Bank account and brokerage bonuses have been a staple of the churning diet since before churning was called churning. In the era of ZIRP (Zero Interest Rate Policy), sign-up bonuses of $200-$300 for moving $25,000 in funds to a bank for 90 days used to be no-brainer deals because if you had the cash uninvested anyway, you were earning an average of 0.10% interest in a savings account. Since America loves math, we can show in a simplified calculation that your nominal opportunity cost was barely enough for a Starbucks latte:
Opportunity Cost in ZIRP era (Savings): $6.15$25,000 * 0.10% * 90 days / 365 days ≈ $2.46 (Why 365? Since APR, is, err per A)
Fast forward to our post-ZIRP dystopian present in which you can easily earn 5.00% or more in an FDIC insured account, and that bank bonus on a checking account that pays effectively zero has a very different opportunity cost
Opportunity Cost in the Facebook Meta Threads era (Savings): $308.20$25,000 * 5.00% * 90 days / 365 days ≈ $308.20
What’s my point here? Obviously run the numbers before diving into a new bank account. But, you can also memorize a quick statistic for whether or not a bank account bonus is worth your time: You should earn somewhere around $50 for each 30 days that you tie up $10,000, or a high-yield savings account beats it.
Note: I know that the “but actually” people out there are going to point out that you’d earn a few cents more at most bank accounts because of compounding and monthly payouts, and that 5% of $10,000 for 30 days is more like $41 dollars. Let’s just say “you’re not wrong” and leave it at that.
A churner dresses up as a number, preparing to run.