are willing to risk, and how long you have to hold the account.”
Evaluating the Worth of a Sign-Up Bonus
When thinking about a sign-up bonus, it should be big enough to make the work you have to do worth it. A good gift not only makes your finances better, but it also makes the change worth it.
When signing up for a new account to get a bonus, it is important to make sure that the standards to get the bonus are reasonable. You should not have to make big deposits or keep your minimum amount way too high.
The most important thing is that the account should help you reach your long-term financial goals. A certified financial planner at Fort Pitt Capital Group named Paul Brahan says, “Think about the interest rate, fees, and features after the initial bonus period.”