In banking, “new money” means funds you bring in from outside the institution and its affiliates. A balance you’ve held at another bank for a decade becomes new money the moment it lands at a bank running a promotion, because what the label describes is the source of the deposit, not its age. Banks care about this distinction because new money grows their deposit base, and they pay for it with cash bonuses, higher interest rates, and relationship perks that existing balances don’t unlock.
What Counts as New Money
The test is simple: the funds weren’t already on that bank’s books. Money sitting in your checking account at Bank A is existing money to Bank A and new money to Bank B. Promotional fine print sometimes calls it “fresh money,” “external funds,” or “outside deposits,” but all three phrases describe the same thing — a deposit that pulls capital in from a competitor.
Where people get caught is with affiliates. If a large bank runs an online-only division or a separate subsidiary, transfers between the two usually don’t qualify, because the money never left the parent company’s ecosystem. The safe assumption is that any account sharing a parent is “inside.” Shifting funds between your own checking and savings at the same bank is just internal reshuffling and never counts.
Why Banks Pay Extra for It
Deposits fund loans. Every dollar you park in a savings account or CD gives the bank raw material to lend at a higher rate than it pays you, and that spread is where most bank revenue comes from. Pulling deposits away from a competitor is a direct way to grow the lending side of the business.
Retail promotions are also cheaper than borrowing on the wholesale market. A $300 bonus to land a $25,000 deposit for a year costs the bank far less than issuing short-term debt to raise the same amount, and the new customer relationship opens doors for credit cards, mortgages, and investment products later. Regulators also require certain large banks to hold enough liquid assets to cover 30 days of stressed outflows, and stable retail deposits help meet that requirement more reliably than wholesale funding.1eCFR. 12 CFR Part 329 – Liquidity Risk Measurement Standards
How the Bank Measures It
To figure out how much of your deposit actually qualifies, the bank starts with your baseline balance: the total you already held across all accounts at that institution on a defined date. The promotional terms spell out that date, often the day before the offer period opens or the day you enroll. Only the amount above your baseline counts as new money.
If your baseline is $8,000 and you transfer in $25,000, you have $25,000 in new money. But if you also withdraw $5,000 from the bank during the promotional window, the net drops to $20,000. Internal moves between your own accounts at the bank don’t change your total and don’t count either way. What the bank is tracking is the net increase in your combined balances, not the gross amount of any single transfer.
The Look-Back Period
Most promotions include a look-back of roughly 30 to 90 days before the offer starts. The bank reviews your recent history to catch the obvious workaround: pulling money out to a competitor and then redepositing it as “new.” If your balance was $50,000 forty-five days ago and you withdrew $30,000 only to send it back during the promotion, the bank will treat that $30,000 as existing money.
Some banks use your average daily balance across the look-back period rather than a single-day snapshot, which makes it harder to game the baseline by temporarily drawing down right before the offer opens.
Which Transfers Qualify
If the money comes from outside the bank and its affiliates, it generally qualifies. ACH transfers from a competing bank, wires from a brokerage account, and checks drawn on a credit union all work. Employer direct deposits into a newly opened account also qualify at most institutions, and many promotions require direct deposit as a separate condition on top of the lump-sum requirement.
Payroll, Social Security, and pension deposits almost always count toward direct deposit requirements. Peer-to-peer transfers and ACH pushes from another account you own sometimes qualify and sometimes don’t, which is why the fine print on this specific point is worth reading. What never qualifies is anything that keeps the money inside the bank’s family: moves between your own checking and savings there, draws on a home equity line from the same bank, or transfers from a co-branded credit card.
Timing and Maintenance Rules
Promotions differ on how you can get the money in. Some let you build up to the qualifying threshold through cumulative deposits over 30 to 90 days. Others require the full amount in a single transfer. If the terms say “$25,000 within 30 days” and you make five $5,000 deposits, that only works if cumulative deposits are allowed.
Once the money lands, you have to leave it there. Maintenance periods commonly run 60 to 180 days, and the bank monitors your balance to confirm it stays at or above the required threshold. Withdrawing part of the new money before the maintenance period ends can disqualify you from the bonus entirely. Some banks deduct a previously paid bonus directly from your account if you close early or let the balance drop; others freeze the account until the situation is resolved. Early account closure can also trigger a separate fee at some banks, usually when the account is closed within 90 to 180 days of opening, and that fee stacks on top of any bonus clawback.
