Churning Bank Accounts for Cash Bonus Rewards

One of my 2020 goals was to start taking advantage of cash bonus rewards via new bank account signup promotions. This is similar to “travel hacking” or “credit card churning,” except the bonuses are paid in all cash, and there’s no credit applications involved.

I’m by no means an expert in this type of stuff, but I’ve done a pretty decent job so far this year and made $2,200 for a pretty small amount of work. This post details my process and experiences.

Churning bank accounts isn’t a good idea for everyone… So I want to be cautious about promoting activities that might lead to account fees or banking issues. (There are no referral links to banks or affiliate promotions in this post). Everything I write should be taken with a grain of salt!

YTD Summary & Bonus Results:

Since January, my wife and I have opened up 9 new bank accounts. That might sound like a lot! But spread throughout the year, across 2 people, it’s been pretty easy to track and manage it all.

We’ve earned $2,200 CASH in sign up bonuses. This money was credited to our various accounts after completing easy welcome offer terms. None of this $ is from referral credits — which could earn us more rewards, but referrals was never our main focus.

Here’s the accounts we opened and bonuses we received:

Bank Name Account Type Time to bonus $$ Sign up Bonus $$
Wells Fargo – me Checking Account 90 days $400
Wells Fargo – wife Checking Account 90 days $400
Citi Bank Checking Account 90 days $400
US Bank Checking Account 60 days $300
PNC Bank Checking Account 60 days $300
Chime – me Checking Account 5 days $100
Chime – wife Checking Account 5 days $50
SoFi – me Checking Account 3 days $125
SoFi – wife Checking Account 3 days $125
TOTAL: $2,200

 

Unlike a credit card company, none of these banks charged an annual fee for opening an account. So this $2,200 only cost me time to set up and manage. If I had to estimate, it probably took 10-20 hours throughout the year to open these accounts, set up transfers, and close whatever I didn’t want to keep open.

Getting Started Churning Bank Accounts:

During my sabbatical, I kept a larger than usual amount of cash in an emergency fund. One of the downsides of holding cash is that the money isn’t invested or growing wealth — most cash just sits in a simple savings account, earning peanuts.

So I started researching different banks that could offer me a slightly higher interest rate, as well as a nice signup bonus or welcome offer to join them. I set aside $20,000 of my emergency fund to start opening accounts but later realized I could do most of these activities with less than $10,000.

What I like about churning bank accounts is there is no hard pull on your credit report*, and every checking and savings account is FDIC insured. Moving money around between established financial institutions is virtually a risk free activity. If I ever needed to pull the cash out, I could do it anytime at no cost.

*Just as a precaution, I monitored my credit score each week throughout the entire year. I started 2020 with an 816 credit score, and today it’s 814. Opening checking accounts doesn’t have the same effect on your credit history as opening multiple credit cards or new lines of credit.

Finding Welcome Bonus Promotions:

To find which banks are offering the best and highest signup bonuses, I used this site: Doctor Of Credit. They constantly refresh the current promotions list and available offers across the country.

Also there’s a TON of information on the site, including user feedback and experiences that help avoid scams, fees and bad deals.

Some things to note about bank account bonuses:

  • Not every bank or offer is available in every US state.
  • Each offer has different and unique qualifying activities. (The most common ones are explained below)
  • Each bank has a different set of terms and conditions for opening, closing accounts, and minimum balances to avoid a monthly fee.
  • These offers are mostly for NEW customers. So if you’re already with a particular bank, or recently received a bank bonus, you may need to wait a year or two before qualifying for another bonus with that same bank.

Needless to say, there’s a decent amount of research and fine print to read. For my first few accounts, I chose banks with promotions I could easily qualify for, had the best reviews, and ones that had physical bank branches near to where I live.

Meeting Criteria for a Welcome Bonus Offer:

The two most common ways a signup bonus is achieved is with qualifying direct deposits, or a minimum account balance held for a specific time period (typically 60 to 90 days).

For example, the Wells Fargo promotion I signed up for required a minimum of $3,000 in direct deposit activity, each month for two months in a row. That’s a total of $6,000 across multiple deposits. After this activity was done, they posted a $400 checking bonus.

For the CitiBank promotion, this required a minimum of $15,000 cash deposited and left in the account for a 60 day period. After that time period, they applied a $400 account bonus. Easy stuff.

Note: Each bank has a different definition for “qualifying direct deposit.” Changing your employer payroll is one option (the banks prefer this), but it’s not always the most convenient. In my case, since I was a freelance contractor this whole year, I just set up ACH transfers from myself to myself. This site here has a great list of which methods qualify as a direct deposit for each bank or credit union.

