Question of Chasing After Bank or Brokerage Bonuses

[Carno]

Let's say you have enough assets invested in markets where the value of your assets could fluctuate in a several thousand dollars range (both on the positive and negative and positive side) on a trading day. My question is if it is worth it to chase after bank or brokerage bonuses that offer up to $1,000 every once in a while?

[RubyTuesday]

Let's say you have enough assets invested in markets where the value of your assets could fluctuate in a several thousand dollars range (both on the positive and negative and positive) on a trading day. My question is if it is worth it to chase after bank or brokerage bonuses that offer up to $1,000 every once in a while?

The fact that my portfolio value changes by 10s of thousands of value daily does not preclude me from valuing a $1000 bonus. They are independent. The question I ask is whether the effort and risk of something getting screwed up are worth the bonus.

So I haven’t chased many bonuses but did negotiate a good transfer bonus to Schwab.

[pizzy]

Let's say you have enough assets invested in markets where the value of your assets could fluctuate in a several thousand dollars range (both on the positive and negative and positive) on a trading day. My question is if it is worth it to chase after bank or brokerage bonuses that offer up to $1,000 every once in a while?

You should be doing in-kind transfers negating any effect of market fluctuation.

[stoptothink]

We have a portfolio in the 7-figures yet I still credit card churn and just did the Fidelity brokerage bonus ($150 each for wife and I). I also spend a few minutes daily doing surveys online (I earned $560 in '22 doing them) and a lot of other stuff for small amounts of money that most others would probably think is too much hassle for pennies. Only you can decided if it is "worth it" to you.

[UpperNwGuy]

Chasing bonuses is not worth it to me. I place a high value on the continuity of my banking and brokerage relationships. Changes always introduce extra work for me, and they often create problems to be solved. I'll live without those bonuses.

Credit card bonuses, on the other hand, are sometimes worth it to me.

[invest4]

I regularly pursue bank bonuses if they are of sufficient amount and not overly cumbersome for me (I don't like to deal with direct deposit requirements for example). I use cash savings for this purpose and often repeat the same bonuses again when I am eligible.

I will also take up brokerage bonuses, but these are fewer and farther in between.


If it's worth it to you, go ahead. What someone else decides for themselves doesn't matter.

[TomatoTomahto]

For reasons having to do with employment (ie, neither dissatisfaction with Vanguard nor chasing bonuses), we recently moved from Vanguard to Schwab. All told, we got $8500 in bonuses as long as we don’t remove the funds for a year (we are actually adding to them), had no “time out of the market,” had no negative repercussions of not having fully converted MFs to ETFs, and Bob’s Your Uncle.

[neilpilot]

My favorite bonus occurred in mid-2020, after Schwab's acquisition of TDA was announced.

I opened an account at Schwab for a $2k bonus offer, and planed to transfer funds from one of our TDA account. When my TDA rep saw the transfer order come thru, he offered to match the Schwab offer with a retention bonus. So I collected a $2k bonus without actually transferring any securities.

What's particularly amusing is that, 2 years later, all of my TDA accounts are about to transfer to Schwab anyway.

[Carno]

Let's say you have 250 trading days a year and you gain or lose several thousand dollars a day. Then you have a few bonuses a year (maybe 2 to 3) each in the $500-$1,000 range. That is like $3,000 a year; something like 3 days of gain off your assets.

[neilpilot]

Let's say you have 200 trading days a year and you gain or lose several thousand dollars a day. Then you have a few bonuses a year (maybe 2 to 3) each in the $500-$1,000 range. That is like $3,000 a year; something like 3 days of gain off your assets.

It can be rationalized anyway you like, but a broker's bonus money is more properly viewed as interest as opposed to a capital gain. That's also the way it's taxed.

[Carno]

Let's say you have 200 trading days a year and you gain or lose several thousand dollars a day. Then you have a few bonuses a year (maybe 2 to 3) each in the $500-$1,000 range. That is like $3,000 a year; something like 3 days of gain off your assets.

It can be rationalized anyway you like, but the bonus money is more properly viewed as interest as opposed to a capital gain. That's also the way it's taxed.

Generally, the IRS categorizes redemption of credit card rewards and frequent flyer miles as non-taxable. Instead of being seen as income and “they are treated as rebates or discounts on what you purchased.”

[Carno]

Let's say you have 200 trading days a year and you gain or lose several thousand dollars a day. Then you have a few bonuses a year (maybe 2 to 3) each in the $500-$1,000 range. That is like $3,000 a year; something like 3 days of gain off your assets.

