Chasing Sign-Up Bonuses: Should You Apply for Another Credit Card?
Although I don't plan to use it, I opened a bank account yesterday. Why? Because in 10 business days, Chase Bank will deposit an extra $150 in my "Chase Total Checking®" account.
I do have to keep the account open for six months, sign up for online access, and, to avoid a $12 monthly fee, keep at least $1,500 in the account. These requirements bring up an important question: Is it really worth your time to chase after incentives on financial products?
For the example above, and others like it, my answer is “yes.” Here’s why: it took about an hour to open the account, and I'll spend thirty minutes closing it. I deposited $1,500, and in six months I'll take out $1,625. I would make about $5 in interest leaving the money where it is right now, so I net $120 extra for 90 minutes of work. I think $80 per hour is good pay.
That's my basic formula for calculating whether offers like these are worth pursuing. Tally your net "profit" from an offer, make an educated guess about the time you'll spend on the process, and divide the former by the latter to see what your hourly pay will be. You'll have to determine your own threshold, but I'll take advantage of offers on which I can make at least $20 per hour.
Take Advantage of Credit Card Bonuses
Six weeks ago, I signed up for a Bank of America Cash Rewards credit card. The 2% cash back on groceries and 3% cash back on gasoline are nice features, but it was the $100 bonus that convinced me. It took a few minutes to apply, and the only catch was that I had to spend $500 on the card in the first 90 days, which was easy since we were in the middle of a move. I hit $500 in the first week or so, and I haven't used the card since.
The American Express Blue Cash Everyday offer I signed up for a few weeks back is even better, and again, it isn't the 3% cash back on grocery store purchases that convinced me. If I charge $1,000 on the card in the first 90 days, I get a $250 bonus! I'll hit that target tomorrow afternoon (it’s been a busy month).
When I was opening that Chase checking account, the teller suggested I get a Chase Freedom credit card. I'll get a $200 cash bonus once I spend $500 on the card in the first 90 days.
My total bonus income from these deals in the last six weeks: $670!
Finding the Deals
The offers above may not be available by the time you read this, but new ones pop up all the time. If you have a decent credit score, you can probably just watch your mailbox. From time to time, when something really amazing comes along, you’ll find a post about great credit card offers right on this website.
Of course, one of the easiest ways to find cash bonuses for trying out financial products is to just search online. Googling "best credit card offers" will usually give you some good results. For example, I just found a nice list on CreditCards.com detailing the latest reward credit card deals.
Also consider searching for bank account promotions online. Usually you’ll have to be a new customer, and each bank has its own definition of “new.” You might qualify even if you once had an account with the bank, as long as you closed it at least a year ago. Read that fine print!
Search for the best promotional interest rates as well. For example, EverBank, which has high interest rates to begin with, often has promotional deals. Recently, they offered a checking account that paid a 1.4% annual interest rate for the first six months. If you get .4% or less on your current checking account and you keep about $15,000 in it, you would make $75 more from EverBank in six months. Of course, if you just keep a few hundred dollars in your checking account the extra interest would be only a dollar or two. You have to do the math to see if it's worth the trouble of opening a new account.
If you trade or invest in stocks, look for brokers that offer an account-opening bonus. For example, a previous post here reported on a $100 cash offer from Motif Investing. It's a bit trickier to calculate the value of offers like these, since the services offered by brokers vary quite a bit. You might spend more on commissions for your stock trades with a particular broker, negating the value of whatever bonus he offers. Then again, maybe you'll save money and get that sign-up bonus. It can't hurt to check out the deals. (Like this idea? Click to tweet!)
(Editor's Note: The $100 sign-up bonus is no longer available, but you can still get 3 months of Motif service for free.)
Be sure to read the fine print when you chase after deals like these, and remember the formula:
The cash (or equivalent) you get from accepting an offer, divided by the hours spent on the process, equals your hourly pay.
And finally, keep an eye on The Penny Hoarder for news on the latest offers.
Your Turn: Have you earned any good cash bonuses or incentives on financial products lately?