Be Aware When Opening an Account for a "Free Cash Bonus"

About a year ago, it seemed to me that every other bank offered some sort of free cash promotion. The flow of these promotions to my mailbox has slowed of late, but there are still a few “free cash bonus” programs floating around. Banks promise you a cash bonus when you open a savings account or checking account with them. It seems like a great deal: You put your money in the bank, and the bank pays you $25, $50, $100, or more. However, it is important to be aware of the requirements that many banks impose in order for you to qualify for the cash bonus.

Free Cash Comes with Strings Attached

Know what’s in the fine print before you open an account for the free cash bonus. In many cases, you won’t get your free money for at least 45 days – and not until after you have fulfilled some specific requirements. Some of the requirements might include:

• Minimum account balance: Some banks want to see that you do not fall below a certain threshold with your account. The account itself might have one balance (or even no minimum balance requirement), but in order to get your cash bonus, you have to maintain a certain amount of money in your account. If your account balance falls below the minimum before a certain number of days pass, you are ineligible for the free cash.
• Direct deposit requirement: You might be required to arrange for a minimum number of direct deposits, or set up a recurring deposit in order to qualify for your free cash. You also need to make sure you understand what constitutes a “direct deposit.” In some cases, an incoming ACH transfer will count as a direct deposit, helping out. Other times, though, it might not work that way; you may have to sign up for a “real” direct deposit. Talk to your bank so that you understand exactly what counts as a direct deposit.
• Minimum number of debit transactions: Perhaps you will have to make a minimum number of debit transactions in order to qualify for the cash bonus. This might be any number of transactions between five and 20. If you don’t use your debit card enough, you might be disqualified. You should also make sure you understand what kind of transaction is required. Some banks insist that you make signature transactions, which means that entering your PIN when you use your debit card won’t count toward the total you need to qualify for your cash bonus.
• Automatic withdrawal or bill pay: You might have to sign up for automatic withdrawal to qualify. Even if you don’t have to sign up for an automatic withdrawal, some banks might require that you sign up for bill pay. You won’t receive your cash bonus until after you have paid a certain number of bills from your account.

Depending on the bank, you might have to do all of the above, or do a combination of two or three of the items. Some banks give you either/or options (e.g. sign up for direct deposit OR pay three bills from your account). None of the items above is very hard to achieve if the requirements fit in with your normal banking habits. Understanding exactly what you need to do in order to get your cash bonus is important.

Additionally, you need to be aware of the impact opening a new account, just for a cash bonus, might have on your credit.

What About Your Credit Score?

There are some banks that actually perform a hard credit inquiry when you apply to open a bank account. Banks are required to verify your identity before allowing you to open an account, but some go a little further checking your credit report. If you knew that your credit score was going to be impacted when you applied for that account with a cash bonus, would you still do it?

Not all banks perform a hard credit check, though. Some banks simply do a soft pull, while others rely entirely on ChexSystems. Not only could your opening a bank account affect your credit score, but what banks find when they run a check on you could result in you being denied an account altogether. If you try to open a bank account for a cash bonus, only to be denied, that can cause even more problems later.

ChexSystems and Account Approval

You might not be approved for a bank account (and a shot at the cash bonus) if the bank doesn’t like what it sees in your ChexSystems report. ChexSystems is a consumer reporting agency that allows member financial institutions to submit information about your account habits. If you bounce too many checks, or if you other problems with your account, you might be flagged in the system.

Another issue is that you might be penalized for too many ChexSystems inquiries. If a bank sees that you are trying to open accounts at several different institutions, due to the number of ChexSystems inquiries, you might be denied. This means that it might difficult to open several accounts in the hopes of getting more than one cash bonus.

If you are denied the ability to open an account due to what is in your ChexSystems report, you are entitled to a free copy of your report. You have to request a copy within 60 days. You can fax or call in your request. Once this is done, it is possible to dispute errors on the report. However, the fact that you have a chance to do this is small comfort when you have been denied a checking or savings account.

Before applying for an account that features a cash bonus as an incentive, make sure you weigh the pros and cons. Consider the possible impact on your credit, and how it might look on a ChexSystems report. Also, think about the requirements of the account, and how feasible it is to meet them. If you think that you can make it work, then opening an account can be an easy way to get some free cash.