I post lots of bank bonuses here on the site. You can see the list of current bonuses, broken down by amount and eligible states on this spreadsheet also. Bank bonuses could be very profitable, you could easily make a few thousand a year and even more if you have a large household. If you’re new to bank bonuses, check out this guide on what you need to know about churning bank account.
People often wonder why banks would give out these bonuses. You open an account, get a bonus of $200 or so, keep it open for a few months and then close it. Seems like a losing strategy for banks. But yet these bonuses are here to stay and in fact banks are sending out more of these bonus offers and larger bonuses as well.
The Federal Reserve has increased interest rates seven times since 2015, but many banks have not passed on those increased rates to deposit customers. Instead they are investing more on one-time payments of hundreds of dollars for new customers who open accounts. WSJ explains that these bonuses can have the benefit of being tucked away in obscure parts of earnings reports where they don’t weigh on closely followed profitability metrics.
Over the six months ended in March, the number of banks that sent out more than five million of the mail offers has gone up. 15 banks have done so, compared to just seven in mid-2015, according to consulting firm Novantas. The average bonus at regional lenders also has risen to almost $300 from less than $200 over a similar period, the firm said. Large national and regional banks including Chase, Wells Fargo and SunTrust are now offering bonuses that typically range from $150 to $500. While that might not be as lucrative as a higher rate for people with large deposit balances, it is a big payout for those with smaller accounts.
These bonuses are designed to attract new primary checking and savings accounts. These customers are considered the most desirable because they rarely leave and are promising prospects for other product sales. Obviously there’s a small number of new customers that just open the accounts for the bonus, but apparently that number is small enough to still make these promotion profitable for banks.
Banks increasingly prefer the bonuses to raising rates broadly because they allow them to specifically target people who open a new primary bank account. A recurring direct deposit or minimum balance is typically required to earn the bonus, making it hard to earn the bonus on a secondary account. There’s usually easy ways to complete these requirements, but not for the casual customer that receives such offers in the mail.