In banking, “new money” means funds you bring into a bank from somewhere outside that bank and its affiliates. The label has nothing to do with when you earned the money or how long you’ve held it. A balance you’ve kept at another bank for a decade becomes new money the moment you transfer it to a bank running a promotion, because what the bank cares about is whether the deposit grows its total balances. Existing money already sitting at that same institution never counts, no matter how you shuffle it.
Banks reserve their best offers, cash bonuses, promotional APYs, and relationship perks, for new money, so understanding the definition and the qualifying rules is what separates a bonus you actually collect from one you technically didn’t earn.
What Counts as New Money
The test is simple in principle: did the deposit come from outside the bank’s ecosystem? Money wired from a competing bank, ACH’d from a brokerage, or delivered by check drawn on a credit union all qualify. Money moved between your own checking and savings at the same bank does not.
Promotional fine print sometimes uses phrases like “fresh money,” “external funds,” or “outside deposits.” These mean the same thing. What they all exclude is any internal transfer that leaves the bank’s combined deposit base unchanged.
The affiliate question trips people up. If a large bank runs an online-only division or a separate subsidiary, transfers between the two usually do not count as new money. The safe assumption is that any account sharing the same parent company sits inside the bank’s ecosystem, and the terms will spell out which affiliates are excluded.
Why the Distinction Matters to Banks
Deposits fund loans, and the spread between what banks pay depositors and what they earn on lending is where most bank revenue comes from. Pulling retail deposits away from competitors grows the lending business at a lower cost than borrowing on the wholesale market. A $300 bonus to attract a $25,000 deposit that stays for a year is cheaper than raising the same money through short-term debt. That math is why promotions exist, and why they’re conditioned so tightly on the money actually being new.
How the Bank Calculates Your Qualifying Amount
Banks start with your “baseline balance,” meaning the combined total across all your accounts at that institution on a specific date. The promotion defines the date, typically the day before the offer opens or the day you enroll. Only deposits above that baseline count toward the requirement.
The number that matters is the net increase, not any single incoming transfer. If your baseline is $8,000 and you wire in $25,000, your new money is $25,000. But if you also withdraw $5,000 during the promotional window, your net drops to $20,000. Internal moves between your accounts at the same bank have no effect either way because they don’t change your total.
The Look-Back Period
Most promotions include a look-back window, commonly 30 to 90 days before the offer starts. The bank reviews recent account activity during that window to catch a familiar workaround: moving funds out to another institution and then transferring them back as “new.” If you withdrew $30,000 forty-five days ago and redeposit it during the promotion, the bank will treat that $30,000 as existing money.
Some promotions calculate baseline using your average daily balance over the look-back period rather than a single-day snapshot, which makes it harder to game the baseline by drawing your account down right before enrollment.
Which Sources Qualify
ACH transfers from a competing bank, wire transfers from a brokerage account, and checks drawn on outside institutions all typically qualify. Employer direct deposits into a newly opened account also count at most banks, and many checking promotions require direct deposit as a separate condition on top of any new money threshold. Payroll, Social Security, and pension payments almost always satisfy the direct deposit requirement. Peer-to-peer transfers and ACH pushes from another account you own may or may not count, depending on the bank.
What consistently fails the test is any movement that keeps money inside the bank’s family: transferring between your own checking and savings, drawing on a home equity line held at that bank, or moving funds from a co-branded credit card account. If the sending account belongs to the same institution or an affiliate, the deposit produces no net growth for the bank and won’t be treated as new money.
Deposit Timing Rules
Promotions differ on whether you can build up to the required amount over time or need to deliver it in a single transaction. Some allow cumulative deposits within a 30- to 90-day window after enrollment. Others require the full minimum in one transfer. If a promotion needs $25,000 within 30 days and the terms say “cumulative,” five $5,000 transfers work. If the terms say “single deposit,” they don’t.
Holding Periods and Early Withdrawal
After you deposit the qualifying amount, the bank requires you to keep it there. Maintenance periods commonly run 60 to 180 days. The bank monitors your balance during that window, and letting it drop below the required threshold, even briefly, can disqualify you from the bonus.
