EDIT: I made $2800 last year doing this! (This thread got revived after a long time...)
So I've seen plenty of talk of credit card churning on this forum, but I haven't seen nearly as much chatter on bank account churning. I thought I'd write up my experiences on this.
Numerous banks have signup bonuses for their bank accounts. Typically I go for the $150 or higher ones (I'll explain why I don't go for every single one I see later - it's not just because it's one more account to manage).
What are the requirements?The typical requirements for a signup bonus are:
- Direct deposit $X
- Sometimes, use their bill pay to pay Y payees at least $Z
- Sometimes, make W debit card transactions
- Sometimes, you must maintain $U for T days
Of course, many bank accounts require a minimum or average balance to avoid fees on the account. Also, some accounts charge a fee if you close your account soon after opening it (the threshold is usually 6 months).
What qualifies as a direct deposit?I'm lucky to have an employer that allows me to 1) split my paycheck to three separate bank accounts, and 2) change my direct deposit accounts at any time online, thereby not annoying people in person at HR (maybe HR does need to do some human intervention every time I change my DD settings, but I doubt this). Therefore, I pretty much always just do an actual direct deposit.
However, more often than not, an ACH transfer from one of your other accounts will work. To see a list of such qualifying transfers, check here:
http://www.doctorofcredit.com/knowledge-base/list-methods-banks-count-direct-deposits/What kind of return can I expect?Typically, you can get a $150-$200 fee free return for opening an account, fulfilling their DD and or bill pay and debit card transaction requirements, keeping $2000 in the account, and leaving the account open for six months. So that's a 7.5 - 10% return over 6 months. Which is a 15.56% - 21% annualized return, if I've done my math correctly.
How can I find these offers?I find out about these bank account bonuses by following
www.doctorofcredit.com. He has many other worthwhile posts too, mostly about MS and churning CC's. To find the current bonuses, go to
http://www.doctorofcredit.com/best-bank-account-bonuses/.
How can I make $1600 in a year?This year, I have earned
- $150 from Chase Savings (this has a much higher requirement of maintaining $10k for 90 days. I did this because I was tax loss harvesting VTIAX at the time, otherwise I wouldn't have done it)
- $200 from PNC Virtual Wallet
- $200 from Fifth Third Bank
- $60 from Santander
Total received so far: $610
I have the following that I am meeting the requirements for:
- $200 from Nationwide Bank
- $150 from BMO Harris
- $200 from Suntrust
- $180 from Santander
Total pending: $730
I also plan on getting a $300 Chase checking bonus again this year (I got it last year). The coupon for this will probably cost about $20. Hence the $1600 in the title.
But, I expect there will be more signup bonuses as the year goes on, so I'll probably make more than that.
I do believe some of these offers are expired. Check out that link I have above with current bonuses.
Things to watch out forStay organized! I created a calendar in Google Calendar specifically to track when I opened my accounts, when I met the requirements, by when I expect the bonus, and when I closed the accounts. I also do a check before every paycheck gets cut to make sure my DD settings are correct to meet the requirements.
Some banks will do a hard pull on your credit report to open an account. I would never recommend you do this. The Doctor of Credit blog always tries to tell you if it is a hard or soft pull to open the account.
Some bank account bonuses are specific to a region.
All bank account bonuses are treated as interest and are therefore taxable. I think it's still worth it, but you just need to make sure your tax withholding and/or estimated tax payments take into account this income.
Why not chase all bank bonuses?Some banks will pull your ChexSystems report. It's kinda like your credit report, but for banks. According to Doctor of Credit, if you have too many recent inquiries on your ChexSystems report, you may get denied for a bank account. Hence, I go after the $150-$200 bonuses only.
Another benefit: Manufactured Spending Opportunity!Some banks will let you fund the initial deposit with a credit card. Sometimes this will be charged as a cash advance, sometimes not. I highly recommend you set your cash advance limit to zero before doing this. Also, you can check out
http://www.doctorofcredit.com/does-funding-a-bank-account-with-a-credit-card-count-as-a-purchase-or-cash-advance/ to see if people have been charged cash advance fees in the past for popular cards and banks. Citi almost always charges this as a cash advance.
I've gotten 2500 Chase Freedom points and 2000 Barclaycard Arrival miles from funding bank accounts with a credit card, without cash advance fees.
Two notable bonusesSantander gives you $20 for $1500 DD and 2 bill pays. Read more here
http://www.doctorofcredit.com/santander-20-per-month-bonus-sign-extra20-bundle/Chase often mails out coupons for bank signup bonuses. People sell these on eBay. I've bought one before and used it. You can read more here
http://www.doctorofcredit.com/coupon-promo-codes/chase-coupon-codes/In the end, is it worth it?I think so. I use YNAB to keep track of all of these accounts, and Google Calendar to keep track of the dates of everything. I find it to be pretty easy - it doesn't take that much time and changing my DD settings is dead simple. But in the end, of course only you can make the judgement.
Even if you don't churn bank accounts, I'd still recommend getting the Santander one. That's one you can automate very easily (many people just set up automatic transfers of $1500+ and two bill pays).
I probably sound like a fanboy or something of the Doctor of Credit blog. But really, it's a good blog that I have no affiliation with.
P.S. For those of you who have methods of MSing with debit cards, I recommend you sign up for a UFB Airline Rewards checking account. For every $2 you spend with your debit card, you can earn 1 American Airlines mile.