Do I have to open a high yield savings account for a cash bonus?
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- Rates on high yield savings accounts are dropping due to coronavirus concerns, so some banks are offering cash bonuses to encourage people to continue creating accounts.
- There are many reasons to open a high yield savings account, but a promotion shouldn’t be the only one that matters. You should be comfortable with your choice regardless of any limited time promotions.
- High yield savings accounts can earn you up to 20 times more than the average savings account and rarely require upfront deposits, minimum balances, or monthly management fees.
- See Business Insider’s Picks For The Best High Yield Savings Accounts Â»
Did you know that right now, for a limited time, some banks are offering cash bonuses to customers who open a high yield savings account?
For example, you can receive up to $ 300 from CIT Bank if you are a new customer who opens a Savings Builder account between February 19 and May 30, 2020. You can also receive up to $ 700 from Citibank if you open a new check and savings account between January 1 and March 31. If you opened an Ally account before March 23, you can earn up to $ 250 by depositing new funds into your account by March 31.
Several companies offer time-limited cash bonuses for setting up
at present. You need to deposit new funds into the account (which means you cannot transfer money from an account you already have with this bank).
Banks generally require minimum deposits to receive the bonus. Some require you to keep the money in your account for a period of time, usually two or three months. Whatever the requirements, you may be able to claim a cash bonus from at least one institution.
So why this sudden influx of promotions?
has already cut rates twice in 2020, rates on high-yield savings accounts have also declined. These companies offer cash to entice Americans to continue opening accounts with them.
But a cash bonus is not the only reason to open a high yield savings account. These accounts are great places to store the money you think you’ll need for the next couple of years, especially if you’re saving for a big purchase, like a car or a house.
A cash bonus is useful, but remember that you should be happy with your savings account in the long run. If you think the app is poorly designed or the ATM fees are too high, don’t open an account for a few hundred extra dollars. Choose a high yield savings account that will meet your needs long after these promotions end.
However, the prospect of pocketing free money from your bank might just be the boost you need to finally open a high yield savings account. Here are three reasons why it might be time to open an account, regardless of the promotions available.
1. You will earn more money than with other bank accounts
You might be wondering if it’s still worth the effort to open a high yield savings account now that interest rates are dropping. A few months ago, you could probably find an account with an APY of 2.00%. Today, many banks’ savings rates have fallen to around 1.00% or 1.50%.
While the lower rates are disappointing for savers, there is a silver lining: high-yield savings accounts still offer higher rates than
and regular savings accounts.
The average APY for current accounts is 0.06%. The average savings account rate isn’t much better, just 0.09%.
This means that even high yield savings accounts with the lowest rates earn around 10 times more interest than your average savings account.
2. You don’t need a lot of money to open one.
To open a savings account with a traditional bank, you usually need to make an initial deposit. For example, you will pay $ 25 with Wells Fargo, $ 50 with Regions, and $ 100 with Bank of America to open a savings account.
Most regular savings accounts also require that you maintain a minimum balance of at least a few hundred dollars. If you don’t keep the minimum amount in your account, you have to pay a monthly fee.
High yield savings accounts make it easier to save if you don’t already have hundreds of dollars on hand. Some require an initial deposit, but there are many accounts that allow you to start with $ 0.
But if a cash bonus is important to you, be aware that most banks require an initial deposit to qualify for the promotion. Ally asks for the lowest amount at $ 1,000.
3. You will pay less management fees
Many physical banks charge savers a monthly management fee, typically around $ 5 or $ 10. While that might not seem like much, it’s annoying to think that all the interest you earn in a year can be wiped out by a month of management fees.
There are usually ways to avoid paying these fees. You can maintain a minimum balance, open a checking account with the bank, or sign up for direct transfers from another account.
Most high yield savings accounts charge no monthly management fees, which means there are fewer hurdles to jump through.
Sometimes you can run into a high yield savings account with a management fee, but these are usually accounts designed for people with higher balances. Most of these accounts also require an initial deposit and a large minimum balance.
If high rates and low costs are important to you, high yield savings accounts are great places to store your money, regardless of their limited time promotions. Just make sure you’re comfortable with the terms of your new account.
Editor’s Note: This post has been updated to include deadlines to qualify for cash bonuses from CIT Bank, Citibank and Ally.