Has anyone else had that moment where you look at your savings account and see that you got paid “.01” in interest and just think, “Really? C’MON Wells Fargo, 1 cent in interest?!” It’s a pretty terrible feeling. More importantly, did you know you might be leaving THOUSANDS of dollars of free money on the table every year by not putting your money in the right checking and savings accounts? Mary and I earned over $3000 and 80k AA miles last year from bank account bonuses, which we are using to pay for excursions and food on our Europe trip this summer and for fun things in Fiji next year. It’s the perfect way to make a vacation COMPLETELY free as opposed to just flights/hotels.
If you want to skip all my analyses and just go to the source of all knowledge on this subject, go to Doctor Of Credit. He is the undisputed expert on the best current bank account bonuses and high-yield accounts, and everyone goes to his site to comment and discuss new offers. He is the only points blogger I follow daily, and I recommend it highly. Bookmark it and check back every so often for new deals/offers in case I don’t post them here as well.
This guide is going to focus on two unique aspects of checking/savings accounts: 1) Bank Account Bonuses, and 2) High-Yield Savings Accounts.
Bank Account Bonuses
Banks often times offer “bonuses” to lure new customers to switch to their bank. Why? They make money when you use their card, they make money on YOUR money, customers might end up getting a mortgage, etc. Essentially, the banks are trying to buy your loyalty to them, so they literally will give you FREE CASH for leaving your money with them. The thing to remember is that you don’t have to switch everything to these banks – usually the requirements are only “deposit $500” or “do 2 bill-pays per month for 3 months straight”, which are things that you can easily do temporarily or only with a small portion of your money. Bank accounts are great because they have NO effect on your credit report/score – banks use something called a ChexSystems score, which is only for bank accounts. Additionally, bank account bonuses ARE taxable earnings, so you will need to include the money earned from bonuses on your taxes. I usually put aside about 15-25% of the bonuses right away so that I don’t get surprised by the tax bill come April!
So what exactly do you do for these bonuses? Here are some examples of requirements that bank account bonuses have (and mind you, each one is different):
- Do one direct deposit
- Deposit $500 in the account
- Pay a few bills (credit card bills count)
- Do 5 debit card transactions per month
- Keep it open for 6 months or risk losing the bonus
Sounds a little easier than some credit card bonuses, huh? And it’s CASH, which is so nice to pay for things on trips that points can’t. I won’t bother with listing out the best bonuses available now since you should just go to DoC’s site which he updates monthly with the best available bank account bonuses. Here are some of the common questions I get about bank account bonuses though:
- Won’t this affect my credit score opening and closing a checking account? Nope! These will never, ever show up on your credit report. These will show up on your ChexSystems report which is only used for opening new bank accounts. Banks use it to share information about people who have bounced checks, etc. so this won’t affect it a ton. If you want to read more about ChexSystems, NerdWallet wrote a good post about it here. I’ve opened 10+ accounts in the last 12 months and have never been denied, so I think anything under 10/year is probably fine. It’s hard to hit more bonuses than that anyway, so you won’t run in to any problems.
- I don’t have a job at which I can change my direct deposit easily. Can I not do this? This is definitely easiest if you CAN switch direct deposit, but you’re not totally out of luck if you can’t. Sometimes you can do an “ACH Push” meaning that you ACH transfer money out of a different account (like Wells Fargo, etc.) to your new bank account. Certain ACH transfers trigger the deposit requirement, but there’s always a risk that it might not count. You can see a full list of what is and what isn’t counting as direct deposits on DoC’s site here. You also could just avoid bonuses that require a direct deposit.
- Do I have to keep all these accounts open? Not if you don’t want to! Most of them, as you’ll see on DoC, have a clause that says “If you cancel this account before 6 months, then we will revoke your bonus.” After that 6-month period has ended, you’re free to cancel if you want. We keep some open for the sake of budgeting (having an account for different purposes like mortgage fund, gift savings, charity, etc.) but it’s definitely not necessary.
Any other questions you have about bonuses? Let us know by commenting below and we will add it to this post!
High-Yield Bank Accounts
As mentioned earlier, there’s nothing worse than getting .05% interest on your money. Like how stupid is that?! With inflation hovering around 2% annually, you’re essentially LOSING money when you leave money in a savings account. Turns out, there are plenty of options for getting better interest rates. Once again, Doctor of Credit is the master here, so go here for the full list of “high-yield” savings accounts, or just accounts that earn a really good interest rate.
Most of these start at a base of 1% interest for no-work accounts, meaning accounts that you can just put money into and let it sit. Capital One 360, Ally Bank, etc. are all ones that you can get 1% interest without doing any work. While these aren’t the best everyday checking accounts (since there aren’t ATMs easily accessible, etc.) they are great for putting a majority of your money here. Keep what you need in a convenient checking account at a local bank or credit union that you like, and put the rest somewhere it can earn you money!
While the 1% accounts are a great step up, other accounts can get you up to 2.5-5.0% interest, which is HUGE for a savings account! They might require lots of random things, like bill pay, 10 debit card transactions per month, etc., so you need to see if the time doing that is worth it for you. Each account will be different, but considering 5% interest is better than some people do in the stock market (and a savings account has no downside risk like the stock market) it’s a pretty awesome deal. All this money adds up, and can be used to accelerate your travel fund or to save for anything else you want.
Don’t settle with the bank account you’ve had your entire life. There might be better things out there, both in terms of bonuses you can get repeatedly or savings accounts that can accelerate your account growth. Let us know below what accounts you end up getting and how it goes!
Photo Credit: instagram user @ambermozo and @rocamoon, who took this picture in Tahiti!