The first step towards opening a savings account is finding a bank offering the best terms for your specific needs. In your search for the savings account, you will come across many banks offering bonuses. The savings account bonus offered may vary from one bank to another. Here are some important things you should know about savings account bonuses and how they affect you.

An Introduction to Savings Account Bonuses & How They Work

In an effort to attract more savings accounts, customers, many banks now offer cash bonuses. A savings account that offers a bonus is called a bonus savings account or an incentive saving account. Opening a bonus savings account is a great way for bank customers to earn some easy extra cash. Banks on the other hand benefit by getting new customers.

Simply opening a savings account with a bank doesn’t mean you’ll get the bonus. You will have to meet the bank’s account conditions in order to qualify. The bonuses and the qualifying criteria may differ considerably from one bank to another. Some banks may require you to deposit a certain minimum amount of money every month to qualify. Others may not allow you to withdraw money for a certain number of months. Still others may impose completely different restrictions.

Before you choose a bonus savings account, you must compare the bonuses offered by different banks. This will help ensure that you are getting the best deal.

What Types of Bonuses Can You Expect?

The most common bonus is offered in the form of an additional percentage that’s added to the bank’s standard interest rate. Some banks offer promotional gifts or rewards points that can be redeemed for travel or experiences. Few others offer prepaid debit cards to new customers.

What You Should Know Before Opening a Bonus Savings Account

What is important to understand is that bonuses are typically offered as an incentive to new customers. This means the incentive may only be valid for a certain period of time after you open the account. Don’t rush to open a savings account just because a bank is offering higher than standard interest rates. Before you open the account, check the interest rate your money will earn after the bonus period. In some cases, this may drop to the lower than competitive rates and you will lose money in the long run.

For long term bonuses, banks may require you to fulfill one or more of these requirements:

  • Deposit a specific dollar amount within a specified period

  • Complete a certain number of transactions every month

  • Maintain the account for a specific period, both before and after receiving the bonus

  • Maintain a high balance in the account over an extended period of time

  • Set up a direct deposit into your account within a certain number of days

Is It Worth Opening a Bonus Savings Account?

Savings account bonuses are a great way to earn some extra cash. To avail of these bonuses without any penalties, it’s important to be realistic when considering the requirements.