Have you ever felt like every bank offers a new account bonus? Whether it's a checking or savings account, many banks and credit unions now offer a bonus if you hand over your cash. I promise to give you cash. Banks want deposits. And they are willing to pay for them.
Let's take a look at why banks spend so much money on new customers and how to make the most of this situation.
Banks compete for your deposits
If you're a long-time customer of your bank and haven't opened a new account in several years, you may not realize this, but money moves. People have the right and opportunity to change banks or open new accounts with other financial institutions. Banks are not the only places on earth where you can store money.
When interest rates were near zero and banks paid little interest on savings accounts, many bank customers were a little complacent. You might have thought, “Oh well.” “There's no point in shopping around for a better bank account because you're not going to get any yield on your savings anywhere.”
That's completely different now. When the Fed aggressively raised interest rates in 2021 and 2022, it created an entirely new interest rate landscape for bank customers and CD investors. Currently, the best savings accounts he pays 5.00% APY (or more). The highest rates for CDs are also about the same. Your money can now actually make money, and banks are scrambling to keep up.
Deposits are becoming more expensive for banks
Because interest rates are higher, banks have to work harder to get people to keep their money with them. After all, why bother leaving your money in a 0.01% APY savings account when you can earn 5.00% APY on a CD or one of the best money market accounts? Yes, some big banks still pay a fraction of that amount in interest.
For banks to remain profitable, they must collect deposits and make loans. Banking regulations and standards require banks to hold a certain amount of deposits and capital compared to the amount of loans allowed. So when bank customers become more eager to move money, banks have to pay more for those deposits.
When banks pay more for your deposits, it takes the form of higher yields on CDs and savings accounts, and higher APYs on interest-bearing checking accounts and creative new perks checking accounts. And in some cases, banks simply “pay” for deposits by giving people cash bonuses for opening new accounts.
There's no need to feel bad about banks. Banks still (usually) make good profits. But the issue of bank profits is an opportunity for you, the bank's customer.
Why you need a new bank account bonus
Due to this intense competition for deposits, many banks are now offering new account bonuses. Some of the best bank bonuses right now range from $300 for opening a new checking account to $200 for opening a new savings account. Some banks offer cash bonuses when you refer a friend or family member to open a new account.
There are several good reasons to open a new bank account and receive a cash bonus.
- I am dissatisfied with my current bank and would like to transfer my money to a new financial institution.
- You want to keep the bank you've used for years, but open a high-yield savings account with a better APY than your current bank offers.
- If you need a separate bank account for other financial purposes or if you need a separate bank account.
You don't necessarily have to move your entire financial life (or your “entire banking” as banks call it) to a new bank. Sometimes you need a new checking or savings account to manage your money differently, get a higher yield on your savings, or set aside money in a separate account for a specific purpose. It may be.
As long as you understand the rules of how to earn cash bonuses and can manage multiple accounts, you'll be fine. Go get your cash bonus!
Why new bank account bonuses aren't always a good deal
However, before signing up for a new account cash bonus, Be aware of possible risks, costs, and downsides. Most of these new bank account cash bonus offers have special rules and requirements. For example, new checking account bonuses typically require you to make a minimum direct deposit into your account or use your debit card for a certain number of transactions within a certain period of time.
To make the most of your cash bonus, make sure your bank is prepared to use your new bank account the way you want. Another potential drawback is that some banks charge monthly account maintenance fees. If you open a new checking account, make sure you follow your bank's account requirements to avoid fees. If a bank gives you $200 to open an account but charges you $12 a month in fees, you're not doing much better.
conclusion
The increased competition for deposits by banks is good news for bank customers. You no longer need to keep your money in a bank account with near-zero interest rates. There are better options available, including savings accounts, money market accounts, and CDs that actually pay a decent yield. Cash bonuses for opening a new bank account can be fun, but be aware of the rules and restrictions. Ideally, starting in 2024, more bank customers will be able to find better savings deals.
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