Tuesday, January 25, 2011

Low Interest? Make Up For It With (Almost) Free Money

Ever since Chase took over Washington Mutual a couple of years back, they've been expanding like crazy out here in California. Not only did they keep those original WaMu locations afloat, they opened up at least 3 locations within a 15 mile radius from me over the past few months.

Not that I'm complaining, though. I do the majority of my banking with Bank of America, which makes me an attractive target for Chase to want to steal my business away from BofA. Every once in a while, I'd get something in the mail saying they'll give me $100 or so for opening a checking account with funds from outside of Chase. There are restrictions, of course.
There's always a minimum deposit, and on top of that, in some cases, you'll need to set up direct deposit or use your Chase debit card at least 5 times during each billing cycle. In general, you'll have to keep your account open for 6 months or else you'll be penalized for closing early.

I was pretty hesitant at first because I was afraid of it becoming a huge hassle. My company, a start up, does not offer direct deposit, so I'd have to do 5 non-PIN transactions with the Chase debit card. Additionally, it'd be one more account to keep track of. But because they were so persistent and the interest rate for my savings account seemed to be going nowhere, I finally decided to take that "free" money offer a few months ago.

It turned out to be much easier than I imagined. There weren't a lot of hoops to jump through. I showed up with the flyer in my hand and asked a Chase personal banker to assist me. She explained to me the terms of the offer and did a brief survey of my banking habits to "help me determine which account will be best suited for me" (I believe Chase does this with every new customer as market research). I then decided on the most basic checking account with a minimum opening balance of $100, since I wouldn't be using this as a primary account. I wrote a check to fund it, set up online banking, and in less than 45 minutes, I was out of there.

Two months after I opened that account, I received another letter in the mail asking me to open a money market savings account with Chase. It says that if I fund it with an opening balance of $5,000, they'll give me another $100. This time, I didn't need to have direct deposit or swipe a card a certain number times, but I still needed to keep the account open for 6 months. The decision was much easier.  I could just open the account and let it sit there for the duration. The interest rate offered was extremely low, but by earning that $100, it would be like earning multiple times of the amount of interest I was earning with BofA savings.

So should you open an account when you receive these offers?

There are a few things you should consider before doing so. Will you be able to keep track of multiple accounts? How will moving that money affect your other accounts? Will you need the money in a short period of time? Make sure you read the fine print on the flyer carefully and that you meet the requirements before you go in. Even after that, have the personal banking associate go over it with you. You don't want to be penalized for withdrawing early or be charged fees for having less than the minimum deposit. That'll defeat the purpose.

If you're willing to do your due diligence, offers like these are very advantageous to those who save up. Once you have a certain amount of cash flow, you can make  to maximize your earnings, however low the interest is.


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