When you think of a bank bonus, credit card rewards may come to mind. However, it’s more common than ever to receive a cash reward for opening a new checking account. As with credit card rewards, you’ll likely have to complete certain steps, such as depositing a certain amount, to receive a bonus.
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For many, these moves are worth it to earn extra money. The Wall Street Journal reported, “The average checking account cash bonus offer rose to $400 in 2024.” That means customers can strategically use bank rewards to boost their savings and achieve other financial goals.
This also means that banks spend significant amounts of money to attract and retain new customers. Wells Fargo CFO Mike Santomassimo told the Wall Street Journal that the bank has “successfully used promotional tactics to retain customers in its retail and small business banking and to attract new customers.” Given the range of bank bonuses currently available, many other banks are doing the same.
If you receive bank rewards, you can use them in the following ways.
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How you can increase your savings with bank bonuses
Customers can use bank rewards to increase their savings. Similar to credit cards, consumers can even open more than one bank account to receive multiple bonuses and rewards.
Set up an emergency fund
If you don’t have an emergency fund but know you need one, a bank bonus can help you jumpstart your savings. Depending on the terms, some bank bonuses offer up to $400 or more, which is a great emergency fund to start with.
You can even leave your first deposit and bonus in this bank account to keep it separate from your other expenses. This way, you can protect and build your emergency fund in case you need it in the future.
Travel planning
If you’re looking to take a trip in the future but don’t have a lot of cash to spare, bank bonuses can help boost your vacation fund. To use bank bonuses for travel, sit down and decide how much money you want to set aside for a future trip.
For example, research banks offer rewards if you want to take a weekend trip for $1,000. Decide if you need to open one or more accounts to reach your goal. Sometimes using a bank bonus to fund a flight or hotel stay can make a trip possible.
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Holiday expenses
According to LendingTree’s findings, 34% of Americans went into debt an average of $1,028 during the 2023 holidays. If you want to be better prepared for holiday spending, checking account bonuses can help you reach those savings goals.
The holidays are one of the most expensive times of the year, especially for families with young children. It can be easy to overdo it with gifts, travel and holiday experiences. For many families who can meet the bank requirements to receive a spending bonus, the extra money can help them avoid debt in the new year.
Frequently Asked Questions
Are bank bonuses taxable income?
Yes, most banks will send you a 1099-T form so you can report your bonus on your taxes. For this reason, it’s a good idea to set aside a percentage of your bonus for possible future tax obligations.
How long does it take to receive a bank bonus?
Bank bonuses and the conditions to receive one vary from bank to bank. Read the fine print of the bank’s terms and conditions to understand the requirements for the bonus, how long it takes to receive a bonus, and whether or not you need to keep the account open for a certain period of time.
What happens if I don’t receive a bank bonus?
If you believe you should have received a bank bonus but you didn’t, contact your bank immediately. Your bank can investigate the reason and find out why you didn’t receive it. Before opening a bank account, make sure you understand the specific requirements for receiving the bonus.
Can I earn more than one bank bonus at the same time?
Yes, you can get multiple bank bonuses at once if you apply to different banks, but it’s important to be strategic. Some banks check ChexSystems, which is like your credit history, just for bank accounts.
ChexSystems can tell banks whether or not you’ve left accounts in good standing. In addition, it can also show banks how many accounts you’ve recently opened. Some banks may give preference to customers who haven’t recently opened multiple accounts, but this varies from institution to institution.
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This article originally appeared on GOBankingRates.com: 3 Ways to Boost Your Savings with Bank Rewards Programs
