What a sign-up bonus is and how banks use them to attract customers

A sign-up bonus is money a bank offers you for opening a new account and meeting certain conditions — usually depositing a minimum amount within a set timeframe. The bank is not giving you assistance programs; it is paying you to switch accounts or bring your paycheck there. The bonus ranges from $50 to $500 depending on the bank, the account type, and current competition for customers.

Banks offer these bonuses because acquiring a new customer costs them money in marketing and account administration. They bet that once you have direct deposit set up and your paycheck landing there, you will stay. The bonus is their upfront cost to make that happen. Understanding what the bank actually requires — and what happens to your account after the bonus period ends — matters more than the bonus amount itself.

Key Takeaways

  • Sign-up bonuses require you to meet specific conditions like a minimum deposit or direct deposit within a stated window, usually 30 to 90 days.
  • The bonus is taxable income and will appear on a 1099 form if it is $10 or more, so you owe taxes on it at your ordinary income rate.
  • Banks often charge monthly fees after the bonus period ends unless you maintain a minimum balance or set up direct deposit, so read the full account terms before opening.
  • Chasing bonuses across multiple banks in a short time can hurt your credit score slightly and may trigger fraud alerts that delay your bonus payment.

What banks require you to do to receive the bonus

The most common requirement is direct deposit. The bank will specify a minimum deposit amount — often $500 to $2,500 — that must land in the account within a window of 30, 60, or 90 days from opening. Your paycheck counts. A transfer from another account usually does not, though some banks accept transfers; read the fine print.

A few banks require only that you open the account and maintain a minimum balance for a set period. Others require you to use a debit card a certain number of times, set up bill pay, or open a linked savings account. The stricter the requirement, the less common the bonus offer — most banks use direct deposit because it locks in recurring revenue.

If you do not meet the requirement by the deadline, you do not receive the bonus. The bank will not tell you that you missed it; you have to track the deadline yourself. Set a phone reminder on day one.

How the bonus is taxed and when you will see it

The bonus counts as taxable income. If the bonus is $10 or more, the bank will send you a 1099-INT form (or sometimes a 1099-MISC) in January showing the amount. You owe federal income tax on it at your ordinary tax rate, plus state income tax if your state has one. A $200 bonus might cost you $40 to $60 in taxes depending on your bracket.

The bonus typically lands in your account 30 to 90 days after you meet the requirement. Some banks deposit it immediately; others wait until the end of the month or quarter. The bank's terms will state when to expect it. Do not assume it has been forgotten if it does not arrive within a week — most take 6 to 8 weeks.

Account fees and what happens after the bonus period

The bonus is temporary. Once it is paid, you are left with a regular checking or savings account, and that account may charge a monthly fee. Common fees range from $5 to $15 per month. Banks waive these fees if you maintain a minimum balance (often $500 to $2,500), set up direct deposit, or keep a linked savings account open.

Before you open the account, read the full fee schedule and the conditions for waiving fees. If you cannot meet the balance requirement and do not plan to use direct deposit, the account will cost you money every month. A $200 bonus disappears in 10 to 40 months of fees. Many people open accounts for the bonus, meet the requirement, then close the account before fees kick in — this is legal, but some banks track it and may refuse to offer you another bonus for a set period (often 6 to 12 months).

How opening multiple accounts affects your credit and fraud detection

Opening a new bank account triggers a hard inquiry on your credit report. One inquiry has minimal impact — usually a few points. Opening three or four accounts in a month can lower your score by 10 to 20 points, which may affect your ability to borrow or the rate you receive on a loan. The impact fades after a few months, but it is real.

Banks also run fraud checks. If you open multiple accounts in a short time, especially with large direct deposits, the bank may flag your account for review. This can delay your bonus payment by weeks while the bank verifies your identity. Some banks will not pay the bonus until the review is complete. If you are chasing multiple bonuses, space them out by at least a month and use the same identity information across all applications.

When a sign-up bonus makes sense and when it does not

A bonus makes sense if you were already planning to switch banks or open a new account for direct deposit. You are not changing your behavior; you are getting paid for something you were going to do anyway. A $200 bonus on a checking account you will use for years is a genuine gain.

A bonus does not make sense if you are opening an account solely to collect it, then closing the account after a few months. The tax bill, the credit inquiry, and the time spent managing multiple accounts often outweigh a small bonus. If you are comparing two banks and one offers a bonus, that is a tiebreaker — not a reason to switch to a bank with worse terms or higher ongoing fees.

How to track the bonus and protect yourself from missing it

Write down the bonus amount, the requirement, and the deadline the day you open the account. Take a screenshot of the bank's terms page. Set a phone reminder for two weeks before the deadline so you have time to arrange the direct deposit if you have not already.

After you meet the requirement, check your account weekly for the bonus. If it does not arrive within the timeframe the bank stated, contact customer service with your account number and the date you met the requirement. Keep records of your direct deposit confirmation — your employer's payroll system or your pay stub will show the deposit date and amount.

Frequently Asked Questions

Do I have to keep the account open after I get the bonus?

No. Once the bonus is paid, you can close the account. However, some banks track bonus chasers and will not offer you another bonus for 6 to 12 months if you close too quickly. Check the bank's bonus terms for any restrictions on closing accounts.

What if my employer does not do direct deposit?

Many banks accept transfers from another account or allow you to deposit a check via mobile app. Read the bonus terms carefully — they will specify what counts as a deposit. If direct deposit is required and you cannot arrange it, you will not receive the bonus.

Can I get the bonus if I already have an account at that bank?

Usually not. Most bonuses are for new customers only, defined as someone who has not held an account at that bank in the past 12 to 24 months. If you closed an account recently, you may not be may be able to access. The bank's terms will state the may be able to access window.

Will the bonus affect my taxes or my benefits?

The bonus is taxable income and will increase your reported income for the year. If you receive means-tested benefits like SNAP or housing assistance, the bonus may affect your may be able to access or benefit amount. Report it to your benefits administrator if you are unsure.

What if the bank does not pay the bonus after I meet the requirement?

Contact the bank's customer service with your account number and proof that you met the requirement (a pay stub or transfer confirmation). If they do not respond within 30 days, file a complaint with the Consumer Financial Protection Bureau or your state's banking regulator. Keep all documentation.