Is Bank Account Bonus Churning Worth It?

Several hundred dollars to open a new account is enticing.

Without a doubt, you’ve heard of credit card hacking and churning to get signup bonuses — even if you don’t play the game.

This weekend I spoke with someone who makes extra money for travel through bank account bonus churning. I’ve occasionally seen a signup bonus advertised, but I never gave them much thought.

He explained that he had earned several thousand dollars in signup bonuses for new bank accounts over the last year.

I was intrigued enough to learn more about the bank account bonus world. My first thought was this sounds even more confusing than dealing with multiple credit cards. However, I decided to research before shutting the door to a potential opportunity.

Google will lead you to a single authority on bank account signup bonuses.

All roads lead to the Doctor of Credit. I read several articles about the practice of earning bonuses, and everyone referenced the same site for the best information about current bonuses, rules, etc.

Most bonuses require a direct deposit.

The direct deposit requirements may make earning bonuses more complicated for those without a paycheck from an employer or a social security payment. Fortunately, the good Doctor has a list of other transactions that qualify as direct deposits by the bank.

Unsurprisingly some of the articles that talked about the successes found through bank account bonus churning were written by self-employee freelancers, including one by 5am Joel. The direct deposit hurdle didn’t stop him from earning $2,200 in bonuses.

You need good organizational skills.

My partner gives me a scowl at the cash register in our grocery store as she digs through her wallet, looking for the card with GROCERIES written on the back. We have a few cards, and I admit it’s easy to lose track of which card has the best bonus, especially when categories change quarterly.

Paying the bill on our handful of cards is simple, though. We have one checking account, and everything gets paid from there.

The people earning thousands in bank account bonuses are opening multiple accounts simultaneously. That means they have to move money around to various accounts.

This could quickly get confusing.

You can reduce the confusion factor by using emergency fund money to move around and not mess with your primary checking account. However, you may need to perform a bunch of transfers to get money back into your primary checking account since these new accounts will need to receive direct deposits to qualify for the bonus.

Serious credit card bonus chasers use spreadsheets and apps to keep the complexities easier to track. Bank account bonus chasers need to track with equal attention to detail.

One mistake, and you don’t qualify for a bonus. Worse, you might miss a credit card payment or overdraft an account if you aren’t on top of your bank accounts.

You need free cash.

It takes money to make money.

You need cash to deposit into your new accounts to play this game. There’s no getting around that.

A disaster awaits if you try to play the shell game with the money you need to pay your bills each month. The last thing you need is to overdraft your checking account and bounce a payment to your credit card, mortgage or rent holder, or car payment.

Bonuses are generally taxable income.

Unlike credit card rewards, bonuses from banks for opening new accounts are taxable. Many banks post the bonus as an interest payment.

The taxable state of these bonuses may deter some people. It’s income and not points, so I can see why it is taxed.

Can churning bank accounts impact my relationship with the bank?

I found very few details, but it seems that if you churn bank accounts too much, you may have trouble opening new accounts in the future.

This doesn’t seem much different than opening too many credit card accounts.

I also think there is a natural throttle. I’m unsure how many direct deposits you can get your HR department to split your paycheck into. I believe mine was limited to two accounts.

Does opening a new bank account impact my credit?

It seems that most banks will do a soft pull of your credit when you open a new account. The good news is that this type of inquiry doesn’t impact your credit score.

If you have a freeze on your credit with Equifax, Experian, and TransUnion, you will need to release the freeze before applying.

And if you don’t have a freeze in place, you really should set them up. It’s free and good practice to add one more layer of security to help protect your credit.

So is Bank Account Bonus Churning worth it?

Good bonuses available will certainly out-earn many side hustles that take more time and effort.

You need free cash to distribute to your new accounts and be well organized. The risk is that you flub a payment to something important that can impact your credit rating.

For the well-organized and financially responsible, bank bonuses seem relatively easy.

I don’t see myself chasing bonuses, but I will not just trash the offers I get without further consideration.

Do you churn bank accounts to earn bonuses? How have you made out, and would you recommend the practice?