How Much Can You Really Earn By Chasing Bank Account Bonuses?
You may have heard of people “churningVia credit card welcome offers, but what about bank bonuses? Many banks offer cash back of $ 400 or more when you sign up for a new checking account, and it’s certainly possible to browse new accounts just to accumulate bonus money. Banks don’t want to make it easy for you, so there are a few things to keep in mind: you need to start with a large bankroll, the process can be difficult to manage, and overdoing it can cause banks to restrict your bankroll. possibility of opening new accounts.
Can You Really Make Money Churning Bank Accounts?
Yes, it is possible – the big bogus bank bonuses claim to win $ 500 to $ 1,500 per year of practice after paying taxes (yes, these bonuses are taxed as income). Requirements may vary from bank to bank, but the steps are relatively straightforward, as long as you have a bankroll of between $ 1,000 and $ 10,000 that you can let sit for an extended period. To qualify for a bonus, you may need to do one or more of the following within a few months of opening an account:
- Save a minimum dollar amount through direct deposits from your employer or government.
- Reach a spending goal by making purchases with your debit card.
- Deposit a specified amount of money and leave it there for a specified period (often the more you deposit, the bigger the bonus).
Bonuses typically range from $ 50 to $ 400, so it’s not difficult to make money with a few new accounts, as long as you’re organized and ready to do your homework. And doing your homework is necessary, because there are definitely downsides to consider.
The disadvantages of churning bank bonuses
Since banks frown on churning (they only make these offers because they want to keep you as a customer, after all), they won’t make it easy for you. Here are some of the obstacles you will face:
- Restrictions on direct deposit: Many banks require a ACH direct deposit be set up in your account within a certain number of days. Normally, it doesn’t matter if you are paid by direct deposit by an employer or the government, but if you run bank accounts you will have to face the chore of repeatedly changing your banking information with HR or the IRS. There are ways to set up direct deposits between separate bank accounts, which allows you to manage the process yourself, but it can get complicated too.
- Advanced payment: To get the most out of your money, you might need to deposit thousands of dollars when you open the account and keep it there for months (which can also help you avoid the associated monthly fees). Not everyone has $ 10,000 lying around, but you’ll need a piece of about that size to take advantage of the bigger bonuses.
- Small print restrictions: Every bank is different, and the bank (s) you target may limit the number of accounts you can open in a year, charge closing or balance fees, or require a specific number of transactions each month. Most accounts only require one soft credit check to open an account (which doesn’t hurt your credit score), but you’ll want to check the terms and conditions to make sure you’re not affecting your creditworthiness in the process.
- Banks may restrict your ability to open a new account. This is a significant risk because many banks use something called ChexSystems to monitor your request history at multiple financial institutions. If you open too many accounts in a year, a bank can essentially blacklist you for a few years, and facing it can be a real pain. The worst part is that there is no precise figure on how many accounts you can safely open, which is why bank bonus churns closely monitor the rejection rates of the various banks.
At the end of the line
It makes sense to chase after the occasional banking bonus, especially if you get a good deal, but if you want to maximize your profits be prepared for some time consuming hassle. Turning this into a side gig is probably not worth the risk of being blacklisted by the banks, but there is certainly money to be made.