Should You Switch Bank Accounts For The Rewards?

Signup bonuses are so common for new bank accounts that I can almost guarantee you got one the last time you opened an account. It’s typical to get a small cash reward for setting up direct deposit or putting a certain amount of cash in your account. But what about rewards usually reserved for credit cards, like points and miles?

Citigroup recently experimented with offering US credit cardholders a hefty airline miles bonus to sign up for an online checking account, according to Bloomberg. More promotions are on the way, the bank says, to inspire card users to enroll in other banking services.

But just like annual fees for credit cards, these signup bonuses can often distract YOU from the drawbacks of a particular checking account. Think: pesky monthly maintenance fees and minimum balance requirements.

Is there any benefit after you’ve received your enrollment bonus? Unclear. But there’s one big difference that makes the idea more enticing than credit card points: You can’t go into debt when you’re trying to earn rewards in your checking account. Sure, you can overspend, but once your balance hits zero, you’re done. (Let’s leave overdraft fees out of this equation, just for a moment.)

How to Evaluate Bank Account Signup Offers

Before you snag that signup bonus, ask yourself these questions.

Do I like my current bank? 

Signup offers are a play for loyalty. Do you have strong feelings about your bank, or are you just there out of habit?

What are the drawbacks? 

Look for maintenance fees, overdraft fees, minimum balance fees, etc. Compare and contrast with your current bank.

Is the offer worth it?  

A couple thousand airline miles could be useful, if the bonus is for an airline you use regularly. If you’re not well-versed in the points game, though, redemption rules or other restrictions could just get you a round-trip flight to nowhere.

How much of a hassle would it be? 

If you like your current bank and aren’t getting bludgeoned by fees, is it worth your time to open a new account, deposit the proper funds, and make sure you’re meeting the requirements to get the signup bonus? Beyond enrollment, are you willing to manage that new account? Transitioning auto-debit bills to a new checking account seems like the biggest nightmare of all.