The easiest money I made last year is from the now-famous $175 E*Trade checking account promotion. By opening a new account with $100 or more, paying two bills online, and establishing a direct deposit of $1,000 or more a month for three months, E*Trade will credit $175 to your account. I took advantage of the offer twice (the second time using my wife's name) and happily saw my wallet $350 fatter.
Today, I received another invitation from E*Trade begging me to take another $175 by opening a E*TRADE Bank Money Market Plus account that offers "a premium yield up to 2.25% APY." (Offer link here.)
Another golden opportunity? Unfortunately, this time it's not.
Take a look at the fine prints:
"$175 bonus will be paid out in 2 intervals. $50 will be credited to your new E*TRADE Bank Money Market Plus account within 30 days of account being funded with a minimum balance of $100. The remainder of your bonus will be deposited into your account by October 5, 2005, as long as your account balance on October 1, 2005 is $15,000 or greater."
"Annual Percentage Yield (APY) of 2.25% as of 2/18/05 and applies to balances of $50,000 or more. Balances of $15,000 - $49,999 will earn 1.75% APY, balances of $1,000 - $14,999 will earn a 0.40% APY and balances of less than $1,000 will earn a 0.30% APY. A $100 minimum balance is required to open account and you must maintain a balance of $15,000 to avoid a $20 monthly fee on the E*TRADE Bank Money Market Plus account. Certain fees may reduce earnings on account. Yields subject to change daily."
If you don't have time to digest, here is the primer:
1. This account bears a tiered APY model, in which only balance exceeding $50,000 is entitled to the 2.25% APY. (0.30% APY for less than $1,000, 0.40% for $1,000 to $14,999, and 1.75% for $15,000 to $49,999.)
2. $15,000 minimal to avoid $20 monthly charge.
3. If you keep $15,000 to avoid the fee, in the tiered model, your effective APY is less than 0.40%.
4. You will only get the full bonus if you keep the account open until October 1, 2005 (which means 6-7 months if you open the account today.)
Now that you know you can get fee-free 3.00% APY from EmigrantDirect, if you choose to keep $15,000 at E*Trade bank for 6 months, you lose $15,000 * (3.00% - 0.40%) / 2 = $195 interest. So, instead of getting $175 fatter, you will actually be $20 worse off. What a lousy deal!