Despite the fact that we would all like to think that such a thing as free money exists, alas, it does not … unless, of course, you want to open a checking account.  Several banks have started offering cash just to get new customers in the door.  But hidden in the fine print, are fees and rules that will wipe out the supposed windfall.  Cash incentive offers have more than doubled over the last year.

For the banks, this is a calculated trade-off.  As they start lending again, banks need more cash from deposit accounts to help fund those car loans and mortgages.  So while a handout from a bank might feel like you’ve won the lottery, you’re actually handing over the real prize: your money.  Banks are targeting “good” would-be customers, who are likely to maintain high balances and use their debit cards frequently.  In turn, they hope new account-holders will raise banks revenues and apply for loans down the road.

But, if you are a savvy consumer, you already knew there’s no such thing as free money.  Expect to jump through serious hoops, just to qualify.  For starters, you don’t get the cash right away.  You first have to meet certain requirements, many aimed at simply getting more of your money: To get $300 at Citi, you’d have to open a Citigold interest checking account and deposit $1,000 by Nov. 18.  Then, you’ll have to maintain an average daily balance of $1,000 through the end of the month.  You’ll also have to sign up for three more Citi products – like a savings account, certificate of deposit or a credit card within two months of opening the account.  And when you finally get the money, expect a bill come tax time.  All of these cash bonuses will be taxed as regular income.  If you’re in the 25% tax bracket, that $300 award will drop to $225.

So here’s the rub –

Minimum Required Balance

Consumers who receive cash offers for a new account should watch out for minimum balance requirements, which more checking accounts require these days.  The average minimum balance requirement is $3,883 for a no-fee interest-bearing checking account, up 15% from last year, according to Bankrate.com.  That minimum falls to $249 on non-interest checking – still 34% higher than last year.  The average customer who falls below the threshold pays a fee as high as $13.  Look for accounts with zero minimum balance requirements.

Debit Card Rules

At Chase, consumers need just $25 to open Chase Checking and to get up to $125 cash bonus.  But account-holders will be charged $6 per month if they don’t buy something with their debit card five times each month or have at least one monthly direct deposit posted to their account.  For banks, this proves especially lucrative because they make money with interchange fees.

Overdraft Fees

Along with cash bonuses, new checking accounts come with a hard sell on overdraft coverage.  AVOID IT.  The fees kick in when a consumer withdraws more money from their checking account than they have.  As of August, new Federal Reserve rules prevent banks from automatically enrolling consumers in debit-card overdraft coverage, which permits purchases to go through even if the consumer doesn’t have enough money in their checking account, thereby allowing banks to collect their fee.  Now, customers who do nothing will have their overdraft purchases declined.

On July 1, new Federal rules will require banks to ask customers to opt in for overdraft coverage; that line of credit that kicks in when account holders make purchases that exceed their available checking and debit account balances.  To lure customers to their programs, some banks are trimming their overdraft fees.  Currently, such fees average $34 per debit transaction or ATM withdrawal.  However, under the new law, if account holders don’t opt in, banks won’t be able to cover their charges when their account balance falls short.  The charge will simply be declined, and the customer won’t be charged an overdraft fee.   For those of you, however, that want to retain your overdraft protection, but for a small price tag, there are a few simple ways to cut your overdraft charges.

The first is to carry multiple cards.  If you always have 1 or 2 back-up cards and cash on you at all times, you will should never run into a situation where you don’t have the funds to pay for something.  If you are someone who tends to carry borderline balances, this may be a good option for you.

One of the easiest ways to avoid overdraft fees is also probably the most obvious:  balance your checkbook.  Now that account information and statements are available online, it is simple to check your account weekly and review the transactions and balance.  Again, if you are someone who operates on a borderline balance, check your account daily and make a budget for yourself.  Make sure you know exactly what you are spending and that it matches up with what you actually have to spend.

Another easy way to avoid hefty fees, consider linking your checking account to either a savings account or a credit card.  There may be a small fee to do this, usually $5 to $10 if you end up dipping into another account.  The downside is that linked accounts with credit cards carry the potential for getting hit with interest charges.  If, however, you are someone who pays off your balance each month, this can a good option.