Bank-bonus chasing

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chesterton_fan
Posts: 14
Joined: Tue Dec 04, 2018 4:23 pm

Bank-bonus chasing

Post by chesterton_fan »

Hello,

I'm thinking about bank account hopping in order to get the sign-on bonuses. This would involve opening the account for the minimum possible period of time to get the bonus, then closing the account and moving onto the next one. In this way I'd hope to earn a better effective interest rate (perhaps 3-4% or even more) on my emergency fund.

I would do this with both checking accounts (changing where my salary gets paid every time I hop account) and savings account (parking my emergency fund there, perhaps splitting it two or three ways depending on the amount/bonus on offer). I'd plan to be systematic about it.

This seems an obvious thing to do, and I'm surprised more people don't do it. Obviously reading the small print is important, but it's nothing complex or onerous.

Am I missing something? Could I be blacklisted by the bank in question? Could it be ridiculously time-consuming? Does anyone else do this?

It seems too obvious and good to be true, I wonder if I'm missing something.

Thanks!
H-Town
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Re: Bank-bonus chasing

Post by H-Town »

It's very easy to chase bank bonus. There were so many good deals in the past ($500 or so) per bank bonus. But at some point, you're gonna run into "whether it's worth it for me?" question. After tax, you pocket $315 out of $500 bonus. Sometimes you go on long vacation or your life gets busy, and you kinda fall out of the loop of chasing bank bonus.
Time is the ultimate currency.
123
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Joined: Fri Oct 12, 2012 3:55 pm

Re: Bank-bonus chasing

Post by 123 »

One risk is having to disclose your personal info with each account you open which can multiply your risk of identity theft in case one of the banks gets hacked. Even if the account is open for only a short time the information about you stays in the bank files and systems for a long time.
The closest helping hand is at the end of your own arm.
sailaway
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Joined: Fri May 12, 2017 1:11 pm

Re: Bank-bonus chasing

Post by sailaway »

That sounds exhausting to keep up with. And what if the paperwork gets delayed? Chase could not get all the info right when we tried to open a joint account there after four tries.

But then, in addition to direct deposit, I have a handful of bills that come out of checking ACH, and bill pay all set up where I am.
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alpenglow
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Joined: Tue May 31, 2011 12:02 pm

Re: Bank-bonus chasing

Post by alpenglow »

There are lots of threads on BH regarding bank, credit card, and brokerage bonus chasing. I've done quite a few deals over the years without issues, but it is getting old. At this point, I only tend to bother with big bonuses such as the Chase Sapphire deal that netted about $900 per person last year. As others have mentioned, bank bonus are taxable. OTOH, credit card bonuses are considered credits and therefore are not taxed, making them more preferable IMO. I've churned Chase bonuses quite a number of times and I haven't been blacklisted. I appear to be on the naught list at AMEX though, because they won't honor any new deals/cards for me. Throughout the process, my credit has only improved and I'm close to 850 at this point. It can be a fun and profitable "hobby" as long as you stay organized.
deecee
Posts: 33
Joined: Wed Aug 13, 2014 9:27 am

Re: Bank-bonus chasing

Post by deecee »

I consider myself a casual churner, and will chase any bank bonus that I can get approved for. I am usually limited to national banks, and whatever regional banks are offering bonuses. Over the last three years, I have averaged $4k per year, gross. The link below is a great resource.

https://www.doctorofcredit.com/best-ban ... t-bonuses/
Ron Ronnerson
Posts: 3563
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Location: Bay Area

Re: Bank-bonus chasing

Post by Ron Ronnerson »

chesterton_fan wrote: Mon Jan 17, 2022 3:41 pm Hello,

I'm thinking about bank account hopping in order to get the sign-on bonuses. This would involve opening the account for the minimum possible period of time to get the bonus, then closing the account and moving onto the next one. In this way I'd hope to earn a better effective interest rate (perhaps 3-4% or even more) on my emergency fund.

