Is a bank bonus worth it? The arithmetic that answers it
3 min read · Bank bonuses, Strategy
Judge a bank bonus as a return on the cash it makes you park, over the days it keeps that cash committed, after the fees you cannot waive. A $300 bonus on $15,000 held for 180 days is a 4.1% annualised return, which barely beats a 4% savings account. The same $300 for payroll alone parks nothing and is simply $2.50 a day of committed time.
A bank bonus is a headline number attached to a set of conditions, and only the conditions tell you what the number is worth. Here is the arithmetic, in the order the ROI calculator runs it.
How long is the cash committed?
Three periods in the terms can hold your money, and the longest one wins.
- The deposit window plus the payout period, which at Chase and Wells Fargo is 90 days for the deposits and then 15 and 30 days respectively to pay. 1 2
- The balance hold, where the offer requires a minimum balance for a stated number of days.
- The early-close window, where the offer forfeits the bonus or charges a fee for closing inside it.
A $300 bonus that needs $15,000 held for 90 days but prints a 180-day early-close window commits the cash for 180 days, because leaving at day 91 costs the bonus.
What is the bonus net of fees?
Subtract the monthly fee for each month you are committed, unless the page prints a waiver you will meet, such as a direct deposit or a minimum balance. A $12 fee with no reachable waiver over six committed months turns a $300 bonus into $228. A waivable fee is treated as zero, and the calculator says so, because meeting the waiver is effort rather than money.
What does that return on the parked cash?
Net bonus divided by parked cash, scaled to a year over the committed days.
$300 on $15,000 over 180 days is 300 / 15,000 x 365 / 180, which is 4.1% a year. That is the figure to put beside a savings rate. At 4% APY the same $15,000 earns $295.89 over the same 180 days, so the bonus wins by $4.11. That is a bonus worth taking only if the account is otherwise useful to you.
Change one input and the answer moves. The same $300 for $5,000 held 90 days with no early-close window is 300 / 5,000 x 365 / 90, which is 24.3% a year, and it beats savings by $250.68.
What if nothing is parked?
A payroll-only offer, such as the two above, requires no balance. There is no return to annualise, because the denominator is zero. Compare it per committed day instead: $300 over 120 committed days is $2.50 a day of redirected payroll. Two payroll offers with different windows become comparable on that scale.
What about tax?
Every figure above is before tax. A cash bonus is interest, taxed at your marginal rate in the year it posts, so a $300 bonus at a combined 27% rate is $219 in hand. Apply your own rate with the tax calculator before ranking offers against each other, since a bigger bonus in a higher bracket can net less than a smaller one.
Two offers, side by side
| Offer | Parked cash | Committed days | Net bonus | Annualised | Beats 4% savings by |
|---|---|---|---|---|---|
| $300, $15,000 held 90 days, 180-day early-close | $15,000 | 180 | $300 | 4.1% | $4.11 |
| $300, $5,000 held 90 days, no early-close | $5,000 | 90 | $300 | 24.3% | $250.68 |
| $300, payroll only, 90-day window, 30-day payout | $0 | 120 | $300 | n/a | $2.50 a day |
| The headline is identical on all three. | |||||
| The third column is what you are actually being paid for. |
What this looks like in CardLab
CardLab's ranking of published bonuses is this arithmetic run on each offer's own terms, with the early-close window read from the page where it prints one and reported as unknown where it does not. The offers are read from the institutions' own pages with the date they were read, and the ranking takes no referral commission from any of them.
Common questions
Why annualise a bonus that pays once?
Because the alternative uses of the cash are quoted per year. A savings account pays an APY, and the only way to compare a one-off bonus with it is to state the bonus as a rate over the days the cash was actually committed. Two offers with different holds and different bonuses only become comparable on that scale.
What if the offer needs no parked cash?
Then there is no return to annualise, because the denominator is zero. Compare payroll-only offers on net bonus per committed day, where committed days still include the deposit window, the payout period and any early-close window, since your payroll is redirected for that long.
Does a fee waiver count as a cost?
Meeting the waiver is part of the effort, but it is not cash out of pocket, so the calculator treats a waivable fee as zero and tells you it did. A fee with no waiver you can meet is charged for every month you are committed.
Where does the savings comparison come from?
It is the parked cash times the APY you enter, scaled to the committed days. It is your own figure, not a rate CardLab publishes, and it is the honest benchmark because that is where the cash would otherwise sit.
Sources
CardLab tracks the cards you hold and the bonuses you are chasing, with every rate read from the issuer's own page.
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