There are exactly 250 trading days in 2023. February and April have the fewest (19), and March and August the most (23), with an average of 21 per month, or 63 per quarter. Out of a possible 365 days, 105 days are weekend days (Saturday and Sunday) when the stock exchanges are closed.

[neilpilot]

Let's say you have 200 trading days a year and you gain or lose several thousand dollars a day. Then you have a few bonuses a year (maybe 2 to 3) each in the $500-$1,000 range. That is like $3,000 a year; something like 3 days of gain off your assets.

It can be rationalized anyway you like, but the bonus money is more properly viewed as interest as opposed to a capital gain. That's also the way it's taxed.

Generally, the IRS categorizes redemption of credit card rewards and frequent flyer miles as non-taxable. Instead of being seen as income and “they are treated as rebates or discounts on what you purchased.”

Yes - I was actually referring to a brokerage bonus.

[scophreak]

Would you pick up a $20 bill off the ground? After all, it's nothing more than a drop in the bucket compared to daily 4-5 figure movements in your investment portfolio...

Others that have already commented that these are wholly separate ideas are spot on. Market fluctuations with existing investments are completely independent from new income opportunities.

[Katietsu]

Let's say you have 250 trading days a year and you gain or lose several thousand dollars a day. Then you have a few bonuses a year (maybe 2 to 3) each in the $500-$1,000 range. That is like $3,000 a year; something like 3 days of gain off your assets.

I do not compare a brokerage bonus to the amount of gain or loss in an investment account.

It is a question of whether or not the bonus is worth the time and hassle. Is working an extra shift worth it? Do you want to DIY the broken faucet or pay a plumber? Do you want to pay more to stop at the convenience store or deal with going to Target? We make these decisions everyday.

Many bonuses are not worth it to me if I am not otherwise looking to open a new account. But sometimes the conditions are easy enough, the bonus is great enough, or I have a slow time in my other responsibilities that I do one.

[atdharris]

I long gave up on chasing bank bonuses. It's too complicated for what you net after taxes. Most have DD requirements which requires me to switch through my firm's HR department or they require you told hold $X in a savings account earning 0% for 3 months, when you could probably earn more money holding it in a HYSA at 3.3%

[Carno]

Let's say you have 250 trading days a year and you gain or lose several thousand dollars a day. Then you have a few bonuses a year (maybe 2 to 3) each in the $500-$1,000 range. That is like $3,000 a year; something like 3 days of gain off your assets.

I do not compare a brokerage bonus to the amount of gain or loss in an investment account.

It is a question of whether or not the bonus is worth the time and hassle. Is working an extra shift worth it? Do you want to DIY the broken faucet or pay a plumber? Do you want to pay more to stop at the convenience store or deal with going to Target? We make these decisions everyday.

Many bonuses are not worth it to me if I am not otherwise looking to open a new account. But sometimes the conditions are easy enough, the bonus is great enough, or I have a slow time in my other responsibilities that I do one.

I just read in another forum that someone churned bonuses once too many at Merrill Edge (Bank of America) and was locked out of his account and was told that he had 30 days to transfer the assets out and the decision was final. 15+ year relationship with BofA and was a Preferred Rewards Platinum Honors and a once Diamond client.

[Escapevelocity]

Let's say you have 250 trading days a year and you gain or lose several thousand dollars a day. Then you have a few bonuses a year (maybe 2 to 3) each in the $500-$1,000 range. That is like $3,000 a year; something like 3 days of gain off your assets.

I do not compare a brokerage bonus to the amount of gain or loss in an investment account.

It is a question of whether or not the bonus is worth the time and hassle. Is working an extra shift worth it? Do you want to DIY the broken faucet or pay a plumber? Do you want to pay more to stop at the convenience store or deal with going to Target? We make these decisions everyday.

Many bonuses are not worth it to me if I am not otherwise looking to open a new account. But sometimes the conditions are easy enough, the bonus is great enough, or I have a slow time in my other responsibilities that I do one.

I just read in another forum that someone churned bonuses once too many at Merrill Edge (Bank of America) and was locked out of his account and was told that he had 30 days to transfer the assets out and the decision was final. 15+ year relationship with BofA and was a Preferred Rewards Platinum Honors and a once Diamond client.

All things in moderation. That person likely was on the overly agressive edge of the bonus chasing game.

[Carno]

Let's say you have 250 trading days a year and you gain or lose several thousand dollars a day. Then you have a few bonuses a year (maybe 2 to 3) each in the $500-$1,000 range. That is like $3,000 a year; something like 3 days of gain off your assets.

I do not compare a brokerage bonus to the amount of gain or loss in an investment account.

