5 Broker Deals That Pay You to Open an Account

If you’re looking for a new brokerage, consider opening your account with one of these institutions. They’ll pay you a new account bonus on certain account types if you meet minimum deposit requirements and keep your account open for a specified length of time. All promotional data presented is accurate as of May 2022.

Key Takeaways

With discount brokers cutting client fees and offering $0 trading commissions, the competitive landscape has never been better for individual investors.
In order to lure in new clients (or steal them from the competition), many financial firms offer financial incentives to those who qualify.
The rewards might seem high but aren’t great when compared to other banking products.
New digital-centric brokerages like M1 and TD Ameritrade’s Thinkorswim platform have been growing steadily since their launches.
You are required to maintain the balance for a period of time, usually a few months, before the reward is issued.

Charles Schwab: $100+ Bonus or 500 Commission-Free Trades

Charles Schwab is offering a $1,000 referral bonus with a $500,000 deposit into a new Schwab brokerage account. You can also get 500 commission-free trades. This is the top of their award tier, but the good news is you can still receive a referral bonus if you deposit less. The bonus tiers are:

$1,000 if you deposit $500,000
$500 if you deposit $100,000-$499,999
$300 if you deposit $50,000-$99,999
$100 if you deposit $25,000-$49,999

Schwab also offers unlimited commission-free online trading on most stocks and exchange-traded funds (ETFs) for all clients.Once you make the deposit, you should have your referral bonus in your account within two weeks.

M1 Finance: First Year Free and $2,500 Transfer Bonus

M1 is a relatively new broker but one that has gained significant traction since it opened shop in 2015. Investors using M1 find their website intuitive and easy to understand, and have good things to say about M1’s ability to customize investment portfolios.

Their bonus structure works similarly to the Schwab structure above, but it has a higher cap. While Schwab stops at $1,000 if you deposit $500,000, M1 will deposit $2,500 as a bonus if you transfer over $1 million in funds or securities. However, their lower tiers are a bit less generous when compared to Schwab. They are:

$2,500 if you deposit $1 million or more
$1,000 if you deposit $500,000-$999,999
$500 if you deposit $250,000-$499,999
$250 if you deposit $100,000-$249,999

M1’s plan is to bring over accounts with higher balances and although they reward those who do, those with smaller accounts might reconsider Schwab’s offerings. However, the first year for new clients at M1 is free, and its digital banking accounts pay 1% APY, which is more than its competitors.

Some brokers, like Vanguard, do not offer promotions, instead opting to reward their clients with extremely low-cost funds and zero-commission trading on many of their products.

Merrill Edge: Up to $600

Merrill Edge, the investment division of Bank of America, is attempting to entice clients to switch over to their brokerage products. Their offers are in line with most of the other offers here, but they are not as widely used as some of the other powerhouses like Schwab or Vanguard.

Merril Edge’s bonus level is based on the tiers below:

$600 if you deposit $200,000 or more
$250 if you deposit $100,000-$199,999
$150 if you deposit $50,000-$99,999
$100 if you deposit $20,000-$49,999

At Merrill Investing, you need to make a qualifying deposit within 45 days of opening the account and maintain the balance for at least 90 days. These aren’t great rewards, and you will almost surely see better returns on your principal if you were to invest in the other brokers or by using other strategies like Series I Bonds.

Ally Invest: $3,000 Cash Bonus

Available at Ally is an Ally Invest $3,000 Cash Bonus Offer when you open a new Ally Invest account. You must fund your account within 60 days of account opening to earn a bonus based on your deposit amount. The bonuses are higher than Schwab and M1, but you’ll need to deposit even more to reach the highest tier.

$3,000 if you deposit $2 million or more
$2,000 if you deposit $1 million to $1.99 million
$1,200 if you deposit $500,000-$999,999
$600 if you deposit $250,000-$499,999
$300 if you deposit $100,000-$249,999
$250 if you deposit $25,000-$99,999
$100 if you deposit $10,000-$24,999

Qualifying account openers will receive the bonus cash credit to your account within 10 business days of meeting the promotional requirements. Ally will also credit $75 to help cover transfer fees if you are moving funds or securities from a different brokerage or bank.

Once the account is credited, the bonus and initial qualifying deposit are not available for withdrawal for 300 days after the requirements have been met.

E*Trade: Commission-free Trades and a $3,500 Bonus

If you decide to go with an E*TRADE account, there are a few things you’ll need to know. First, you must fund your account within 60 days by transferring funds from an external source. What is interesting about E*TRADE is that they have a bonus tier for those opening an entirely new account with the brokerage, as well as a discounted bonus structure if you already have accounts with the brokerage.

E*TRADE makes credits for cash or securities within 60 days of the account opening, depending on deposits to the account from external sources. Credits are made within a week after the 60-period. Here’s how the credit (for a new account) is broken down:

$3,500 if you deposit $1.5 million or more
$2,500 if you deposit $1 million to $1.49 million
$1,200 if you deposit $500,00-$999,999
$600 if you deposit $200,000-$499,999
$300 if you deposit $100,000-$199,999
$200 if you deposit $50,000-$99,999
$100 if you deposit $20,000-$49,999
$50 if you deposit $5,000-$19,999

Remember these are the bonuses for a new account. If you already invest with E*TRADE, the bonuses still exist, but they are substantially less and reward about half of what they would be if it were a new account.

E*Trade offers unlimited commission-free online trading on most stocks and ETFs for all clients.

Does TD Ameritrade Have Promotions?

TD Ameritrade does have promotions, and they are similar to the others on this list. You automatically receive $1,000 when you open and find an account through a friend’s referral. The bonus amounts are between $100-$1,000 and are dependent on qualifying deposits from $25,000 to $500,000 or more.

Which Broker Is Offering a Bonus?

All of the big brokers offer a bonus, but it’s worth noting that the bonus isn’t necessarily that high when you consider the deposit amount required in order to receive it. $3,000 seems like a substantial amount, but if it requires over a million dollars to receive it, that’s a 0.3% return, versus the 5 percent or more returns for government-protected securities that don’t require nearly that amount.

Can Brokers Give Bonuses?

Brokers can give bonuses to their clients, but it’s rare. The bonus structure is used to entice new accounts. Once the broker has your money, they may only issue an incentive if you were to tell them you are switching brokerages.

Is It Good To Have 2 Brokerage Accounts?

This depends on your goals. If you want to have a brokerage account for your IRA and a brokerage account to trade options, this makes sense. Not all brokerages treat products the same way and although the competition is fierce between them, some still do certain things better than others. Options traders might prefer the power of the TD platforms, while long-term ETF holders might favor Schwab’s offerings and low-cost ETFs.

The Bottom Line

These promotions aren’t a good way to make a quick buck, and the bonuses are relatively small, often 1 percent or less of the amount you’re required to deposit. What’s more, in many cases, taxes or commissions will erode the value of your bonus.

An account-opening bonus is, however, a good incentive to give a brokerage, bank, or credit union a closer look if you were thinking about opening a new account anyway. Just make sure the account type you’re opening is the best option for your long-term needs, that you’ll still come out ahead after any fees and that you aren’t depositing money you might need in the near term.

This article was originally published by Investopedia.com. Read the original article here.