Update April 2016. I originally wrote about this promotion in October 2013, and many readers have been getting $20 of interest every month on a relatively low balance (worked out to 16% APY on $1,500 average balance). With a 1% APY savings account, you’d need $24,000 to get the same amount of interest! Unfortunately, Santander Bank recently announced that this promotion will end and accounts will be converted to a Simply Right checking account later this year (reports include either July 1st or December 1st, 2016).
I would note that this deal lasted for over 2.5 years, longer than I thought it would. Just like with 5% APY Netspend prepaid cards, you can’t really predict how long deals will last. Some end earlier than you think, some end later. Don’t forget to close your account in July, unless you’ve gotten attached to your Santander account (which was always the idea!).
Original post from October 2013 (deal is no longer available):
Santander Bank (formerly Sovereign Bank) has a new banking package called the extra20 checking and savings account that pays you up to $20 each month (no longer available):
- You must open both an extra20 checking and extra20 savings account.
- Get a $10 bonus each month that you have direct deposits totaling $1,500.
- If you qualify for the first $10, get another $10 bonus each month that you pay two bills from your extra20 checking account through Online BillPay.
$20 a month = $240 a year. If you choose to simply use this account to pay your bills, it shouldn’t be hard to keep a $1,500 average balance. Earning $240 on a $1,500 balance works out to a 16% APY. If you aggressively emptied your account after each direct deposit, you could increase this effective APY even more.
There is no monthly fee for the extra20 checking account with $1,500+ in total direct deposits (otherwise, $10). There is no monthly fee for the extra20 savings account if linked to an extra20 checking account. The bonuses are reported as interest on a 1099-INT. I have no idea how long they can keep this going, but it is quite a bold offer to promote their rebranding. I guess it depends on their marketing budget and also how many other people are paying overdraft fees, debit card merchant fees, and/or ATM surcharges.
A common question will be if an online bank transfer (ACH) would qualify as a direct deposit. I don’t know. My understanding based on similar past promotions is that if banks wanted to screen them out, they have to manually look at each transaction. The majority of the time they don’t go through the bother. Of course, if you have the ability to redirect or split your paycheck, that would be the safest bet.
Santander Bank is a wholly owned subsidiary of the (big) Spanish Santander Group. FDIC-insured Certificate #29950. Branches are in the Northeastern US. I started the application using addresses in California and Oregon and it let me continue, so I am hopeful that this is available nationwide.