CD Rates Summary May 22, 2018
Fed Holds Rates Steady - Deposit Rate Predictions and Strategies
New Savings Bonds Rates - I Bond Fixed Rate Rises to 0.30%
Set Aside Funds for College Expenses With College Savings PlansDownsides of Checking Account Bonuses - When Is It Not Worthwhile?
With interest rates so low these days, you may be able to earn more with checking account bonuses if your savings is small. However, there are several downsides to consider. Yesterday I came across this Bankrate article on 5 hidden costs of checking-account bonuses. Some of the hidden costs mentioned were more related to time and work. In our blog post on bank bonus gotchas, we described the common strings attached to many bonus offers like direct deposit and debit card usage.
Another potential gotcha mentioned in the Bankrate article is taxes. Most banks will consider the value of the bonus as interest and include it on your 1099-INT. So you'll have to pay income taxes on the bonus, and that includes the value of non-cash bonuses. One risk not mentioned in the article is if the bank values the non-cash bonus higher than what it's worth. For example, if the bank reports a gift value of $200 and your marginal tax rate is 28%, it will cost you $56 in federal income tax. If you could have bought the gift for only $100, your net bonus after taxes is only $44 ($100 - $56).
One potential gotcha not mentioned in the Bankrate article was described in detail in our bank bonus costs article. That's the potential effect on your credit score and on being approved for new bank accounts. Many banks will do a hard credit inquiry when you open a bank account, and this can temporarily ding your credit score.
In addition to a hard credit pull, many banks use ChexSystems when you apply. This is done primarily to ensure you have not abused checking privileges at past banks (like by bouncing checks). However, banks have used ChexSystems to see how many accounts you have recently applied for at other banks. If they see you have applied for multiple bank accounts, they may decide to reject your application. Many readers have reported this problem.
With these hidden costs in mind, you should pick your bank bonuses carefully. Is the value of the gift worth it? Also, will the account provide value to you without regard to the bonus? Do you have any other tips for deciding on bank bonuses?
That brings me to a new poll question. How large does a checking account bonus have to be for it to be worth applying for? Assume the bonus is in cash and the requirements are relatively easy.
While, yes, they are taxable, I am in the 15% bracket, making the hit tolorable.
My credit score is over 750 and I don't borrow money, so that is of little or no consequence for me.
Aslo, I just got my chex systems report, with 62 entries on it, and have seldom been denied an account due to that report. Not never, but seldom.
For me, it's like free money that pays a bill or 2 or 3 every month.
ChexSystems is almost always the excuse given but with no explanation.
All my credit scores & history are impeccable with absolutely no negative events ever.
Getting your ChexSystems report is useless, if the actual reason for denial is not for valid negative activity.
Opening multiple accounts is NOT prohibited or negative activity even though it is used in a discriminating way by institutions who hide behind ChexSystems without the courtesy of a reason for denial.
Every denial for the mere existence of multiple accounts should be protested loudly.
Either I have been very lucky or you have been very UNlucky.
I've found credit card deals to be the better bang for your buck. The best credit card deals offer 2-3 more times as much money as the best bank bonuses. They tend to have less fees to worry about and less requirements...usually just "spend x amount of dollars in 3 months", and with a little effort you can spend x amount without actually spending it. Where are you finding $4000 worth of deals? On this website?
It is pure fantasy these days to get that much bonus.
For starters, most bonuses these days are for local customers only.
I counted only 22 bonuses given from 22 different states this year, do you drive there to open it?, of course not, the gas alone to drive back and forth will eat your bonus and then some.
Most of them require direct deposits form employer or SS income to qualify for the bonus.
You nay be confusing the reward accounts with opening bonus accounts, I find your claim UNBELIEVABLE.
http://www.depositaccounts.com/blog/2011/11/customer-kicked-out-of-a-banks-reward-checking-account.html
The guy is a real class act (sarcasm font off).
If we ignore him maybe he will go away.
At the very least, it is disingenuous to use ChexSystems as an excuse, but then not reveal what information factored into the rejection determination.
This should fall under "Consumer Protection" since all negative decisions must be explained in some transparent, coherent manner.
Ultimately, we are not entitled to a particular account, just an honest reason for denial.