It is a question of whether or not the bonus is worth the time and hassle. Is working an extra shift worth it? Do you want to DIY the broken faucet or pay a plumber? Do you want to pay more to stop at the convenience store or deal with going to Target? We make these decisions everyday.

Many bonuses are not worth it to me if I am not otherwise looking to open a new account. But sometimes the conditions are easy enough, the bonus is great enough, or I have a slow time in my other responsibilities that I do one.

I just read in another forum that someone churned bonuses once too many at Merrill Edge (Bank of America) and was locked out of his account and was told that he had 30 days to transfer the assets out and the decision was final. 15+ year relationship with BofA and was a Preferred Rewards Platinum Honors and a once Diamond client.

All things in moderation. That person likely was on the overly agressive edge of the bonus chasing game.

Forgot to mention he also followed all the offer terms as far as the eligibility, qualification, etc. were concerned, but still banks have their own unwritten rules.

[eric321]

There are benefits of having multiple brokerage accounts.

Each brokerage firm provides some free resources or research.

Also, from an estate planning perspective, having funds in a transfer on death account is good to get your extended family some cash to take care of things while your primary assets are in probate.

[Katietsu]

I just read in another forum that someone churned bonuses once too many at Merrill Edge (Bank of America) and was locked out of his account and was told that he had 30 days to transfer the assets out and the decision was final. 15+ year relationship with BofA and was a Preferred Rewards Platinum Honors and a once Diamond client.

All things in moderation. That person likely was on the overly agressive edge of the bonus chasing game.

Forgot to mention he also followed all the offer terms as far as the eligibility, qualification, etc. were concerned, but still banks have their own unwritten rules.
[/quote]

There is a big difference between occasionally and judiciously taking advantage of the best bonuses and aggressively churning bonuses almost as a part time job. Banks and brokerages are not in the business of losing money. If you utilize a warehouse club’s policy of accepting all returns too often, even they will cancel your membership.

To get back to your question-Is it worth to chase after bank and brokerage bonus? I do not feel like I am “chasing” bonuses. I might go 2 or 3 years without getting a bonus. I have collected over $10,000 in bonuses which has rewarded me with a great hourly rate for my time even when there was a mild mishap. Right now I am dealing with the loss of basis information. It might take me an hour to fix if the brokerage does not eat it taken care of on there on. But the bonus was great so an hour of my time is still small relative to the bonus size.

But, there are many people who choose not to do this. If you do not see a bonus that is worth it to you, then why worry about bonuses at all?

[TravelGeek]

Forgot to mention he also followed all the offer terms as far as the eligibility, qualification, etc. were concerned, but still banks have their own unwritten rules.

Just like you have the ability to choose which bank you want to do business with, banks presumably can also choose to not do business with you (as long as they don't discriminate) even if you play by the documented rules for a given offer.

Generally, the IRS categorizes redemption of credit card rewards and frequent flyer miles as non-taxable. Instead of being seen as income and “they are treated as rebates or discounts on what you purchased.”

Aren't we talking about bank (account) and brokerage bonuses? Credit card signup bonuses are a different beast.

[nalor511]

Bank bonuses, since you have to leave a large amount in cash earning near 0%, are not worth it, IMO. Brokerage bonuses, on the other hand, since your assets transfer in-kind and continue to earn whatever they would already earn, have no downside except for the minor hassles of signing up and staying organized regarding holding periods. I don't like leaving money on the table, so yes, I will take the free (in exchange for minor organizational hassle) $10k-20k/year in brokerage bonuses for as long as possible

The poster above saying someone was locked out of a brokerage for churning bonuses is easily avoidable -- don't churn bonuses at whatever brokerage is your favorite. Churn wildly through brokerages like Chase, Citi, Merril, Tastyworks, etc , and if they lock you out, so what. Then once you can't churn anymore, do a final transfer to your favorite brokerage (Schwab, Fidelity)

[123]

Chasing bonuses is not worth it to me...Changes always introduce extra work for me, and they often create problems to be solved. I'll live without those bonuses...

+1 I place a high value on consistency and continuity in our financial records. Another major reason why I don't chase bonuses is that my spouse is reluctant to get involved with finances and opening new accounts is stressful for them. We have likely a dozen investment accounts (Traditional IRAs, Roth IRAs, Inherited IRAs, 401ks, taxable brokerages, RSUs, etc) and while they represent a lot of "chasing bonus" opportunities shuffling the deck would only confuse and irritate my spouse.

[Carno]

Right now I am dealing with the loss of basis information. It might take me an hour to fix if the brokerage does not eat it taken care of on there on. But the bonus was great so an hour of my time is still small relative to the bonus size.
But, there are many people who choose not to do this. If you do not see a bonus that is worth it to you, then why worry about bonuses at all?

