Bank account bonus.
In plain English
A bank account bonus is a cash reward for opening a new checking or savings account and meeting requirements, commonly a set number of direct deposits, a minimum balance held for a period, or a certain number of debit transactions. Bonuses can run from 100 to several hundred dollars. The fine print matters: missing a requirement forfeits the bonus, closing the account early can claw it back or trigger a fee, and the bonus is taxable interest the bank reports on a 1099. It is real money for meeting terms you can actually meet.
01Why it matters
A bank bonus is easy money if you meet the terms, but the requirements, early-closure fees, and the tax on it decide whether it is truly worth the switch.
02The math, step by step
A bank offers 300 dollars for opening a checking account and receiving 3,000 dollars in direct deposits within 90 days. Meet that and the 300 dollars is yours, reported as taxable interest on a 1099.
03What this is NOT
A bank account bonus is NOT tax-free. Banks report it as interest income on a 1099, so it is taxable, unlike most credit card rewards, which the IRS treats as a rebate.
04Receipts
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Plain-English answers from our glossary. Receipts included. Never advice.
Educational tool. Answers come only from ClearMoneySchool's published glossary and are not advice. Why we never give advice