Account Tracking Systems and Reminders!

Signing up online for accounts is pretty easy, but what’s hard is remembering all of the unique promotion details, qualifying activities, user IDs and passwords for each bank. There are a few tools I recommend to help stay organized. 

  • Excel or Google Sheets: I use a simple spreadsheet to track all the bank names, dates, bonus amounts, etc.  
  • Word or Google Docs: I created a simple document to journal anything new I learned, make a note of recurring transfers I set up, and special T&C’s I need to remember.
  • Mint.com: After each new account opening, I immediately connected the new bank user-id and password to my Mint.com account. Makes for easy tracking of transactions and net worth updates! (Some people prefer Personal Capital)
  • Calendar Reminders: For the accounts I want to close or money to withdraw in the future, I set calendar reminders so I don’t forget stuff.

Things can get messy really quickly. So if you’re not great at record keeping, perhaps churning isn’t a good fit for you. Or, try maybe signing up for just 1 new checking account bonus at a time.

Overall Churning Experience and Is It Worth It?

Since I have the time, cash, and a personal interest in nerdy finance stuff, making extra bonus money is fun for me. For just a few hours each month I can make an extra few thousand dollars each year.

I’m pleasantly surprised at how easy it all was and plan to keep taking advantage of promotions as they come up.

Another cool thing about joining all these banks… I got to evaluate each of their processes and systems to see if they were worthy of me switching all my primary accounts over to them. I’ve been with Chase for about 10 years so it was good to shop around a little bit. I found some impressive things here and there but none of them really blew me away enough to make them my primary bank.

Have you tried churning bank accounts like this? Any killer stories to share?

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20 Comments

  1. Dollartrak September 28, 2020 at 9:05 AM

    I have had good results with credit cars before, but have never really went after the bank account rewards. Great article and I like the way you laid it out to to show that it can all be done in under a year. With my current tax rate, I would need a $4k raise just to pull this off. It seems like it is well worth the paper work.

    Reply
    1. Joel September 28, 2020 at 9:20 AM

      Wife and I also did CC churning the past few years. I think we’re up to ~$8500 in rewards on that front. But, it’s not something I really want to write about or encourage people to do. Although bank account churning isn’t as sexy or rewarded as much, it’s essentially risk free and just requires patience and time. :)

      Reply
  2. Leila Kartforosh September 28, 2020 at 9:08 AM

    I just did this with Capital One checking! It’s not much but I only need to spend $300 in the first 90 days for $100 bonus. I’m just going to transfer $325 and use it to buy my groceries and gas in October!

    I don’t spend much typically so it’s not something I could always do but I too hope to take advantage when I can!

    Great idea

    Reply
    1. Joel September 28, 2020 at 9:22 AM

      Awesome work. FREE money!!! Glad you can hit the spending requirement with stuff you would buy normally anyway. $100 for only $300 spend is a great deal! I’m going to look into that Cap One deal – thanks!

      Reply
  3. abails September 28, 2020 at 10:04 AM

    What about taxes? Not only would I need to keep track of all the new accounts, I am concerned that I would need to pay out about 33% in taxes. It makes that sweet $300 look paltry after all the work is done. Thanks for writing about this topic! We get the offers all the time in the mail so it does cause some curiosity.

    Reply
    1. Joel September 28, 2020 at 12:41 PM

      Great question! Some banks classify the bonus as “interest”, so they will send out a 1099INT at the end of the year. Other banks won’t send anything because it’s under $600 requirement for MISC income. But regardless of getting a form or not, ALL income no matter where it comes from should be reported to the IRS.

      As for whether it’s worth it… Even if I was taxed at 33%, I would still do this for extra money. It’s worth it per hour for the effort I put in :)

      Reply
      1. Joel September 28, 2020 at 7:41 PM

        AWESOME article Richard. Thank you for finding this.

        Reply
  4. Grateful Kae September 29, 2020 at 11:35 AM

    Oh boy, I’d better not let my husband see this article…He LOVES doing stuff like this. I, personally, find it so overwhelming to have so many different accounts to keep track of (and I do most of our tracking activities). It kind of makes my head spin.

    Over the past few years we have ended up opening quite a number of credit cards and/or bank accounts for this same reason, to grab the free cash rewards or other rewards. Like you mention, none of them negatively affected our credit scores and they have no other drawbacks (except for having to keep track of them.)