I would do this with both checking accounts (changing where my salary gets paid every time I hop account) and savings account (parking my emergency fund there, perhaps splitting it two or three ways depending on the amount/bonus on offer). I'd plan to be systematic about it.

This seems an obvious thing to do, and I'm surprised more people don't do it. Obviously reading the small print is important, but it's nothing complex or onerous.

Am I missing something? Could I be blacklisted by the bank in question? Could it be ridiculously time-consuming? Does anyone else do this?

It seems too obvious and good to be true, I wonder if I'm missing something.

Thanks!
I do this. I don't think of it as free money as it requires time, effort, and a willingness to add complexity to your life. It's like a side-job of sorts.

First, you need to locate offers that are worth the hassle. This will require reading fine print carefully, sometimes more than once. You need to fill out applications and sometimes send in supporting documents to establish the account or verify your identity. Then you need to make sure you fulfill the terms such as making a certain number of transactions per month on the debit card associated with the account, making sure the account meets the deposit amount that's required, signing up for e-statements, etc. I use the calendar on my phone to remind myself when I have to do certain activities in order to fulfill the requirements.

Usually, linking another bank account will be required so you can move money around. This may first take two trial deposits to verify the external bank account. I put reminders in my calendar about this too.

You'll also benefit greatly if you establish a spreadsheet in order to keep track of all the details such as when the account was opened, how much the bonus was for, the requirements to earn the bonus, when you earned the bonus, when you closed the account (so that you can churn it again in the future), etc. I also include details about how to avoid fees on the spreadsheet (this often requires keeping balances above a certain limit).

After earning the bonus and making sure you've kept the account open for long enough to avoid a clawback, you'll need to close the account. This can usually be done by email, online chat, or phone call.

At tax time, you'll need to account for all the interest so look out for all the 1099s.

If you can establish a business (my wife and I each registered a business name with our county), you can go after good business bank account bonus offers as well.

In my personal opinion, bank account bonuses are often not as good as credit card bonuses or brokerage bonuses. The reason is that they often require more work for a smaller incentive and the money earned is also taxable. I'm in a low tax bracket (12% federal and don't pay state income tax) so it's not too bad. Just be aware of what you'll be losing to taxes and also account for any lost interest if you need to transfer money from another account where you are earning a higher rate.

There is a learning curve involved but it's not typically difficult work. You can make a decent hourly rate ($100+/hour) and earn a few thousand dollars per year. Double that if you have a significant other. Some offers are obviously better than others and you have to decide which ones are worth it for you to pursue.

If you have extra cash laying around that you won't need for at least a year, I would seriously consider purchasing I Bonds first if you're not already doing that. They pay 7.12% at the moment (there are limits on how much you can buy per year) and it's a lot simpler. Then I would look into credit card and brokerage offers. Lastly, I'd check bank account bonuses that pay at least $200 or more.

It is possible to be blacklisted but it has not happened to me. I've opened a ton of accounts over the years. You should monitor for fraud regularly as well. If you use an account aggregator such as Personal Capital or Mint, that can help with this task. Of course, you'll need to add the account to the aggregator so that will take time as well.

Organization and attention to detail are paramount. I often do this over the summers when I'm not working (I'm a teacher) and have earned mid-five figures from bank, brokerage, and credit card bonuses over the past few years. If you can take the earnings and invest them so the money can compound, all the better.

A family member and friend dabbled in this and despised it. So it's not for everyone. I see it as sort of a game and it's nice getting some cash from all the banks out there. My wife and I earned approximately $11k last year from banks, brokerages, and credit card companies. Most (but not all) of this amount was in bonuses.
tibbitts
Posts: 23722
Joined: Tue Feb 27, 2007 5:50 pm

Re: Bank-bonus chasing

Post by tibbitts »

I've only done three bank bonuses and missed qualifying for the best one by far by making an incredibly stupid mistake: withdrew the funds a few days early. Totally my fault; I had read the terms but just didn't follow the rules, nobody to blame but me. I was so frustrated that I was determined to break even, and transferred the same amount of money as the bonus required from my cash reserves to a Vanguard equity index fund. I earned $329 more than the bonus would have been in two weeks. Actually I earned $1000 more than the bonus in ten days, but got greedy and left the money in for two weeks, reducing my gains to $329 plus the bonus. So I totally lucked out and now the money is back where it belongs.

