Should I take advantage of this promotion?

[sethmachine]

There's a promotion for starting a new bank account at a bank. The requirement is that the initial deposit must be at least $15,000. If the balance of the account at least stays at $15,000 for 30 days since opening, the bank will give you $400.

According to my calculations, that is essentially getting paid 2.6% interest in 30 days. That seems like a lot.

I also have debt too which I usually send my excess money to. However, I calculated that if instead I opt to wait 30 days (or even 60 days) with the $15,000, my debt would only accumulate $50.0 on the principal over that 60 day period (a little more than half that because it compounds).

Assuming my debt is $4,000 with an interest of 7.00% that compounds daily, it means my principal would be roughly $4,046.28 (each day adds about $0.70, assuming 365 days in a year).

So my total gain would be a gain of about $340 dollars.

Is my math correct, assuming I have the $15,000 and won't need to access it for 30 days?

[disneysteve]

If you have $15,000 sitting around that you don't need, why do you still have $4,000 of debt, especially at 7%?

[scfr]

You're math is not entirely correct. First and foremost, you pay income tax on the $400 bonus.

Also, if it's the Citi bonus, the bonus isn't supposed pay out until 90 days after you meet the requirement (and you'll need to keep $10K in the account for those additional 90 days beyond the 30 days to avoid a fee). And if they don't pay the bonus when they are supposed to, you'll need even more time while you get them to pay up.

Don't get me wrong. It's a really good bonus. But if I had debt at 7% I'd still get that paid off before I started pursuing bank bonuses.

[sethmachine]

You're math is not entirely correct. First and foremost, you pay income tax on the $400 bonus.

Which part of my math is incorrect? Did I calculate compounding interest incorrectly?

If you have $15,000 sitting around that you don't need, why do you still have $4,000 of debt, especially at 7%?

I don't have $15,000 sitting around that I don't need. Yes I could pay off the debt but then I have money saved up for emergency fund and also to maintain my lifestyle in case things go bad (e.g. major medical expenses, lost job, etc.).

Also, I am a renter, and so if I wish to move to a new rental, it generally costs 3-4x a month's rent to move in. So between that and other needs, I'm being cautious in this sense, although I do pay for it in additional interest.

[scfr]

Which part of my math is incorrect? Did I calculate compounding interest incorrectly?

Your gain is not going to be as much as you think unless your marginal tax rate is 0%.

[sv2007]

There's a promotion for starting a new bank account at a bank. The requirement is that the initial deposit must be at least $15,000. If the balance of the account at least stays at $15,000 for 30 days since opening, the bank will give you $400.

According to my calculations, that is essentially getting paid 2.6% interest in 30 days. That seems like a lot.

I also have debt too which I usually send my excess money to. However, I calculated that if instead I opt to wait 30 days (or even 60 days) with the $15,000, my debt would only accumulate $50.0 on the principal over that 60 day period (a little more than half that because it compounds).

Assuming my debt is $4,000 with an interest of 7.00% that compounds daily, it means my principal would be roughly $4,046.28 (each day adds about $0.70, assuming 365 days in a year).

So my total gain would be a gain of about $340 dollars.

Is my math correct, assuming I have the $15,000 and won't need to access it for 30 days?

I'd like to ask people who want to check their math to PLEASE post up their calculations. Then we can just walk it over and not bother typing our own...

$4000 @ 7%/365 for 30 days
$4000 * (1+ .07/365)^30 = y (30 days)
y = $4023.08

@ 60 days = $4046.29

Your gain $400 - 46 > $350; which means your $340 is wrong

[Jovanny]

I think you should clear off the debt first.