You reminded me of another pitfall: loss of cost basis information. I noticed my in-kind asset transfers in the past led to loss of cost basis information in some cases.

[nalor511]

Right now I am dealing with the loss of basis information. It might take me an hour to fix if the brokerage does not eat it taken care of on there on. But the bonus was great so an hour of my time is still small relative to the bonus size.
But, there are many people who choose not to do this. If you do not see a bonus that is worth it to you, then why worry about bonuses at all?

You reminded me of another pitfall: loss of cost basis information. I noticed my in-kind asset transfers in the past led to loss of cost basis information in some cases.

Any loss of cost basis info is correctable by keeping screenshots before and after transfer.

[Mike Scott]

Do or not as you value time and money. It does not matter what others do.

[calmaniac]

Let's say you have 250 trading days a year and you gain or lose several thousand dollars a day. Then you have a few bonuses a year (maybe 2 to 3) each in the $500-$1,000 range. That is like $3,000 a year; something like 3 days of gain off your assets.

For me, not worth the time and energy of having to track assets and changes and deal with the inevitable mistakes/miscommunications that arise. With mid seven figures I'm sure I could make a few bucks doing this. Personally, I have better things to do with my time. YMMV.

[JazzTime]

This is really a personal decision based on how you value your time and how much inconvenience you can tolerate. Up until the recent Chase $900 bonus offer, I never bother with these bonuses. (And having chased that one just yesterday, I'm already questioning if it's worth the effort.) If it takes five hours of your time, what's that worth to you? More importantly, how many hoops must you jump through? The big issue is the requirement to have a direct deposit. That's a pain in the butt to change what is now a smooth and consistent regular deposit over to another bank, then reverse course later on when you switch back.
That said, everyone has their own pain tolerance.

[RudyS]

Many years ago when there were S&L's nearly on every corner, and the new account bonus was a toaster or something similar, my MIL had so many accounts that one went into escheat after she passed.

[02nz]

Let's say you have enough assets invested in markets where the value of your assets could fluctuate in a several thousand dollars range (both on the positive and negative and positive side) on a trading day. My question is if it is worth it to chase after bank or brokerage bonuses that offer up to $1,000 every once in a while?

Brokerage transfers are incredibly easy - in many cases easier than setting up an ACH link! Why would you not do it for $1K? Heck, I just got $2500 for moving $250K to Public.

[Nyc10036]

Brokerage transfers are incredibly easy - in many cases easier than setting up an ACH link! Why would you not do it for $1K? Heck, I just got $2500 for moving $250K to Public.

I guess the concern for me is that "something goes wrong somehow".
Some scenario of being locked out of my account or the assets didn't move over properly.
I would get an ulcer.

[whodidntante]

Let's say you are walking along on a nice, sunny day. You see $1,000 lying on the ground, but it's on the other side of the street. You'll have to go down to the crosswalk and everything. There's only so much time before it won't be there anymore. Do you cross the street to pick it up?

Most of the bonuses I do are not much more complicated than that.

For extra fun, imagine you have a bird on your shoulder. Bonus pirate.

[student]

Brokerage transfers are incredibly easy - in many cases easier than setting up an ACH link! Why would you not do it for $1K? Heck, I just got $2500 for moving $250K to Public.

I guess the concern for me is that "something goes wrong somehow".
Some scenario of being locked out of my account or the assets didn't move over properly.
I would get an ulcer.

I have the same fear so I kind of stop doing it. I only do it to consolidate.

[JBTX]

Let's say you have enough assets invested in markets where the value of your assets could fluctuate in a several thousand dollars range (both on the positive and negative and positive side) on a trading day. My question is if it is worth it to chase after bank or brokerage bonuses that offer up to $1,000 every once in a while?

You are comparing apples and oranges. The daily portfolio fluctuations are irrelevant if you are a long term investor. You are pursuing long term returns.

A better question is - is $1000 material and important to you?

Let’s say you had a $1,000,000 in assets. That would generate an annual cash flow stream of around $40k, give or take. Now let’s say you generate $4k of annual bonuses. You’ve increased your cash flow 10%. Is that immaterial?

It is certainly possible to conclude the extra effort and bother isn’t worth your time, depending on your situation and interests. If you have 8 figure wealth, or you are traveling the world or you work 50+ hour weeks, it may not be worth your time and opportunity costs.

[Carno]

Brokerage transfers are incredibly easy - in many cases easier than setting up an ACH link! Why would you not do it for $1K? Heck, I just got $2500 for moving $250K to Public.

