Paying A Bonus On Deposit Accounts
By Amy Kudlacek
I really dislike bonus on account questions. I cringe when I talk to a bank that wants to offer "gifts" on new deposit accounts. Yet somehow, they never seem to go away. My dislike for these types of questions is not that I am against enticing customers to open accounts. It is merely the fact that such a simple thing can be so complicated when comes to the Regulations.
Offering a bonus on an account can affect not one, not two, but potentially three different regulations. And that is not counting possible IRS reporting requirements. The regulations cover everything from prohibiting bonuses on certain types of accounts, advertising a bonus, and describing the bonus in account disclosures. So unless you cover all your bases, you could easily get yourself into trouble.
Knowing how complicated this can be, we wrote an article several years back entitled Paying a Bonus on Deposit Accounts. This article takes a look at all the affected regulations, provides regulatory references, explains the requirements and puts everything into layman's terms. But, even then, the topic can still be confusing.
Earlier this year, we were looking for a way to make paying a bonus on an account even easier. We came up with a flowchart, which we believe addresses the regulatory issues. In addition, it is quick and easy to use. We have added this flowchart to the bottom of the Paying a Bonus on Deposit Accounts article. We hope this will be helpful to you. It certainly has been a great help to me, when answering these types of questions.