Last week I opened two checking accounts -- one in person, one with an online bank. It took about half an hour. And the banks paid me $125 to do it.
No, I couldn't believe it either. This is even better than the time I watched porn for money.
Why would banks and credit unions want to give you money? Because they want to get some butts in the seats, or rather some bucks in the vaults. Once they've got you in the building, they hope to have you for life -- and maybe sell you a money market account or some investment planning, too.
But to consumers who know how to work the system, it's profitable to them in the short term.
How to work it
Back in the day, you could get a free toaster if you opened an account. Today you can get cash or gift cards.Smart Spending message board readers report getting anywhere from $35 to $500 (and in one case, a waffle iron) by taking advantage of such programs.
"I've opened several accounts with these cash incentives over the past few years. It's free money!" wrote a reader posting as "LostAtLand."
LostAtLand acknowledges that "it gets to be a pain when you have seven different checking accounts" and admits closing most of them within a year. That's not what the banks want, of course, but that's the risk they take when offering free money (or waffle irons).
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An anonymous post at TipHero.com wins the how-to-game-the-system prize. Its author opened a $25 checking account at TCF Bank to get a $50 grocery gift card. Soon the bank floated a second offer: Write four checks, and $25 more would be added to the account. So the anonymous "frugalist" wrote four $1 checks -- for cash.
Financial institutions "realize they're going to have a certain amount of that," McBride says. "But what they're looking for is someone who's legitimately going to remain a customer."
The banks also want a "primary relationship," according to Patrick McMahon of PNC Bank, which recently offered a $75 bonus. Once the incentive account is opened, bankers hope you'll consolidate all your money in one place -- specifically, their place.
Check the fine print
Certainly, these promotions get people through the door. TCF Bank is offering $50 to new customers; previous promotions were for grocery cards or gas cards. About 162,000 TCF checking accounts, with "no strings attached," were opened in the first quarter of this year, company spokesman Jason Korstange says.The opportunity to "cross-sell" other financial products makes the initial $50-per-customer investment more than worth it, Korstange adds.
Most institutions do have some kind of strings attached, such as setting up direct deposit or making a certain number of debit card purchases. Almost always, the new account is a checking account, which McBride calls "the centerpiece of the banking relationship" because it makes possible services such as direct deposit and online bill pay.
- Video: How to avoid overdraft fees
About that checking account: Is it free checking, or is there a monthly fee? Will you have to pay for the first box of checks? Is there a minimum-balance requirement?
Pay attention to the fine print, or that "free" money could sift away -- and in the case of monthly fees, take some of your money along with it. Get Rich Slowly blogger J.D. Roth recently conceded that over 17 years he had paid about $1,500 in fees for a simple checking account.
"Take advantage of the offer while making sure it isn't costing you money," advises Todd Sandler of ING Direct.
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