A bank is permitted to offer a $100 to customers opening a new checking account if the $100 premium is not related to the balance in the demand deposit account or the duration of the account balance. As a general rule, a bank is prohibited from paying interest on a demand deposit account under the Federal Deposit Insurance Corporation regulations, but the regulations contain some exceptions to the definition of “interest.” Payment of any premium that is not directly or indirectly related to the balance in a demand deposit account or the duration of the account balance is not deemed to be an “interest” payment under the regulation. 12 CFR 330.101(e).

Another exception from the definition of “interest” are premiums given to the depositor only at the time a new account is opened or an addition is made to an existing account. Under this exception no more than two premiums per deposit can be given during any twelve-month period and the value of the premium cannot exceed $10 for a deposit of less than $5,000, or $20 for a deposit of $5,000 or more. In determining the amount of a merchandise premium the bank must include shipping, warehousing, packaging and handling costs. 12 CFR 330.101(a).