A $100 bonus for a new checking account can be costly

Checking accounts aren’t typically a trendy topic at backyard barbecues. But banks are building more buzz this summer by offering everything from $100 gift cards for NBA merchandise to $400 cash bonuses for opening checking accounts.

But if you don’t dig deep into what’s required here, that so-called “easy money” could end up taking more cash out of your wallet than you’d expect.

“Banks want to make this account sticky. They want this to be your home base for a long period of time,” said Claes Bell, a data analyst for Bankrate.com, who reviewed checking account promotions.

“It’s important for people to look at the fine print.”

I found a coupon for a $400 bonus for new customers who open a Chase Premier Plus Checking account and set up direct deposit. Chase said the $400 bonus is part of a test marketing effort and was sent to a small sampling of individuals.

But here’s an offer that some might want to refuse. Why? To avoid a monthly service fee, you must keep an average daily balance of $15,000 or more in checking, savings or other balances. Or you can have automatic payments to your qualifying linked Chase mortgage from your Chase account.

Otherwise, you’d be hit with a $25 monthly service fee.

Many times, the offers are made for a limited time, may only be available in specific markets or might be mailed to select consumers.

Banks want your checking account business to be able to build a broader relationship, perhaps by marketing a credit card, brokerage services or a mortgage to you later.

“This is about acquiring customers more than it is about acquiring checking accounts,” said Bell, of Bankrate.com.

Before just opening an account, ask a few questions:

Is there a fee to close the account?

You could face a closing fee, maybe $25 or so, or even lose the entire cash bonus, if you close that account too early.

What’s the minimum balance required to avoid a monthly service fee?

It doesn’t make sense to sign up for a checking account to get a $200 bonus, if you’d end up spending $300 in a year on monthly service fees if you don’t maintain the required minimum balance.

Is bonus cash free money?

Not according to the tax man. The bonus cash is treated as taxable interest income and reported to the Internal Revenue Service on IRS Form 1099-INT.

Do you really want to go through the hassle of closing an old checking account?

No one is required to close an old bank account before opening a new one somewhere else. But most bonus deals require that you sign up for direct deposit with that new account. Maybe you deposit part or all of your paycheck. Or a Social Security check.

And the new account could require a minimum balance to avoid monthly fees.

Will you need to re-do how you pay your bills? Will you need to make changes to get bills automatically paid from the new account, instead of the old one?

“Banks don’t make it easy for you to switch your accounts,” warned Bell, of Bankrate.com.

This story was originally published July 25, 2016 at 2:41 PM with the headline "A $100 bonus for a new checking account can be costly."