Legacy Investing CalculatorsShow

Savings bonus break-even

When does a signup bonus outweigh a lower savings rate?

Your numbers

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$
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Break-even time

1 yr 5 mo

Yearly cost of the lower rate$212
Bonus$300
Rate gap0.85%

Tip. If you plan to move the money again soon anyway, the bonus usually wins.

Assumptions

  • Annual rate gap × balance = yearly opportunity cost.
  • Break-even months = bonus ÷ (monthly rate gap × balance).

Explore the numbers

Examples and charts

Start with a scenario, then read the response curve to see which input actually moves the answer.

Example 1

Small balance

A modest balance, where the rate gap costs little and the bonus dominates for years.

Months to break even

85 months

Example 2

Mid balance

A typical savings balance where the break-even lands within a year or two.

Months to break even

17 months

Example 3

Large balance

Enough cash that the rate gap outruns the bonus in a matter of months.

Months to break even

4 months

Sweeps average balance from half to one and a half times your value, holding everything else fixed.

Response curve

How average balance moves the result

Months to break even

17 months

15 mo20 mo25 mo30 mo35 mo$15k$20k$25k$30k$35k
Chart axis: Average balanceNow $25k → 17 mo

What this calculates

Finds how long a signup bonus takes to make up for a lower ongoing rate compared with a higher-yielding alternative.

How to use it

  1. Start with average balance and work down the form, or load an example to begin from a realistic case.
  2. Read the headline result alongside the supporting rows, which show the intermediate figures behind it.
  3. Check the assumptions. They decide what the number includes and, more importantly, what it leaves out.
  4. Sweep average balance on the response curve to see how much it actually moves the answer.
  5. Run a cautious case as well as an optimistic one before using the estimate in a decision.

Common mistakes

  • Chasing bonuses with money you need for immediate expenses.
  • Forgetting that the promotional rate on the new account may drop after a few months.
  • Ignoring the hard credit enquiry some accounts require just before a mortgage application.

Formula

Break-even months = bonus ÷ (balance × rate gap) × 12

Inputs

  • Average balance
  • Signup bonus
  • Bonus account APY (%)
  • Alternative APY (%)

FAQ

Do the bonus requirements matter?

A great deal. Direct-deposit rules, minimum balances, and holding periods can make a bonus impractical or claw it back. Read the offer terms before treating the bonus as certain.

Is the bonus taxable?

In the US, bank bonuses are generally reported as interest income, so your after-tax bonus is smaller than the headline. The break-even is therefore slightly sooner than shown.

Why does a bigger balance make the bonus worse?

Because the bonus is a fixed amount while the rate gap costs you a percentage. On a large balance the ongoing gap swamps a one-off payment quickly.

Are these numbers financial advice?

No. They are educational estimates based on the inputs and assumptions on this page. Confirm important decisions with a qualified professional and your own documents.

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