You might have heard of people “churning” through credit card welcome offers, but what about bank bonuses? Many banks offer $400 cash back or more when you sign up for a new checking account, and it’s certainly possible to cycle through new accounts just to accrue bonus money. Banks don’t want to make this easy for you, so there are a few factors to keep in mind: you need to start with a sizable bankroll, the process can be a pain to manage, and overdoing it can lead to banks restricting your ability to open new accounts.
Yes, it’s possible—serious bank bonus churners claim to make around $500—$1,500 per year from the practice after paying taxes (yes, these bonuses are taxed as income). Requirements might vary by bank, but the steps are relatively simple, provided that you have a bankroll between $1,000 and $10,000 that you can let sit for an extended period of time. To qualify for a bonus, you might need to do one or more of the following within a few months of opening an account:
- Save a minimum dollar amount via direct deposits from your employer or the government.
- Meet a spending goal by making purchases with your debit card.
- Deposit a specified amount of money and leave it there for a set period (often, the more you deposit, the bigger the bonus).
Bonuses typically range from $50—$400, so it’s not hard to make some money off a few new accounts, provided that you’re organized and are willing to do your homework. And doing your homework is necessary, as there are certainly downsides to consider.
Since banks frown upon churning (they are only making these offers because they want to keep you as a customer, after all), they’re not going to make it easy on you. Here are a few of the roadblocks you’ll be dealing with:
- Direct Deposit Restrictions: Many banks require a ACH direct deposit to be set up in your account within a certain number of days. Normally, this is no big deal if you’re paid via direct deposit by an employer or the government—but if you’re churning bank accounts, you’ll have to deal with the hassle of repeatedly changing your banking information with HR or the IRS. There are ways to set up direct deposits between separate bank accounts, allowing you to manage the process yourself, but that can get complicated too.
- Cash up front: To get the most bang for your buck, you may need to deposit thousands of dollars when you open the account, and keep it parked there for months (which may also help you avoid any associated monthly fees). Not everyone has $10,000 lying around, but you’ll need a chunk of around that size to take advantage of the larger bonuses.
- Restrictions in the fine print: Every bank is different, and the one(s) you’re targeting might limit the number accounts you can open up within a year, charge closing or balance fees, or require a specific number of transactions each month. Most accounts only require a soft credit check to open an account (which doesn’t hurt your credit score), but you’ll want to double-check the terms and conditions to be sure you aren’t impacting your creditworthiness in the process.
- Banks might restrict your ability to open a new account. This is a significant risk, as many banks use something called ChexSystems to monitor your application history across multiple financial institutions. If you open too many accounts within a year, a bank can essentially blacklist you for a few years, and dealing with it can be a real pain. The worst part is that there’s no hard number on how many accounts you can open safely, which is why bank bonus churners closely track various banks’ rejection rates.
It makes sense to chase the odd bank bonus—especially if you get a good offer—but if you want to maximize your profits, prepare for a time-consuming hassle. Turning this into a side gig probably isn’t worth the risk of getting blacklisted by banks, but there is definitely money out there for the taking.
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