I think it's crazy to do bonuses that require "qualifying activity" like debit card transactions, and I have no direct deposits for more than $30/mo, so that limits the bonuses I'd potentially be interested in.
MrJedi
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Re: Bank-bonus chasing

Post by MrJedi »

I do a few each year. I need at least $400 for the juice to be worth the squeeze. Doctor of Credit is a fantastic blog for this type of stuff
moneyflowin
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Joined: Sat Oct 16, 2021 6:14 am

Re: Bank-bonus chasing

Post by moneyflowin »

You have to be an organized and meticulous person to succeed at that game. Each bonus has its set of rules that you must follow exactly, and there are limitations and quirks at various banks. Otherwise you can end up paying monthly fees or worse, not getting the bonus because you didn't dot your i's, or even worse, messing up your Chex report because one of your bank accounts was closed with a negative balance because you didn't notice the bank kept charging a monthly fee

The serious pros open 30 or more checking and credit card accounts per year. IMO a bit crazy, but I think those pros are mostly younger and don't have much earning power at their job and thus the effort is worth it for them
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8foot7
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Re: Bank-bonus chasing

Post by 8foot7 »

I've done this off and on for a while, back on this year as I want to make a relatively stupid purchase and (although I understand money is fungible blah blah) I figure if I can generate enough bank bonus money post-tax to pay for it, it's not quite as stupid.

At this point I am only chasing bonuses paying $300 and above unless the bonus simply requires opening an account and leaving a nominal amount in it (a la the Fidelity $100 bonus late last year which only required opening an account and depositing $50). I adopt this approach for a few reasons:

1) we pay 30-something percent on the marginal dollars fed +state, so a bonus $299 and under is worth a max of $194.35 after tax)
2) many bonuses don't pay out if you've been a customer within the past 24 months, so going for a $100 bonus, say, is less optimal than waiting around for a $300 bonus from the same institution
3) changing my work direct deposit is a pain in the rear as is tracking debit card purchases and timing the bonuses and the administration is just not worth it for lower-paying bonuses
4) but for lower paying bonuses that require tracking only an expected payout, it's like walking past money on the ground -- why not stop to pick it up.
5) there is a non-zero chance your profiles and/or accounts at a bank will get locked out for security or ID verification which can be a real pain to get around, especially if your account ends up closed and the bank mails a check -- that is the main risk here, to be without a fairly substantial amount of 'working capital' (a paycheck) if things get blown up at the right/wrong time

I figure there is at least two hours per account involved in chasing all of this stuff, from the research, understanding terms, printing and screenshotting, account opening, funding, changing direct deposit, getting debit cards right, setting up billpay, tracking transactions, calculating expected payout, tracking payout, making sure when I can close an account, closing the account, mailing letters when necessary to follow up on things, etc. I calculate my time as worth about $70 an hour pre-tax, so I need a bonus to ring in well above $140 (unless it qualifies under item 4 above) to make it worth pursuing.

My balanced approach is right for me, not saying it is right for everyone, but it ends up modestly profitable and allows me to feel less guilty about stupid purchases without derailing other financial goals.
z3r0c00l
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Re: Bank-bonus chasing

Post by z3r0c00l »

I do this every year with credit cards and rarely, bank accounts. Last year it was $1200 as:
  • 4 credit cards for about $200 each and
    1 Citi bank account with $15,000 held for 90 days followed by $1500 for 30 days earning $400 bonus
All told we are talking maybe 2-3 hours of work. I get that some people here are too wealthy to work for $400 an hour, but I am not one of them. The Citi money would have earned about $20 dollars in my savings account so it is really $380.