You may had a special offer. Currently the offer is $1,000 for $250K to Public ( https://public.com/transfer-account )

[nalor511]

Brokerage transfers are incredibly easy - in many cases easier than setting up an ACH link! Why would you not do it for $1K? Heck, I just got $2500 for moving $250K to Public.

You may had a special offer. Currently the offer is $1,000 for $250K to Public ( https://public.com/transfer-account )

It was 1% until 12/31, you have to strike while the iron's hot

[Carno]

The poster above saying someone was locked out of a brokerage for churning bonuses is easily avoidable -- don't churn bonuses at whatever brokerage is your favorite. Churn wildly through brokerages like Chase, Citi, Merril, Tastyworks, etc , and if they lock you out, so what. Then once you can't churn anymore, do a final transfer to your favorite brokerage (Schwab, Fidelity)

Unfortunately, it is not that simple. The poster also reported that he was having trouble moving his money out. Online ACATS to Fidelity got rejected and Merrill CS is trying to find out what’s required. It could get to the point where they liquidate everything and leave him with a huge tax bill.

[TwstdSista]

I thought I was being smart with my money by chasing a few bonuses. And then Citibank marked my account "for closure" as a result of suspected fraud and my money is still tied up in their frozen account. Supposedly because of a third party check - I funded the account through a EFT from Fidelity, so whatever that means.

Lots of people are quite successful at bank bonuses. For obvious reasons, I've decided they aren't for me.

[Carno]

I thought I was being smart with my money by chasing a few bonuses. And then Citibank marked my account "for closure" as a result of suspected fraud and my money is still tied up in their frozen account. Supposedly because of a third party check - I funded the account through a EFT from Fidelity, so whatever that means.
Lots of people are quite successful at bank bonuses. For obvious reasons, I've decided they aren't for me.

I did a Citi $1,000+ last year through a banker (not online). Wrote a check to myself at a branch to fund. Account got locked and I had to go through some loops to remove the lock. I will not do any Citi in the future due to this experience.

[EdNorton]

I just saw that e-trade is offering up to $3,000 transfer bonuses. Will Charles Schwab match that bonus to keep my account there? This bonus applies to retirement account also.

[boglegirl]

There's a big difference between bank bonuses and brokerage bonuses. In my experience, bank bonuses are pretty easy (except for Citibank, apparently, and cases of churning). But I wouldn't go for a brokerage bonus unless I had a real reason to want to switch brokerages...too much risk of things like loss of basis data.

[orcycle]

While I’ve gone after one large brokerage bonus, my favorite bank bonus gave me $300 to open a new account with a $500 minimum balance and had to be kept open for 180 days. I used that bonus to pay for snacks and meals while biking and at the end of the 180 days, I closed the account. Minimum fuss, maximum fun!

I may end up roundtripping from Fidelity to Vanguard and back again because I didn’t convert some mutual funds to ETFs before transferring to get the first brokerage bonus. But the paperwork to do this would be maximum fuss.

[ScroogeMcDuck]

I don't think whether bonuses are worth it to you depend on portfolio size. I use grocery store coupons but I know people with less money than me who refuse to use them. I know people with more money than me who will line up for free items that I wouldn't bother with. I think bonuses are like that.

We made about $23k in bank/brokerage bonuses last year which is less than 1% of our portfolio but over 40% of our spending. I find them worthwhile.

[Nyc10036]

I thought I was being smart with my money by chasing a few bonuses. And then Citibank marked my account "for closure" as a result of suspected fraud and my money is still tied up in their frozen account. Supposedly because of a third party check - I funded the account through a EFT from Fidelity, so whatever that means.
Lots of people are quite successful at bank bonuses. For obvious reasons, I've decided they aren't for me.

I did a Citi $1,000+ last year through a banker (not online). Wrote a check to myself at a branch to fund. Account got locked and I had to go through some loops to remove the lock. I will not do any Citi in the future due to this experience.

wow

This is the first time I have read that someone who opened an account in person had an account locked.

[manlymatt83]

While I’ve gone after one large brokerage bonus, my favorite bank bonus gave me $300 to open a new account with a $500 minimum balance and had to be kept open for 180 days. I used that bonus to pay for snacks and meals while biking and at the end of the 180 days, I closed the account. Minimum fuss, maximum fun!

I may end up roundtripping from Fidelity to Vanguard and back again because I didn’t convert some mutual funds to ETFs before transferring to get the first brokerage bonus. But the paperwork to do this would be maximum fuss.

Just transfer to E*TRADE and then you can keep buying the mutual funds for free plus get a hefty bonus.