3 Ways To Use Bank Rewards Programs To Boost Your Savings

Catherine Collins

Sun, Aug 18, 2024, 7:00 PM 4 min read

Credit card rewards might come to mind when you think of getting a bank bonus. However, getting a cash reward for opening a new checking account is more common than ever. Like credit card rewards, you’ll likely have to complete certain steps, like depositing a specific amount, to receive a bonus.

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For many, these steps are worth it to earn extra cash. The Wall Street Journal reported, “The average cash bonus offer for checking accounts rose to $400” in 2024. That means customers can strategically use bank rewards to boost their savings and meet other financial goals.

It also means banks are spending significantly to acquire and keep new customers. Mike Santomassimo, Wells Fargo CFO, told the Wall Street Journal that the bank has “successfully used promotion…to retain and acquire new balances in consumer and small business banking.” Given the range of bank bonuses currently available, many other banks are doing the same.

If you do earn bank rewards, here are some ways you can use them.

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Ways To Use Bank Rewards To Boost Savings

Customers can use bank rewards to boost their savings. Much like credit cards, consumers can even open more than one bank account to earn multiple bonuses and rewards.

Creating an Emergency Fund

If you don’t have an emergency fund but know you need one, getting a bank bonus can help you jump-start your savings. Depending on the terms, some bank bonuses offer up to $400 or more, which is a great starter emergency fund.

You can even leave your initial deposit plus the bonus in that bank account to keep it separate from your other spending. This is one way to protect and build your emergency fund for when you might need it in the future.

Planning Travel

If you want to take a trip in the future but don’t have a lot of excess cash, bank bonuses can help to supplement your vacation fund. To use bank bonuses for travel, sit down and decide how much you want to budget for a trip in the future.

For example, research banks offer bonuses if you want to take a $1,000 weekend trip. Decide whether or not you need to open one account or more than one account to reach your goal. Sometimes, using a bank bonus to help pay for a plane flight or a night in a hotel can make a trip possible.

Holiday Spending

According to findings from LendingTree, 34% of Americans went into debt during the 2023 holiday season by an average of $1,028. If you want to prepare better for holiday spending, checking account bonuses can help you reach those savings goals.

The holidays are one of the most expensive times of the year, especially for families with young children. Going overboard with gifts, travel, and holiday experiences can be easy. For many families who can meet bank requirements to earn a spending bonus, the extra cash can help avoid going into the new year with debt.

Frequently Asked Questions

Are Bank Bonuses Taxable Income?

Yes, most banks will send you a 1099-T form so you can report your bonus on your taxes. For that reason, it’s a good idea to set aside a percentage of your bonus to account for potential tax obligations in the future.

How Long Does it Take to Receive a Bank Bonus?

Bank bonuses and the terms to get one will vary by bank. Read the fine print of the bank terms to understand the requirements to get the bonus, how long it takes to receive a bonus, and whether or not you’re required to keep the account open for a set period of time.

What Happens if I Don’t Receive a Bank Bonus?

If you think you should have received a bank bonus but didn’t, contact your bank right away. Your bank can research the issue to see why you didn’t receive it. Again, before opening a bank account, make sure you understand the specific requirements for receiving the bonus.

Can I Earn More Than One Bank Bonus at a Time?

Yes, you can earn more than one bank bonus at a time if you apply at different banks. However, it’s important to be strategic. Some banks will check ChexSystems, which is like your credit history but for bank accounts.

ChexSystems can alert banks as to whether or not you’ve left accounts in good standing. Additionally, it can also show banks how many accounts you’ve opened recently. Some banks might prefer customers who haven’t opened several accounts recently, but it varies by institution.

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