Question on New Account Bonus Offers.

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toolcrib
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Question on New Account Bonus Offers.

Postby toolcrib » Mon Jan 28, 2013 12:47 pm

I did a quick search on this subject and came up empty, so figured I would ask the opinion of the members here.

About twice a year I will get some offer that involves opening a new bank account with varying requirements and I will get a bonus. Usually around $100.

Generally I ignore these as I find opening a seperate account anoying, and I feel somewhat guilty if I close the account as soon as the requirements to keep the offer are met.

In the past I have only used an offer once, I was saving for my home down payment and was still over a year away from my target buying date. The offer was that if I opened a MM account with $5,000 and kept the balance above $5,000 I would get a $100 bonus. This worked out to around a 4% APY on top of the account interest. I considered it a 6-month CD with a better rate than I could find elsewhere and treated it the same. Two days after the minimum 6 months, I closed the account and transfered the money back into my savings.

I currently have an offer, that if done to the minimum of the requirements works out to about 100% APY. This seems a bit to good to be true, so I am a more than a little skeptical.

My main question is, what is the down side of using these offers. Other than the obvious part of having to watch another account, and the time invested in opening and closing the account. Does the opening and closing of an account have a negative effect on your credit score? Is there any reason I should not take advantage of the offer, other than feeling guilty about planing on cutting ties with the bank from the begining when there goal is to bring me in and keep the account for the long term.

Thanks,
Andrew

Mario
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Re: Question on New Account Bonus Offers.

Postby Mario » Mon Jan 28, 2013 12:54 pm

toolcrib wrote:I feel somewhat guilty if I close the account as soon as the requirements to keep the offer are met.

You shouldn't. They're not doing it for you as a favor. Rest assured that in the aggregate, they are still making money by extending this offer.

I currently have an offer, that if done to the minimum of the requirements works out to about 100% APY. This seems a bit to good to be true, so I am a more than a little skeptical.

That does sound too good to be true... I'd make sure to triple-check the fine print.

My main question is, what is the down side of using these offers. Other than the obvious part of having to watch another account, and the time invested in opening and closing the account. Does the opening and closing of an account have a negative effect on your credit score? Is there any reason I should not take advantage of the offer, other than feeling guilty about planing on cutting ties with the bank from the begining when there goal is to bring me in and keep the account for the long term.

Unless they pull a credit check or extend credit to you, it shouldn't affect your credit score.
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stannius
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Re: Question on New Account Bonus Offers.

Postby stannius » Mon Jan 28, 2013 2:50 pm

Mario wrote:
I currently have an offer, that if done to the minimum of the requirements works out to about 100% APY. This seems a bit to good to be true, so I am a more than a little skeptical.

That does sound too good to be true... I'd make sure to triple-check the fine print.


Well, it depends on the absolute amount of the bonus. If it's a low to medium absolute bonus, but with really low bar to get the bonus, then that's not so hard to believe.

A made up example would be "$50 bonus if you make a direct deposit in the first 60 days" but there's no minimum on the deposit.

A non-made-up example would be when my wife opened an ING Direct account with an initial deposit of $1 and got a $25 bonus, a 2500% ROI! But then she forgot the password and the $26 sat there for years before they closed the account and mailed her a check. (Luckily she had put her parents address on the account, and our bank took a check made out to her maiden name.)

Mario
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Re: Question on New Account Bonus Offers.

Postby Mario » Thu Jan 31, 2013 4:40 pm

stannius wrote:
Mario wrote:
I currently have an offer, that if done to the minimum of the requirements works out to about 100% APY. This seems a bit to good to be true, so I am a more than a little skeptical.

That does sound too good to be true... I'd make sure to triple-check the fine print.


Well, it depends on the absolute amount of the bonus. If it's a low to medium absolute bonus, but with really low bar to get the bonus, then that's not so hard to believe.

A made up example would be "$50 bonus if you make a direct deposit in the first 60 days" but there's no minimum on the deposit.

A non-made-up example would be when my wife opened an ING Direct account with an initial deposit of $1 and got a $25 bonus, a 2500% ROI! But then she forgot the password and the $26 sat there for years before they closed the account and mailed her a check. (Luckily she had put her parents address on the account, and our bank took a check made out to her maiden name.)


Good point. I'm curious now...
http://debtblag.com

Track my fiscal fitness with $0.5 million in debt: http://getrichslowly.org/forum/viewtopic.php?f=11&t=61052 Latest update: As of April 16, I've paid off $21,400 in credit card debt this year (after starting with $35k)

toolcrib
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Re: Question on New Account Bonus Offers.

Postby toolcrib » Fri Feb 01, 2013 6:02 am

To answer your curiosity, it is a bonus offer of $100 if you open a checking account with a minimum of $25 and have a minimum of $50 direct deposited for the first six months. There is also an option of not having a direct deposit, and just making 10 debit card purchases in the first 60 days.

My calculation of 100% interest was based on the $25 initial deposit with $50 added per month for six months with no withdrawls. Then closing the account at the end of six months. Depending of the timing of the direct deposits, the effective interest rate will vary.

Due to a change in my employers payroll handler, I am no longer allowed to split my pay between different banks as direct deposits so the $50 a month option is not available. I guess I just have to decide if the time spent opening an account, making sure I make a minimum of 10 debit card purchases in the first 60 days (do I have to wait for the debit card to be mailed to me?) and then closing the account after six months is worth $100. The offer already had a benefit for the bank, as I looked them up and looked over there interest rates for savings and CDs. Unfortunately for them, there rates are not very good.

Thanks,
Andrew

Mario
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Re: Question on New Account Bonus Offers.

Postby Mario » Sun Feb 03, 2013 11:44 pm

That doesn't sound like a bad deal and the cost seems to just be remembering to make the 10 debit card purchases
http://debtblag.com

Track my fiscal fitness with $0.5 million in debt: http://getrichslowly.org/forum/viewtopic.php?f=11&t=61052 Latest update: As of April 16, I've paid off $21,400 in credit card debt this year (after starting with $35k)


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