As Forbes contributor Jeffrey Dorfman wrote earlier this year, there are plenty of reasons for experts to believe the Federal Reserve will keep interest rates low – including our growing national debt and our economy’s reluctance to grow despite years of ultra-low rates. So while interest rates must go up eventually, experts say it could be quite a while before they make a meaningful rise.
Of course, low interest rates aren’t all cookies and rainbows. While they do make it cheaper to take out a mortgage or car loan or borrow money to expand your business, the average American family’s savings are suffering due to the record-low rates.
When your “high-interest” checking or savings account is only earning 1%-1.5% APY on average, it’s hard to keep up with inflation, let alone “get ahead.” So, how can people continue earning money on their money?
What is a Bank Bonus?
One strategy I’ve begun pursuing recently is signing up for new bank bonus offers. With these offers, I am consistently awarded with a cash bonus that works out to a healthy APY over the course of several months.
My most recent bank bonus was a $1,000 business bank bonus I earned from Huntington Bank. To qualify, I had to move most of my banking business to Huntington and keep a certain amount of money on deposit for 18 months. Before that, I signed up for a new Chase checking and savings account to earn a combined bonus of around $350. Ironically, that bank bonus led to me using Chase for my primary checking and savings needs.
Although many people might think credit card rewards and bank bonuses are one and the same, that’s not the case at all. While credit card rewards are issued based on credit card spending, bank bonuses are awarded to individuals who are able to put a certain amount of money on deposit and meet other basic requirements.
How bank bonuses work:
- Bank bonuses vary by institution and offer: Depending on the bank and the offer you choose, you may be required to deposit anywhere from $500-$50,000 and keep it in the bank for a period of up to 18 months. Bonus offers can help you earn anywhere from $50 to $500.
- Bank bonuses are available on checking and savings accounts: Depending on the offer, you can qualify for a bank bonus on a checking or savings account, and sometimes both.
- Other requirements apply: Bank bonuses from different institutions have varying requirements, with some requiring direct deposit or a certain number of transactions made with a debit card within a period of three to six months.
- You’ll have to pay taxes on the bonus: Since bank bonuses are considered taxable income, you should expect a 1099-MISC tax form in the mail.
Popular Bank Bonus Offers
If you’re frustrated with the paltry sums of interest you’re earning on your checking or savings account, a bank bonus could help you recover some of your lost earnings. To take advantage, you need to be willing to open an account with a new bank and meet some basic requirements. After that, however, the bank bonus you earn is yours for the taking.
Here are a few of the most popular bank bonus offers you can sign up for online:
Capital One 360 Savings
If you need a place to park some of your savings, Capital One 360 offers a respectable 0.75% annual percentage yield (as of January 11th, 2016) with no minimum balance and no account maintenance fees.
- Fee-free savings
- Online and mobile banking available 24/7
- Live customer service available 24/7
- A bank bonus worth up to $500 for deposits up to $50,000 (Note offer expires on 3/31/2016.)
Chase Total Checking®
Chase is offering a sign-up bonus on checking accounts that are opened online. With the current promotion, you could get a $200 bonus when you open a new Chase Total Checking® account and set up direct deposit.
In addition, get a $200 bonus when you open a new Chase Total Checking® account and set up direct deposit, you can also get a $150 bonus when you open a new Chase Savings℠ account, deposit a total of $10,000 or more in new money within 20 business days, and maintain a $10,000 balance for 90 days.
Here’s how it works:
- Get a $200 bonus when you open a new Chase Total Checking® account and set up direct deposit.
- Get a $150 bonus when you open a new Chase Savings℠ account, deposit a total of $10,000 or more in new money within 20 business days, and maintain a $10,000 balance for 90 days.
Is a Bank Bonus Right for You?
If you’re sick of earning next to nothing on your checking or savings account, a bank bonus can serve as some consolation. Even better, opening a new account will allow you to try out a new bank and see if you like the services they offer. In many cases, you can also earn competitive rates and score extra perks such as a free debit card, online and mobile bill pay, and nationwide ATM access.
In this low-interest environment, you have to make the most of any opportunity to make money on your money. Bank bonuses allow you to try a new bank or service while also helping you grow your checking or savings account balance over time. And at the end of the day, you have nothing to lose.
Have you ever signed up for a bank bonus before? How much have you earned in the past?
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