Just like credit cards offer large signup bonuses for new credit cards, many banks offer similar bonuses for opening new accounts such as checking or savings accounts.  While the bonuses may seem similar, there are several key differences that you have to keep in mind that I’ll go into below.  Doctor of Credit is my go-to resource for bank bonuses, and this latest one that I signed up for is no exception.  The Santander extra20 checking account is unique in that there isn’t a bonus for signing up, but rather a small bonus every single month that you meet the requirements.  Below I’ll go into more detail on bank bonuses in general, the details on the Santander extra20 account, and my own experience signing up for the account.

What You Need To Know About Bank Bonuses

By this point you probably have a pretty good handle on credit card bonuses, but if not, check out my Introduction to Churning and Getting Started With Churning series to learn more.  While both credit card signup bonuses and bank bonuses reward you with points, miles, or cash for opening a new account, there are several key differences between the two that you should keep in mind before jumping in.

1. You Must Pay Taxes on Bank Bonuses – While credit card signup bonuses and the points earned from regular spending are classified as “rebates” (no taxes required), bank bonuses are counted as income and you must pay taxes on them.  Depending on what tax bracket you fall into, your real bonus will be not quite as high as advertised once you pay taxes on it.  An exception to this is if the bank offers points or miles instead of cash as a part of the signup bonus.
2. Watch Out For Fees! – Many bank accounts have many different fees that you’ll have to pay if you don’t meet certain requirements.  These requirements may involve keeping a minimum balance at all times, a monthly direct deposit, or something else.  Be sure to read the details about any bank offer before signing up because any fees that you cannot avoid will take away from the benefit of the bonus.
3. Check How Long You Must Keep The Account Open – Most bank bonuses require you to keep the new account open for a set period of time or they will revoke the bonus that you earned.  This varies from no wait at all to up to a year that you must keep the account open.  Be sure to calculate how much you will pay in fees during this time frame if you’re unable to avoid them all.
4. Check If Opening the Account Will Be a Hard Pull On Your Credit – When applying for almost any credit card, the credit issuer will pull your credit from one or more credit bureaus.  For opening bank accounts, most banks do NOT pull your credit, but you should be able to find out ahead of time.  It’s important to keep track of your hard pulls if you are applying for a lot of credit cards because some issuers do not like seeing a bunch of recent pulls on your credit.
5. You May Be Able To Initially Fund The Account With A Credit Card – Many banks allow you to do the initial funding with a credit card when you open the account.  Be sure to reduce your cash advance limit to the minimum possible first to avoid fees, but you will be able to earn points on the “purchase” to transfer money into the bank account.
6. Many Bonuses Are Region Specific – While Chase banks are located just about anywhere and have a good signup bonus, many local banks also offer signup bonuses if you live in their state.  Be sure to check for bank bonuses both locally and nationally to find the best offers.

While you do have to pay taxes on bank bonuses, the fact that you won’t be penalized with a hard pull on your credit most of the time means that signing up for bank bonuses can fit nicely with churning if you choose to do both.  To find what bank bonuses are available in your area, I highly recommend Doctor of Credit’s Current New Bank Account Promotions page that is updated frequently.  Doctor of Credit also has detailed information on each bonus such as the credit card funding rules and how to avoid the fees.

Details About The Santander extra20 Checking Account Bonus

The Santander extra20 banking promotion isn’t a signup bonus, but is rather an ongoing $20 bonus per month for every month you meet the two requirements.  The two requirements are making a direct deposit of $1,500 and paying at least 2 bills via online bill pay, each of which pays $10.  If you are able to complete both requirements, you will receive $20 at the beginning of the following month.  This $20 will be deposited into your extra20 Savings account that is automatically opened when you open an extra20 Checking account.

Opening the account can be done online and does not require a hard credit pull.  The account can be initially funded with a credit card for up to $500.  This account does have a $10 monthly fee if you do not direct deposit at least $1,500 into the account, but fortunately this lines up perfectly with the bonus requirement and you shouldn’t have any problem avoiding it.  There is also a $25 early termination fee if you close the account within 90 days, but because this bonus is ongoing, there isn’t really any benefit to closing the account.

According to Doctor of Credit, the direct deposit requirement can be fulfilled by just about any transfer into the account (such as an ACH transfer).

Here is a direct link to the Santander extra20 offer: https://www.santanderbank.com/us/pages/personal/extra20

My Personal Experience Signing Up For A Santander extra20 Checking Account

I signed up for this account a month ago because I couldn’t think of a good reason not to get a free $20 every month!  I filled out all of my information online to open the account and funded the checking account with my Chase Sapphire Preferred for the maximum $500.  This was actually a pretty big risk because I was too lazy to lower my cash advance limit beforehand, but luckily it went through as a regular purchase and I earned 500 UR points (I have since lowered the cash advance limit on my CSP to $20).

After the application was complete, I was accepted as a new bank member and uploaded a picture of my drivers license along with proof of address to speed up the account verification and initialization process.  A bunch of paperwork was then mailed to me (I think I got 6 different items over the course of a week), one of which I had to sign and mail back to complete the account creation process.  The other mail included important account information and a temporary login/password combination to allow me to set up the online account.

Once the online account access was set up, I immediately went into Bill Pay and set up two monthly recurring payments of $10 each.  I chose our electric and gas bills because they are linked digitally to Santander’s system and each company will simply apply the payments towards my next bill. These payments will fulfill half of the requirements to get the full $20 each month, and since I don’t see us getting rid of electricity or gas, this part of the process becomes completely effort free.

The second requirement of $1,500 in direct deposits each month is also a simple one because the company I work for makes it very easy to switch where my money is deposited each month online.  I simply logged on, moved $1,500 of my monthly paychecks to the new account and now I’m set up to fulfill both requirements each month.

The only question left is getting the money back out of the account, but this can be handled a couple different ways.  I could use the debit card provided with the account, but then I’d be missing out on a ton of credit card points!  There’s no way that’s going to happen, so I will be taking advantage of simply transferring the money out to my primary bank account that I pay all the credit cards with.  I could pay the credit cards directly with this account, but I prefer to keep some sense of order in my crazy web of accounts and paying all the cards out of a single checking account helps with that.

The real beauty of this bank bonus is the relative effort-free $20 that comes every month once you get the system up and running.  It takes a little bit of effort initially, but once I schedule a monthly withdraw of the money to my primary account, I won’t even have to log into the account and it truly becomes free money.  After setting up the bill pays and direct deposit, the first $20 bonus was successfully added to my account at the end of the month.  Assuming everything goes well, I might help Becky sign up for one of these accounts soon and we’ll be up to $40 per month of free money as a couple.  An extra $40 per month might not sound too exciting, but an extra $480 per year will definitely help towards our goal of financial independence by 40.