A handful of national banks are offering hundreds of dollars in cash bonuses simply for opening new accounts.
Banks are interested in attracting as many Americans as possible to deposit their money with them and preventing customers from moving to higher-yielding accounts or money market funds in a period of high interest rates.
Competition for customers is therefore intensifying and banks are willing to offer a decent bribe.
Leading the way are Chase and Wells Fargo, which are currently offering a $300 bonus to customers who open a new checking account and set up direct deposits.
“We have successfully used promotion and retention strategies to retain and acquire new balances in consumer and small business banking,” Wells Fargo Chief Financial Officer Mike Santomassimo said of the strategy earlier this week.
Wells Fargo is currently offering a $300 bonus for opening a new checking account
Bank of America also offers a $200 cash bribe for new customers.
“Our direction to our team is to grow our deposit base a little bit faster than the economy,” Bank of America Chief Financial Officer Alastair Borthwick told analysts on a call this week.
“That means that general prices need to be set to achieve this,” he explained.
Meanwhile, Citi has a 5 percent promotional rate on new savings accounts for the first 90 days.
The average cash bonus offer for opening a new checking account rose to $400 earlier this year, up from $130 in 2016, according to Curinos data.
However, before switching banks, it may be helpful to do some math and determine if it’s the best option for you in the long run.
For example, some banks with offers now require customers to maintain a higher balance to deposit cash or they will have to pay a fee.
Chase requires customers to make a monthly direct deposit of at least $500 to get the bonus and not have to pay a $12 monthly maintenance fee on the new account.
Chase also offers a $300 switching bonus for new customers.
Any cash bonuses earned by switching accounts are reported to the IRS and taxed as interest.
It’s also important to consider the benefits you can get from your current bank account, such as mortgage savings or useful tools for traveling abroad.
Likewise, if your checking account offers a decent interest rate, it may not be beneficial in the long run to exchange it for a cash offer.
However, “if you could have $300 in your pocket tomorrow, that’s more attractive to some people than the delayed gratification of a 4 percent interest rate,” said Adam Stockton, managing director of Curinos. Wall Street Journal.