🎯 In 30 seconds: A $300 bonus is not $300. Subtract the interest your money would have earned elsewhere while it sat to meet the terms, and the tax on the bonus, which the IRS treats as interest income. What is left is the real gain. Opening many accounts also leaves a trail in ChexSystems that other banks may check. Moving savings for a better rate pays when the gap is large and lasting.
What a bonus asks of you
Banks pay for new customers. The fine print usually includes some mix of these:
- Direct deposits of a set total within a set number of days.
- A minimum balance kept for a set period, such as 90 days.
- A number of debit card purchases.
- Keeping the account open for a minimum time, or the bank may take the bonus back or charge a closing fee.
- Being a new customer, often meaning no account with that bank for a recent period.
Read the offer terms, not the ad. The terms also say when the bonus is paid, which can be weeks or months after you qualify.
Worked example: valuing a $300 bonus
Sofia, 29, sees a $300 bonus for moving $15,000 into a new checking account and keeping it there 90 days. The checking account pays almost nothing. Today her $15,000 earns a made-up 4.00% APY in a high-yield savings account. She is in the 22% federal bracket for 2026 and, to keep it simple, pays no state income tax.
| Step | Math | Amount |
|---|---|---|
| Bonus | $300.00 | |
| Tax on the bonus | $300 × 22% | −$66.00 |
| Savings interest given up for 90 days | $15,000 × 4.00% × 90 ÷ 365 | −$147.95 |
| Tax she no longer owes on that interest | $147.95 × 22% | +$32.55 |
| Real gain | about $118.60 |
For some people that is still worth doing. But it is about $119, not $300, and it costs a 90-day lockup and some paperwork. Measured another way, the bonus equals about 8.1% a year on $15,000 for those 90 days before tax. The bigger the balance a bonus demands, the faster that number shrinks.
A bonus that needs only direct deposits costs far less in lost interest. Pointing part of a paycheck at the new account for two months moves money you still spend as usual.
Taxes: what form to expect
IRS Publication 550 says gifts for opening an account can be reported to you as interest income on Form 1099-INT. Cash bonuses are commonly reported that way, alongside regular interest; some banks use Form 1099-MISC instead. Either way the bonus is taxable in the year it is paid, and it is reportable even if no form arrives.
Mind the calendar. A bonus paid in late December lands on this year’s return; one paid in January lands on next year’s.
ChexSystems and credit checks
When you apply for a deposit account, many banks look at a specialty report from ChexSystems (some use Early Warning Services as well). The CFPB says a ChexSystems report can include checking account applications, openings and closures, and the reasons accounts were closed.
ChexSystems is separate from the three big credit bureaus whose reports feed most credit scores. But a bank reviewing your file may still decline someone who has opened many accounts in a short time. A few banks also pull your regular credit report for a new checking account, especially one with an overdraft line. Ask before you apply.
- You can get one free ChexSystems report every 12 months, plus a free score on request.
- Dispute errors with ChexSystems and with the bank that reported them. Both must investigate for free.
- If you froze your ChexSystems file, lift the freeze before applying. Freezes are covered in Money Theft & Forensics.
Rate chasing: when moving savings pays
Online savings rates move all the time, and last year’s leader may lag now. Is it worth moving? Take $12,000 earning 4.00% and a new account paying 4.35%. The 0.35 point gap is worth $42 a year before tax, about $33 after 22% federal tax. That justifies an hour once. Chasing a 0.05 point edge every month does not: on $12,000 it is $6 a year.
| Balance | Gap of 0.25 point | 0.50 point | 1.00 point |
|---|---|---|---|
| $5,000 | $12.50 | $25 | $50 |
| $20,000 | $50 | $100 | $200 |
| $50,000 | $125 | $250 | $500 |
Those are yearly amounts before tax. A rule many savers follow: move when the gap is big and looks lasting, not for a three-month teaser. How teaser rates trick the eye is on Interest rate vs APY vs APR.
- Save a copy of the full offer terms.
- Put every date in your calendar: deposit window, holding period, earliest safe closing date.
- Find the monthly fee and how to avoid it while you hold the account.
- Confirm the bank on FDIC BankFind.
- Work out the real gain with the method above.
- Keep your total at that bank inside the insurance limits, counting accounts you already have there.
- Is a bank sign-up bonus taxable? Answer: Yes. It is generally reported as interest income, usually on Form 1099-INT.
- About how much real gain did Sofia’s $300 bonus produce? Answer: About $119.
- Where do banks look to see your past account applications and closures? Answer: A specialty report such as ChexSystems.
- On $20,000, what is a 0.50 point rate gap worth per year before tax? Answer: $100.