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Bonuses received for "Free"

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If the bank offers free tickets to a theatre (value of tickets are over $10) for opening a new checking account, but the bank received the tickets for free from the theatre company, is it still a bonus? If the bank uses these same tickets in a drawing at their grand opening, are there any concerns?

Unlike the cost determinant that's used when working with premiums under Regulation Q, Regulation DD works with the value (market value) of the item. If the theater company's tickets have a market value of $10 or less, one of them would not be a bonus under Regulation DD, but if the market value is over $10, you are working with a bonus under Regulation DD.

In this case, because the cost to the bank is simply the cost of accounting for and handling the tickets, they would qualify as premiums (not interest) under section 217.101(a) of Regulation Q, if the checking accounts you're referring to are demand deposit accounts. Even though they cost you nothing, the tickets do have value. To make them legitimate prizes in your branch opening drawing, you must have no purchase or account opening qualifications for entry into the drawing.

First published on 5/26/08

First published on 05/26/2008

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