What is Bank Churning?
You may or may not have heard of bank churning. If you haven’t… it’s basically opening accounts for sign-on bonuses… Over… and Over again. I’ll show you how I’ve made over 2000 dollars with churning and how you can do it too. There are other ways you can get bonuses but in this video we’re gonna focus on bank checking accounts. Please check out my video on YouTube for a more interactive guide.
Should you start Bank Churning?
It’s a question you might ask yourself and we’ll take a look at both reasons but let’s take a look as to why… bank churning might not be for you.
- There is no immediate gratification. Meaning, you aren’t going to get the bonus until certain conditions are met. It could be you have to directly deposit a certain amount by a certain time frame or maybe you have to make a certain amount of purchase transactions.
On average, I usually do not get my bonus until 2-3 months after I opened my account but the earliest I’ve ever received my bonus was 2 weeks.
- Most bank accounts require a deposit when opening an account. It can range from 25 to a couple hundred dollars depending on the type of account you are opening but realistically I’m averaging between 50 – 100 dollars per account that I’ve opened. So If you are opening 5 accounts you’re probably going to need 400 dollars to open them all at once but if you don’t have the funds then you can always open them one at a time when funds are available.
- You might see this if you’re looking at a local bank with a limited branch location. You might be able to create an account online but they may require you to go into a physical bank to claim your bonus. That’s all great and all but what if the nearest location is 2 hours away? Depending on the bonus amount… it might not be worth it if you have to spend money and time to go get it.
- You will need to file this when tax season comes around because it’s considered taxable income so you might need to print out a 1099 to file the coming tax season. Maybe you are receiving some kind of government assistance and you can only make a certain amount of money and you’re at the limit to how much income you can make and if you make anymore then maybe you’ll lose that assistance.
Why you should do bank churning?
- In my opinion there is very little downside in bank churning. Let me give you a scenario:
If I told you that if you lend me 50 to open an account for you and every month I want you to let me hold 500 dollars for you that you have full access to… I just want to hold it for you and at the end of the 3 months I will give you 300 dollars and you can have all the money that you let me hold for you. Also if something would have happened to me then the FDIC (Federal Deposit Insurance Corporation) will pay all the money that is due to you.
*** Most banks these days are FDIC insured but you should take a minute to check the bank. ***
- The second reason kind of ties into the first reason because technically the bank is giving you money but in order to get it you have to do something for them in return but at the end of it all you still make out… I almost, kind of, sorta considerate “Free Money”
- To some extent it’s also considered by some people as an investment. Since you are investing time and money to get a return.
Let’s do that math as an investment. And we’ll use the example from earlier.
The Bank bonus is 300 but it requires you to keep the minimum balance of 1500 for 6 months.
300 / 1500 = 0.2 0.2 x 100 = 20%
I know there’s more to it then that but this is just some super basic math on the return on investment. You let the bank hold your 1500 dollars for 6 months and after that you get a 20% return on investment which is an extra 300 dollars! I don’t know about you but I don’t know of many investments that have low risk with low capital that can get you 20% return in a relatively short amount of time. Keep in mind that there are some Bank bonuses that go above 20% return!
How to Get Started with Bank Churning
So you’re liking what you’re hearing so far… where do I start? you might ask? Great question. There are 2 sites that basically did the leg work for you and list a bunch of bonuses for you to get.
Here are some resources to help you find your banks:
Both are great sites but I’d advise you review the terms and conditions before opening any account because terms and conditions for forever changing and the sites may not provide the most up to date terms.
Go check out a live example in my Youtube Video for a reference.
Alright so now that you’ve seen any example, I’m not going to go over every single account but here’s all the accounts that I’ve opened recently and if you add them all up, it totals 2,159 dollars. Now there are other ways you can get over to 2000 dollars but it might require more capital and frankly I do not have thousands of dollars sitting around to make the minimum requirements.
I was able to achieve this by only using the minimum amount of money and deposits possible to get the bonuses but I could have had less accounts to open to get the same amount or more if I had more upfront money or more money coming in from my direct deposits.
Bank Churning Evaluation Checklist:
- Make sure that when they do a credit check to open an account that it’s a soft pull which does not affect your credit. I’ve never seen a hard pull but you definitely want to make sure that it’s not because the next thing you know… you got 10 hard inquiries on your credit report and your score went down 20 points.
- Can I afford to meet the requirements to get the bonus money, otherwise it would be a waste of time If you can’t get the bonus. Maybe they require a Direct Deposit of 3000 per month and you can only deposit 2000 per month.
- Most bank accounts have a monthly maintenance fee for the bank to maintain all your money. See if there are ways to avoid the monthly fees because frankly if you have to pay this fee… it’s going to dig into your profits. Most times this fee can be waived by just having a direct deposit which you may be doing anyway because it’s a requirement to get the bonus. Its killing 2 birds with one stone
- Are you going to time to either get the Direct Deposit into the account or will you have enough money by the deadline. That’s pretty much self explanatory.
- Have you or anyone in your household have an account with this bank because some banks only allow 1 bonus per household. Or maybe you or someone in your household has recently closed an account with them and it hasn’t been at least 6 months since closing it. I would definitely read the terms and conditions carefully. Most banks will let you open an account as often and as many times as you want but getting the bonus can be another story.
Final Thoughts on Bank Churning:
Here is some advice I can give you.
- Try to open an account in the beginning of the month because it will give you enough time to set up your direct deposit which for me usually takes a week for the direct deposit to send to my newly opened account. This also gives you enough time to get your finances together to transfer the funds needed to avoid the monthly fee and to qualify for the requirements for the bonus. If you opened the account in the middle of the month you may not be able to get your direct deposit set up and since it’s so late in the month some banks will charge you the monthly fee anyway. Now I’ve known some banks are really lenient and waive the monthly fee for the first month or two but it’s best to not gamble on that and just create it in the beginning of the month instead of second guessing it.
- I usually take a screenshot of the promotion and terms/conditions. You never know when they might just decide not to give the bonus. You can at least provide proof to them that you did everything asked of you and you need them to uphold their end of the bargain. You can never be too safe when it comes to your time and money.
This is not Financial or Tax advice. If you have an concerns regarding your finances or taxes, please reach out to an expert on the subject matter. This article is for entertainment purposes only.
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