Wednesday, May 12, 2010

How to Get Paid to Bank

Melissa & Doug Play Money SetYou've got a job and you've got your bills. And therein lies the problem. The amount leftover after the bills isn't enough to satisfy you wants. Savvy personal finance says you have two options. Increase your earnings or spend less than you earn. I am always on the lookout for different ways to increase my earnings. The first place to increase your earnings significantly comes from your current income source -  your job. Brush up that resume, or ask for a raise. In the meantime, there are other methods that are great for boosting income. Sell you stuff! Then go online and open a few bank accounts. 

Yes, believe it or not, banks are increasingly using the tactic of offering up cash incentives and rewards to lure in new customers. Make sure you do your homework first if you are currently looking to open a new checking or savings or brokerage account. There are lots of lucrative first time customer rewards. In fact, to help you get started I have started to list the current bank deals that I am aware of on my Free Money Bank Deals page.

"BIG MONEY" $100. DOLLAR BILL AREA RUGGetRichSlowly recently asked the readers, "Ask the Readers: How Do You Choose a Savings Account?" For me, it was moving to a new area that opened up my eyes to different service providers and a few hundred dollars. Bank of America offered me $100 to open a new checking account online with no fees. SunTrust offered me $150 to bank with them and use their billpay service. And BB&T is still offering $100 to new customers who open a banking account. ING Direct is also offering a free $50 for new customers. There are plenty more including brokerages like TradeKing's free $50.

How do you find the banking bonus deals?
I find out about these primarily by visiting the actual bank either online or through their physical brick and mortar branches. From there it is advertisements, SlickDeals, FatWallet, and personal finance blogs like MyMoneyBlog. There appears to be an exhaustive list on iBankBonus.

Is it worth it?
One Cent, Two Cents, Old Cent, New Cent: All About Money (Cat in the Hat's Learning Library)In the last year, I was given nearly $1,000 to open up a new account and do business with various banks and brokerages. All that income is reported to the IRS via a 1099-INT and subject to taxes. But aside from the monetary gain, the greatest benefit came from the ability to pick the bank that worked best for me. It was like they were offering me cash to come take a test drive of their services and see how they stacked up against the competition. How well was their billpay setup? How easily could I transfer in funds? 

Does it affect your credit score? 
Sometimes. Not every bank will do a hard pull of your credit score. If your checking account comes with an overdraft line of credit then they will likely do a hard pull. Each inquiry to your credit will ding your score. This will not be helpful if you plan on going in and getting a new loan for a car or house in the near term. You can read more about what affects your credit score.

Are you at increased risk of identity theft?
It is generally believed that the more you expose yourself the more chance you have of becoming a victim of identity theft. This might be true. Banks and other financial institutions are charged with safekeeping your information private but thieves do exist. That is one reason you should check your credit report at least once a year even if you haven't been opening new accounts for a few extra Benjamin Franklin's in your wallet.

What is the catch?
$100 Bill Wallet Always look inLoadedin [Office Product]There is definitely a catch. They aren't likely to just hand over a free $100 for nothing. They want your business and your money. To qualify for your bank bonus you will likely have to complete a few small tasks. Banks usually require one of three things or a combination of them and include using their billpay service, establishing direct deposit, and/or using a debit card a set number of times per month. There may also be various time limits associated with each of these. SunTrust asked for 3 bill pays each month for 3 months. Brokerages similarly ask for a minimum deposit and sometimes executing a trade.

Do the rewards always come through?
Yes, as long as you meet all of the requirements. If you are going to sign up for a promotion be sure to print off or save the promotion page with all of the fine print. Then create a little to do list and keep to it.

What are the best deals?/What are the easiest way to make free money?
The best deals are those that just have a minimum deposit for a required time frame. For example, open an account and leave the money there for six months to a year. These offers can be thought of as lucrative one year CD's because you have to wait to get your principal back. Some banks will count direct deposits that come in the form of an ACH push from another bank.

Can I do more than one at time?
You are not limited to the number of offers you want to apply for. You will likely be limited in the number of direct deposits that you can do in a month. If you employer allows your paycheck to be split up and direct deposited into several accounts it will be easier to do two offers with direct deposit requirements. If you want to fulfill billpay requirements on more than offer - just split up payment and pay it multiple times or from multiple sources.

Any other tips?
Emerson Digital Coin BankMake sure you are aware of your limits. Some credit cards only allow a set number of payments during each billing cycle. Don't allow yourself to get so caught up in making an extra $100 that you miss a payment because you didn't understand the new banking system and get charged late fees. Don't make signature based purchases on your debit card on the last day of the month and expect them to show up as transactions for that month - they often take a day or two to clear and finally post to your account. 

Remember, while you might be upset the banks were all bailed out and are evil - they are only offering the money as a marketing ploy to gain you as another customer.

Have you switched banks recently? Tell us about your experience with new account offers.

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