Gladly will do it again this year as opportunities arise. Already have an eye on the first credit card which offers 5% cash back on revolving categories with double cash back up to $150. So that's an easy $300 spending money on groceries that I already need.
70% Global Stocks / 30% Bonds
Doctor Rhythm
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Re: Bank-bonus chasing

Post by Doctor Rhythm »

It’s a common discussion on this forum. I’ve done it with one or two new bank accounts per year for the last several years. It’s been all right - not entirely hassle-free, but not infuriating either. Closing the account is often the sticking point. You’re mileage may vary depending on how many hoops you’re willing to jump through for a given amount of cash.

For myself, I don’t do anything that requires direct deposits or debit card purchases, or that gives a bonus less than ~ $400.
patrick
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Re: Bank-bonus chasing

Post by patrick »

I received $2400 in bank account bonuses last year from 7 different accounts (Capital One, Citi, Santander, People's United Bank, Citizens Bank, Investors Bank, and Monifi). Some people open far more than that, but I got that much from the relatively easy, high value accounts. I got the equivalent of about 20% interest since most of these were checking bonuses with low or no minimum balances and I didn't leave money in their longer than needed.

Most will block you from getting more bonuses for a while. One of the longer restrictions comes from Chase which won't give you another checking bonus for 2 years after getting one. There are a few banks that will refuse to open an account based on too many recently open accounts (from Chexsystems and similar reports) but most banks don't care.

Hopping around to get savings bonuses equivalent to 3% or 4% is not as worthwhile, since for modest amounts you can get comparable ongoing interest rates:

3.3% on the first $20,000 - Evansville Teachers Federal Credit Union, requires 15 debit card purchases per month and a monthly electronic deposit
4.07% on the first $7,500 - Genisys Credit Union, requires 10 debit card purchase per month of at least $5 each
5% on the first $500 and 3% on another $3,000 - Service Credit Union
6% on the first $2,000 - H-E-B Debit, requires some activity every 90 days to avoid fees, but an ACH push of $1 is sufficient.
6.17% on the first $1,000 - Digital Credit Union
7.12% on up to $10,000 purchased per year - Series I US savings bonds, resets every 6 months based on inflation rates in the recent past
YeahBuddy
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Re: Bank-bonus chasing

Post by YeahBuddy »

My initial thoughts are that it's north worth it for me if it takes more than a few hours per bonus. But I now have a new site to visit from the recommendations above for doctor of credit.
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psteinx
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Re: Bank-bonus chasing

Post by psteinx »

z3r0c00l wrote: Tue Jan 18, 2022 11:58 am I do this every year with credit cards and rarely, bank accounts. Last year it was $1200 as:
  • 4 credit cards for about $200 each and
    1 Citi bank account with $15,000 held for 90 days followed by $1500 for 30 days earning $400 bonus
All told we are talking maybe 2-3 hours of work. I get that some people here are too wealthy to work for $400 an hour, but I am not one of them. The Citi money would have earned about $20 dollars in my savings account so it is really $380.
Hmm

You evaluated and pursued 5 different offers...

Out of how many possibilities? How did you screen?

Then opened the 5 accounts (read the T&Cs, signed up, etc.)

Did what they wanted (deposits, charges, etc.)

Verified receipt of bonuses.

Closed the accounts.

Got any necessary tax paperwork.

