Should I Change My Bank Account to Receive Rewards?
Sign-up bonuses are so common for new bank accounts that I can almost guarantee that you received them the last time you opened a checking account. They usually receive a small cash reward for making a direct deposit or for depositing a certain amount of money into their account. But what about rewards usually reserved for credit cards like points and miles?
Citigroup recently experimented with offering credit card holders hefty airline bonus miles for registering an online checking account, according to Bloomberg . The bank reports that additional promotions will be running shortly to inspire card users to participate in other banking services.
But just like the annual credit card fees, these signup bonuses can often distract you from the downsides of a particular checking account. Think: annoying monthly service fees and minimum balance requirements.
Are there any benefits after receiving the deposit bonus? Unclear. But there is one big difference that makes this idea more attractive than credit card points: you can’t go into debt when you’re trying to earn rewards in your checking account. Of course, you can spend too much money, but once your balance reaches zero, you’re done. (Let’s leave overdraft fees out of this equation for a moment.)
How to evaluate proposals for registering a bank account
Before you receive your sign up bonus, ask yourself these questions.
Do I like my current bank?
Registration offers are a loyalty game. Do you have strong feelings for your bank or are you there out of habit?
What are the disadvantages?
Look for service fees, overdraft fees, ATM fees, minimum balance fees … I could go on . Compare and compare with your current bank.
Is it worth it?
A couple thousand airline miles can be useful if the bonus is for an airline you regularly use. However, if you are not well versed in the game of points, redemption rules or other restrictions may simply lead to flying back and forth to nowhere.
How troublesome would that be?
If you like your current bank and are not burdened with commissions, is it worth the time opening a new account, depositing the required funds, and meeting the requirements for the signup bonus? Are you ready to manage this new account beyond registration? Moving automatic debit accounts to a new checking account seems like the biggest nightmare.