Free Lunch?

In High School, one of my teachers spent more than one class period trying to convince us that there is no such thing as a free lunch.  Someone, somewhere is paying for that lunch.  I don't think the class had anything to do with politics either.

I found a good example of this recently in an advertisement from Chase.

Good things do come in small packages!

Get $125 on us.

$125 is yours when you open a qualifying Chase checking account!

So... who is paying for this $125 "free lunch?"  Well, certainly not Chase!  Here are some excerpts from the the details in the small print:

The Chase checking accounts eligible for this bolus have monthly Service Fees that start at $10-15 and can be different by market.

To receive the bonus: 1) open a new qualifying Chase checking account, which is subject to approval; AND 2) deposit $100 or more within 60 days of account opening.

If your checking account is closed within six months, we will deduct the bonus amount at closing.  Also, if your account is closed within 90 days, an Account Closing Fee of $25 will apply.

So the very minimum amount this checking account will cost you will be $60, which drops this bonus down to $65.  More likely, the monthly fees will be $15 per month, so that means the bonus is really $30.  If you close your account before 6 months have passed, you'll lose the $125 in addition to any monthly fees you have already paid.  Closing the account before 90 days have passed REALLY sticks it to you.

Then, when you call to close the account, you're sure to get the hard sell.  They don't want that $10-15 per month going away.

I'm sure that some people might come out $65 ahead in this deal, but for each of those people, there will likely be ten that end up spending more than $125 in fees.

Ridiculous.

Because you are paying a bank for the privilege of using your money.  It would be similar to me lending you money, paying you for the privilege, and paying you the interest during the life of the loan.