Tempted by a new bank account sign-up bonus? Read the fine print.

New account incentives appear to offer easy money, especially if you're already looking for a new bank. However, proceed carefully: The rules behind these giveaways can cut into payouts, and there may be negative consequences for your reputation as a banking customer.

LM Otero/AP/File
Freshly-cut stacks of $100 bills make their way down the line at the Bureau of Engraving and Printing Western Currency Facility in Fort Worth, Texas, in 2013.

These days, banks are big on advertising sign-up bonuses for new customers, offering an account credit of several hundred dollars for opening a checking or savings account. These incentives appear to offer easy money, especially if you're already looking for a new bank. However, we advise proceeding carefully: the rules behind these giveaways can cut into their true payouts, and there may be negative consequences for your reputation as a banking customer.

Here’s what you should consider before opening a new bank account just to get a signing bonus.

Most Offers Have Minimum Requirements

Most banks attach specific conditions to their bonuses to ensure that you'll really use your new account. With checking account offers, you'll most likely need to run up a certain balance, and from direct deposits, before the bonus appears in your balance. While the average minimum for such deposits is fairly low, the direct-deposit stipulation is a headache because most people will need to ask their employer to redirect their paychecks into the new account.

Some bonus hunters seem to have found success in meeting direct deposit requirements with other ACH payments, such as a transfer from a prepaid debit card or an account at another bank. However, there are no guarantees that such alternatives will satisfy the direct-deposit requirement of your sign-up offer. Besides the need to make deposits, you may find the bank demands a certain minimum balance be maintained in the new account; this tends to be particularly common with savings account offers. Such a minimum may mean you'll need to keep thousands of dollars in the account, possibly for several months, all to secure a bonus worth a few hundred dollars.

Applying for Multiple Accounts Can Impact Your Banking Relationships

When you submit an application with a new bank, it will usually request a report on your credit score and banking history. The majority of banks perform only what is called a soft inquiry or soft pull, which does not impact your score and may not get recorded in your credit history. However, banks also use companies like ChexSystems to examine your banking history; if those probes reveal you’ve recently opened a lot of accounts (a practice the industry terms “churning”), that may raise a red flag with banks and lenders.

A complicated ChexSystems history may make it difficult to get started at a new bank, and could even restrict your options to less desirable products such as second-chance checking, which is designed for people with poor banking histories.

Account Fees Can Put A Dent In Your Bonus

Opening a new account means accepting all the standard account fees the bank charges. If the bank requires you to keep the new account funded over several months, you'll probably be on the hook for one or more monthly maintenance fees, which average $12 to $15 per account. Most banks provide ways to waive the monthly fee, but this often means keeping the balance above a certain level. While you'll probably meet that balance in the process of meeting the bonus requirements, keep in mind that you'll also need to maintain a minimum to avoid maintenance fees on your original bank account, too.

With so many ongoing fees, it might seem that the best move is to close your new account as soon as you receive the bonus. However, some banks have fees lurking for you here as well, ones for closing accounts too quickly. If you open and close an account within three months, you may run into early termination fees that run from $25 to $50 depending on the institution. Being aware of a bank's standard account policies is critical if you're seeking to take advantage of sign-up offers, which aren't significantly larger than several months of maintenance fees and early termination fees.

Going after bank sign-up bonuses is a complicated process that requires careful planning and attention to detail. Read carefully before you commit to opening an account for the sake of a one-time benefit.

This story originally appeared on ValuePenguin.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to Tempted by a new bank account sign-up bonus? Read the fine print.
Read this article in
QR Code to Subscription page
Start your subscription today