If you’ll need access to the cash within the next several months, a promotion with a 180-day hold may not be worth the constraint.
What You Get in Return
The most common reward is a one-time cash bonus tied to a deposit threshold: perhaps $200 for $15,000 in new money, $500 for $50,000, and $1,000 or more at $100,000 and up. The bonus pays out after the maintenance period ends, assuming all conditions are met. Business account bonuses often come with transaction requirements too, like a set number of debit card purchases or bill payments inside 90 days.
Promotional APYs are another route. A bank may offer an extra quarter- or half-point on a CD or high-yield savings rate, but only on deposits funded with new money. On a CD, that premium locks in for the full term, which can meaningfully change the return on a large deposit over 12 to 18 months.
Larger new money deposits can also push you into a higher relationship tier, typically starting at $50,000 to $100,000 in combined balances. Those tiers come with waived monthly fees, discounted loan rates, and access to dedicated advisors. Getting into the tier is a one-time qualification; staying there usually requires keeping the balance up.
Doing the Real Math
A $300 bonus on a $15,000 deposit held for 90 days works out to roughly a 2% return over three months, which annualizes near 8%. That beats a standard savings rate easily. The comparison changes if you’re pulling the $15,000 from a high-yield account already paying 4.5% APY, because you lose that interest during the holding period at the new bank.
The advertised APY on a promotional account won’t reflect the bonus. Under federal rules, a bonus is defined as any premium, gift, or consideration worth more than $10 given for opening, maintaining, or increasing a balance, and it is explicitly excluded from the APY calculation.2Consumer Financial Protection Bureau. Appendix A to Part 1030 – Annual Percentage Yield Calculation3eCFR. 12 CFR Part 1030 – Truth in Savings (Regulation DD) You have to add the bonus to the expected interest yourself and compare the total against what the money would have earned at your existing bank.
Then subtract taxes. The IRS treats bank bonuses tied to deposits as interest income, not gifts.4Internal Revenue Service. Publication 550 – Investment Income and Expenses The bank reports the amount on Form 1099-INT, and you report it on Form 1040, line 2b. If your total taxable interest for the year exceeds $1,500, you’ll also file Schedule B.5Internal Revenue Service. About Schedule B (Form 1040) – Interest and Ordinary Dividends A $500 bonus taxed at a 24% marginal rate leaves you $380 in hand. One further wrinkle: if the bank doesn’t have a correct Taxpayer Identification Number on file, or if the IRS has flagged you for underreporting interest, backup withholding of 24% can apply to interest and bonus payments.6Internal Revenue Service. Topic No. 307 – Backup Withholding
Two Boundaries Worth Knowing Before You Transfer
Moving a large sum to chase a promotion concentrates your deposits, and concentration creates insurance risk. The FDIC insures $250,000 per depositor, per bank, for each ownership category.7FDIC.gov. Deposit Insurance At A Glance All accounts in the same ownership category at the same bank get added together: your checking, savings, CDs, and money market accounts under your own name are one bucket.8FDIC.gov. Deposit Insurance – Understanding Deposit Insurance Joint accounts are a separate category, insured at $250,000 per co-owner, and certain retirement accounts like IRAs get their own $250,000. If you already have $200,000 at a bank and transfer in another $100,000 of new money in the same ownership category, $50,000 sits outside insured limits. Credit unions provide equivalent protection through the National Credit Union Share Insurance Fund, with the same per-member limits.9National Credit Union Administration. Share Insurance Coverage
Retirement balances deserve their own caution. IRA and 401(k) funds can qualify as new money for retirement-account promotions, but the transfer method matters. A direct trustee-to-trustee transfer keeps the money in the retirement system with no tax consequences. An indirect rollover, where the funds come to you first, gives you exactly 60 days to redeposit them in a qualifying retirement account; miss the deadline and the full amount becomes taxable, with a 10% early distribution penalty on top if you’re under 59½.10Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions Distributions from employer plans also carry mandatory 20% withholding, so you’d need to cover that from other funds to roll over the full amount. For any retirement promotion, use a direct transfer unless there’s a specific reason not to. No bonus is worth an indirect rollover gone wrong.