    On a similar note, we pay for most everything we buy on credit cards and always pay 100% in full every month, and my husband is constantly telling me “Use XX card for gas this month, there’s triple rewards!!” or whatever card has a good deal going on….UGH! .hahaha. I would use one single card for everything if I could. :)

    Reply
    1. Joel September 29, 2020 at 1:13 PM

      My wife and I do the same. I use a Sharpie Pen to write on my wife’s credit cards… “GAS only” or “USE THIS ONE”. Tracking has become easier over time, but I know what you mean about being overwhelming. I’ve gotten into the habit of shutting down old accounts, so I don’t have too many just sitting around doing nothing. :)
      Cheers Kae!

      Reply
  5. Nate September 29, 2020 at 11:39 AM

    I’ve done this on a few accounts this year as well. $900 for opening a savings and checking account at Chase was my best bonus, but I’ve had a couple others. Plus credit card churning, I’ve made about $2000 so far this year with more in the works right now. It all goes straight into the vacation fund for us.

    How long do you wait to close these accounts? Checking accounts in particular have monthly fees that you can waive by either keeping direct deposit or a certain amount of cash in the account. I’m always nervous of closing too soon and triggering some clause that voids the bonus. But it’s a pain to continue my direct deposit to an account I don’t otherwise use for anything.

    Reply
    1. Joel September 29, 2020 at 1:20 PM

      Honestly I’ve been shutting them down about 2 months after I get the bonus. The reason I started with banks that have physical branches near me is I can go into the branch, get a cashiers check for the entire balance, then ask them to close the account right then and there. Then I take the cashiers check and deposit it right at my main bank.

      I never continue the direct deposit because most fees can be waived with just a minimum balance. At least the ones that I’ve signed up for so far.

      The only accounts I have open still are the “virtual ones” with no fees. Chime and SoFi. Although referrals aren’t my main motive, I have made a few $ from sharing with friends so I keep these open just if they want to open an account real quick. Bonuses for Chime and SoFi are very quick and easy.

      Reply
  6. Impersonal Finances September 29, 2020 at 1:46 PM

    Great article and a great reminder that there is free money to be made (and taxed unfortunately) if you know where to look! I have gotten into credit card rewards but didn’t even consider opening new bank accounts. I plan on opening credit cards with many of these banks anyway in the future so it doesn’t hurt to have an account set up with them to help me keep track.

    And thank god for Mint to track them all!

    Reply
    1. Joel September 29, 2020 at 4:35 PM

      Cool! Yes it’s much better if you have an existing login to the bank.

      Mint is a lifesaver. I have like 50 connected accounts haha!

      Reply
  7. JoeHx October 2, 2020 at 4:33 PM

    I did this a few years ago and netted over a thousand dollars. I think I quickly ran out of banks, though. Being that it’s been a few years, I’m probably eligible to do it again. Maybe I should.

    Reply
    1. Joel October 2, 2020 at 4:38 PM

      Let me know how it goes. I was curious about that too, being my first year. The promos will eventally run out and i’ll have to either go for the low value ones (might not be worth my time) or just wait out the time period. Cheers!

      Reply
  8. TB from Midwest October 21, 2020 at 11:08 AM

    Hey Joel – this is a great post! I received a $500 promotional flyer in the mail recently for a regional bank. Basically provides $400 upon opening the checking account and then a chance to get an additional $100 within the first 90 days by performing various actions (3 transactions a month, 1 ACH deposit over $500, etc.). There are monthly fees associated, but can be reduced to $0 if I sign up for electronic statements and maintain monthly average balance of (only!) $1,500. This seems like a no brainer. My question for you is, do you know of any websites/blogs that track these banking (checking/savings) promotional offers, similar to places that track the credit card offers?

    Reply
    1. Joel October 21, 2020 at 11:57 AM

      Hey TB… YES! The best place is Doctor of Credit —> https://www.doctorofcredit.com/best-bank-account-bonuses/ This site is updated almost every day it seems :)

      Sounds like the one you got might be a “targeted offer”. These are typically only mailed to select people and require a unique code or something special to sign up. Either way, congrats on the $500 and glad you were able to avoid the fees. Great work!

      Reply
  9. Jamie October 26, 2021 at 11:31 PM

    I love this idea! But how do you set up the direct deposits? Do you just keep changing the account your paycheck goes into? Or do you set up direct deposit from another one of your bank accounts?

    Reply
    1. Joel October 27, 2021 at 1:51 PM

      Hey Jamie!
      There are a few ways to set up direct deposit. You can change it with your employer (but this can take some time to change — then change back afterwards)… The other way is to just ACH transfer between your other bank accounts. Like “paying yourself”. Some banks accept this as a form of direct deposit, and others don’t so it’s best to check this page here here which shows which banks accept what types based on user experience. Hope this helps!

      Reply

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