All in 2-3 hours, for the 5 of them combined? Either you're wildly optimistic about your time estimates, or you're much more efficient at this than I would be (and many others, I think).
z3r0c00l
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Re: Bank-bonus chasing

Post by z3r0c00l »

psteinx wrote: Tue Jan 18, 2022 3:48 pm
z3r0c00l wrote: Tue Jan 18, 2022 11:58 am I do this every year with credit cards and rarely, bank accounts. Last year it was $1200 as:
  • 4 credit cards for about $200 each and
    1 Citi bank account with $15,000 held for 90 days followed by $1500 for 30 days earning $400 bonus
All told we are talking maybe 2-3 hours of work. I get that some people here are too wealthy to work for $400 an hour, but I am not one of them. The Citi money would have earned about $20 dollars in my savings account so it is really $380.
Hmm

You evaluated and pursued 5 different offers...

Out of how many possibilities? How did you screen?

Then opened the 5 accounts (read the T&Cs, signed up, etc.)

Did what they wanted (deposits, charges, etc.)

Verified receipt of bonuses.

Closed the accounts.

Got any necessary tax paperwork.

All in 2-3 hours, for the 5 of them combined? Either you're wildly optimistic about your time estimates, or you're much more efficient at this than I would be (and many others, I think).
  • No evaluation or screening needed really, I glance down a list of cards that offer cash bonus and sign up for the cards I have not taken out in the past that offer more than $150 and/or a spend that is reasonable say under $1000 a month. The list below shows a Wells Fargo card that is exactly what I look for, though I have already taken out that card so it is off limits this year. Debatable if they would pay me or not, technically they "may not."
    https://www.nerdwallet.com/the-best-credit-cards
  • Opening the accounts takes about 5-10 minutes per, one presses a button, enters mailing address, and the card is issued. There is nothing to read as the conditions are always very simple. Spend X in Y time and get bonus of Z amount. The card companies want it to be very easy to get a new card. They deal with people like me because the promotions hook people who carry debt on their cards.
  • Get the card in the mail in a week or two, activation takes about 15 seconds on the phone, at which point I make an online account at the bank. Sometimes it is already a bank I have and so the card just shows up in my account automatically. This takes a few minutes per account, linking it to another bank account to pay the bills takes a few minutes more.
  • Check the account once a month to make sure bill is getting paid and once spend is done, check for bonus which always shows up on time.
  • Use bonus to pay for portion of last month's bill on the card, pay off the card, usually let it sit around for a few months without using, then cancel it over the phone. Cancellations are usually automated these days since they know people like me won't be sold anything, it is just cheaper not to pay a person on the phone to annoy me about it. Automated card cancellation takes about 30 seconds.
  • Never get tax paperwork from them.
This is max a few hours per year, of course spread out over many months. But let's run wild with it and estimate it takes me 12 hours a year to do this. $100 an hour is still way above what I make at work. I do avoid the bank bonuses since they tend to take more time and cost you lost interest elsewhere. I took out one Citi offer this time around because $400 on 15,000 was a great deal. (Something like 10% annualized.) How many here would buy a $15,000 CD offering 10% return but only for two months? What if it took you an hour to buy it? For me it is worth it, a multi-millionaire probably wouldn't bother.
Last edited by z3r0c00l on Tue Jan 18, 2022 4:14 pm, edited 2 times in total.
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calwatch
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Re: Bank-bonus chasing

Post by calwatch »

I never sign on with a bank that I wouldn't contemplate using permanently and also don't churn bonuses for banks that I like. Regardless I open two or three new bank accounts a year and have no issue with it. It is a few hundred extra bucks which can be done at any time. I do need to be reminded of closing some bank accounts though, usually when I receive the 1099's in the mail for them.
SRenaeP
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Re: Bank-bonus chasing

Post by SRenaeP »

I used to do it a few times a year. It's easy enough money for a few cumulative 'hours' of work. However, I got burned by SunTrust a few years ago and that soured me on it. Long story short, SunTrust mailed a debit card and corresponding PIN on the same day. They were stolen from my mailbox and the thief wiped out my account. SunTrust wouldn't restore the funds even though I provided them with a police report, etc.
manlymatt83
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Re: Bank-bonus chasing

Post by manlymatt83 »

For those looking for a happy medium version of this:

http://doctorofcredit.com/tag/big
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