{"id":8282,"date":"2024-06-13T04:00:00","date_gmt":"2024-06-13T10:00:00","guid":{"rendered":"https:\/\/milesearnandburn.com\/?p=8282"},"modified":"2024-06-10T23:05:07","modified_gmt":"2024-06-11T05:05:07","slug":"the-opportunity-cost-of-bank-bonuses","status":"publish","type":"post","link":"https:\/\/milesearnandburn.com\/index.php\/2024\/06\/13\/the-opportunity-cost-of-bank-bonuses\/","title":{"rendered":"The Opportunity Cost of Bank Bonuses"},"content":{"rendered":"\n

Bank account and brokerage bonuses have been a staple of the churning diet since before churning was called churning. In the era of ZIRP<\/a> (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<\/a>. Since America loves math, we can show in a simplified calculation that your nominal opportunity cost was barely enough for a Starbucks latte:<\/p>\n\n\n\n

Opportunity Cost in ZIRP era (Savings): $6.15<\/span>
$25,000 * 0.10% * 90 days \/ 365 days \u2248 $2.46<\/code> (Why 365? Since APR, is, err<\/em> per A)<\/p>\n\n\n\n

Fast forward to our post-ZIRP dystopian present in which you can easily earn 5.00% or more<\/a> in an FDIC insured account, and that bank bonus on a checking account that pays effectively zero has a very different opportunity cost<\/p>\n\n\n\n

Opportunity Cost in the Facebook<\/s> Meta Threads era (Savings): $308.20<\/span>
$25,000 * 5.00% * 90 days \/ 365 days \u2248 $308.20<\/code><\/p>\n\n\n\n

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.<\/p>\n\n\n\n

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.<\/em> <\/p>\n\n\n

\n
\"\"<\/figure>\n<\/div>\n\n\n

A churner dresses up as a number, preparing to run.<\/p>\n","protected":false},"excerpt":{"rendered":"

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<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_editorskit_title_hidden":false,"_editorskit_reading_time":0,"_editorskit_is_block_options_detached":false,"_editorskit_block_options_position":"{}","footnotes":""},"categories":[1],"tags":[],"class_list":["post-8282","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/milesearnandburn.com\/index.php\/wp-json\/wp\/v2\/posts\/8282","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/milesearnandburn.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/milesearnandburn.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/milesearnandburn.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/milesearnandburn.com\/index.php\/wp-json\/wp\/v2\/comments?post=8282"}],"version-history":[{"count":6,"href":"https:\/\/milesearnandburn.com\/index.php\/wp-json\/wp\/v2\/posts\/8282\/revisions"}],"predecessor-version":[{"id":9812,"href":"https:\/\/milesearnandburn.com\/index.php\/wp-json\/wp\/v2\/posts\/8282\/revisions\/9812"}],"wp:attachment":[{"href":"https:\/\/milesearnandburn.com\/index.php\/wp-json\/wp\/v2\/media?parent=8282"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/milesearnandburn.com\/index.php\/wp-json\/wp\/v2\/categories?post=8282"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/milesearnandburn.com\/index.php\/wp-json\/wp\/v2\/tags?post=8282"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}