Consequences of early withdrawal range from forfeiting an unpaid bonus to having an already-paid bonus clawed back out of your account. Closing the account too early can also trigger a separate fee at some banks, typically if you close within 90 to 180 days of opening. These fees stack on top of any bonus loss. If you might need access to the deposited cash within the next six months, a promotion with a 180-day hold may not be worth the constraint.
Running the Numbers Before You Move Anything
A $300 bonus on a $15,000 deposit held 90 days works out to roughly 2% over three months, or about an 8% annualized return. That beats a standard savings rate comfortably. It looks less impressive if the $15,000 is coming from a high-yield savings account already paying 4.5% APY, because you lose that interest during the holding period.
The advertised APY on a promotional account will not include the bonus itself. Under Regulation DD, a “bonus” is defined as any premium, gift, or consideration worth more than $10 given for opening, maintaining, or increasing an account balance, and it is explicitly excluded from the APY calculation.1eCFR. 12 CFR Part 1030 – Truth in Savings (Regulation DD)2Consumer Financial Protection Bureau. Appendix A to Part 1030 – Annual Percentage Yield Calculation You have to add the bonus to expected interest yourself and compare that total against what your money would earn if it stayed where it is.
Taxes reduce the bonus further. A $500 bonus taxed at a 24% marginal rate leaves $380 in your pocket. Subtract any interest lost on the transferred funds during the holding period and the real gain shrinks again. Run the math before you move.
How the IRS Treats the Bonus
Bank bonuses tied to deposits are interest income, not gifts. IRS Publication 550 states that noncash gifts or services received for making deposits or opening a savings account must be reported as interest if their value exceeds $10 for deposits under $5,000, or $20 for deposits of $5,000 or more.3Internal Revenue Service. Publication 550 – Investment Income and Expenses Cash bonuses almost always clear those thresholds.
The bank reports the amount on Form 1099-INT, and federal law requires that reporting for interest payments of $10 or more.4Office of the Law Revision Counsel. 26 USC 6049 – Returns Regarding Payments of Interest You report the bonus on Form 1040, line 2b, as taxable interest.3Internal Revenue Service. Publication 550 – Investment Income and Expenses If your total taxable interest for the year exceeds $1,500, Schedule B is also required.5Internal Revenue Service. About Schedule B (Form 1040) – Interest and Ordinary Dividends
If you haven’t given the bank a correct Taxpayer Identification Number, or the IRS has flagged you for underreporting interest, the bank may apply backup withholding at a flat 24% rate on any interest or bonus payments.6Internal Revenue Service. Topic No. 307 – Backup Withholding That withholding is credited when you file, but it ties up cash in the meantime.
Deposit Insurance Limits Still Apply
Chasing a promotion by moving a large sum concentrates your deposits, and concentration can push you past insurance limits. The FDIC insures $250,000 per depositor, per insured bank, for each ownership category.7FDIC.gov. Deposit Insurance At A Glance If you already hold $200,000 at a bank and transfer in another $100,000, the combined $300,000 in a single ownership category leaves $50,000 uninsured.
All accounts in the same ownership category at the same bank are added together for insurance purposes. Your checking, savings, CDs, and money market accounts held in your name alone all sit in one bucket.8FDIC.gov. Deposit Insurance – Understanding Deposit Insurance Joint accounts form a separate category, insured at $250,000 per co-owner, and certain retirement accounts like IRAs get their own $250,000 of coverage. Credit unions offer equivalent protection through the National Credit Union Share Insurance Fund, with the same $250,000 per-member limit and separate coverage for joint and retirement accounts.9National Credit Union Administration. Share Insurance Coverage Before you move a large deposit, add up your existing balances at the receiving institution across all account types.
Retirement Funds as New Money
IRA and 401(k) balances can qualify as new money for retirement account promotions, but the transfer method decides whether the move stays tax-neutral. A direct trustee-to-trustee transfer keeps the funds in the retirement system and creates no tax event.
An indirect rollover, where the money is distributed to you first, gives you 60 days to redeposit it into a qualifying retirement account. Miss the deadline and the full amount becomes taxable. Distributions from employer plans like 401(k)s also carry mandatory 20% withholding, so rolling over the full pre-tax amount means covering that 20% out of pocket. If you’re under 59½, the taxable portion is subject to an additional 10% early distribution penalty.10Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions For a retirement account promotion, use a direct transfer unless there’s a specific reason not to. No bonus justifies the risk of a botched indirect rollover.