Banks and Brokerages Still Rolling out Bonuses and Rewards for Opening Accounts

This article from earlier this year discussed giftsforbanking, a CD offering that provides presents in lieu of a higher CD yield, and Bankdirect, a Texas-based bank that offers American Airlines miles in lieu of interest on savings accounts. The article concluded that while American Airlines miles may be a good substitute for cash interest in the current environment, the gifts on giftsforbanking won’t make up for your lost interest over the life of the CD.

Those people who live in areas where JP Morgan Chase has a heavy presence have become accustomed to receiving offers in the mail to earn between $100 and $150 in cash for opening a Chase savings or checking account. These offers ordinarily require maintaining a $10,000 balance and maintaining it for over 6 months. Since $10,000 isn’t going to earn $150 in interest this year, the opportunity to make that kind of money in six months may be attractive if you are willing to spend a few minutes sitting with a Chase banker in a branch. Find the closest JP Morgan Chase branch to where you live.

Likewise, HSBC is offering new Premier account holders who deposit $100,000 a $500 bonus. That’s a 0.5% return just from the bonus. Find the closest HSBC branch to where you live.

Online brokerages have also gotten into the act too, and have now become perhaps the most aggressive gift-givers. This author has received Apple and Home Depot gift cards, as well as United frequent flier miles and Starwood points, for moving equities and cash to TD Ameritrade.

TD Ameritrade recently caught my attention and clearly raised the promotion bar by sending out a glossy brochure offering free 8-day cruises for two to Alaska, the Mediterranean or the Caribbean. My own excitement dissipated when I reached page 4 and discovered that the Alaska cruise requires a $5 million cash or equity deposit, the Mediterranean cruise $2 million and the Caribbean cruise $1 million.

Earlier TD Ameritrade promotions requiring smaller deposits have worked well for me. While I don’t have the type of assets sitting around to take advantage of the cruise promotions, this glossy brochure did strike me as a very unique effort by a discount brokerage aimed at winning higher net worth investors from the major non-discount investment houses.

Nevertheless, I would warn any higher net worth investor that these promotions only work if you are entirely self-directed and are using the account mainly as place to park cash or securities. Particularly, in my own experience, TD Ameritrade has proven to be technically challenged – their execution system often malfunctions and their website is often unavailable. High net worth investors may rue the day that they jumped on a cruise after spending 15 minutes on hold trying to figure out whether they are in or out of a trade.