Have you ever thought about getting extra money just for opening a bank account? At the moment, a number of banks and other financial institutions are offering 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 don’t 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 branch, a recent move, or bad customer service.
Matthew Goldberg, a senior consumer banking reporter 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 bonuses, on the other hand, usually comes with some conditions. There are usually specific rules, like keeping a large minimum balance, 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.
- Consider the requirements before committing.
- Compare potential bonuses with long-term interest gains.
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’re 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’s tempting to switch banks just for the bonus from the highest-yielding FDIC-insured bank, but it’s important to look at the big picture first.
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Essential Considerations Before Switching Banks
Make sure you’ve done your research before making a decision. Not only is it about the reward right away, but also about knowing the rules that go along with it.
Key Factors to Evaluate
- Account Duration Requirement: Understand how long you need to maintain the account to qualify for the bonus.
- Forfeiture Charges: Be aware of any penalties for early withdrawal that could negate the benefits.
- Risk Tolerance: Assess your comfort level with any risks associated with the new account.
James N. Mohs, an associate professor of accounting at the University of New Haven, highlights the importance of these factors: “The keys to the value of a sign-up bonus are the length of time you have to hold the account, the forfeiture charges for early withdrawal, and your risk tolerance.”
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 bonus not only makes your finances better, but it also makes the change worth it.
When looking at a new account for its sign-up bonus, it’s important to make sure that you can actually meet the requirements to get the bonus. You shouldn’t have to make big deposits or keep your minimum balance 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.”
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