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In 2016 I opened a dozen bank accounts. By year’s end I had closed all but five of them, and I will close two more of those within a few months. Why all the banking activity? Because banks keep offering big bonuses for opening an account.
I collected $2,375 in bank signup bonuses in 2016. It wasn’t a one-time success; in 2015 the total was closer to $3,000.
I did incur about $156 in related expenses last year (more on that in a moment), so my net profit was $2,219. I estimate I spent 60 hours working on getting those bonuses, so I received about $37 per hour for my time — below the $50 per hour I aim for, but still worthwhile.
Do you too want to make thousands of dollars from bank bonuses? Here’s how it’s done…
Table of Contents
Start With the Best and Biggest Offers
It usually takes more time than you would guess to investigate offers, open a new account, deal with the requirements for the bonus, and close the account. As a result, it probably isn’t worth going after a $50 bonus — although I did one of those last year because the requirements were so simple.
Go for bonuses that are $100 or more to start, and then, when you know what it takes to play these financial games, you can better judge which smaller offers are worth your time.
For example, Motif Investing pays you $150 when you open a new brokerage account and make 5 trades. This means that you could buy 3 stocks and sell the same 3 immediately for a cost of $10 per trade. In this case you’d be walking away with $90 profit.
When we recently moved to Tucson, Arizona, Chase sent me a coupon for a $300 bonus for opening a checking account. After estimated expenses of $20 I netted $280 (the bonus was paid within two weeks of opening the account — a rarity). The current offer online is $200 (not bad), and they may have something better or worse by the time you read this.
I spent more than an hour in the local branch to open the account (they are so slow). I spent thirty minutes setting up direct deposit and and I’ll spend an hour closing the account. Counting time reading the fine print I will have invested three to four hours into earning this bonus, so I’m making $70 to $93 per hour for my efforts.
I’m doing well even if it takes double the time I estimate. That’s the advantage of working on the big bonuses first — they leave lots of room for miscalculations.
Calculating Your Time and Expenses
I enjoy chasing after bonuses, but I still want to know what I’m actually making for my efforts. So I calculate my net profit after expenses. I also try to overestimate the time required.
For example, on my tracking sheet (you have to be organized when you have a dozen new bank accounts every year), I enter driving expenses at 30 cents per mile when I open accounts in person (I try to do most online). Most of the time I usually have an expense of a few dollars.
I have a pay-by-the-minute phone plan, so I occasionally throw a few bucks in the expense column to cover the inevitable phone calls. I pay a fee for the direct-deposit service on my business checking account used to pay myself, so I include that expense.
You have to track all the expenses to know what you really make from bank bonuses.
To go after the right bonuses you need to estimate how much time you’ll spend on the process. You can estimate that better after some experience, but start with the assumption that you’ll spend at least three or four hours of your time to earn a bank bonus.
Since it can take more time than anticipated (especially with Citibank!), aim for an hourly rate of at least twice what you’re willing to accept for this game. So, for example, if $20 per hour makes it worth your time, look for offers that should make you $40 per hour.
Where to Find the Best Bank Bonus Offers
There are websites that report on bonus offers and post them in convenient lists like the one maintained by DoctorOfCredit.com. Another good list can be found at HustlerMoneyBlog.com.
Sometimes they miss a promotion, especially local ones. To catch those google “list of banks” plus the name of your locality, and do the same with “list of credit unions.” Then visit the homepage of every local bank or credit union to see if they’re offering anything.
How to Meet the Requirements
Earning a bonus can be as simple as opening an account and leaving it open for a few months. Those offers still come up occasionally. But usually there are also at least three or more of the following requirements:
- Residence in certain states or cities
- Opening the account online
- Opening the account in person
- Being a new customer
- Direct depositing of your paycheck
- Maintaining a minimum balance
- Maintaining a large balance
- Keeping the account open for a minimum time period
- Using an associated debit card a number of times
- Enrolling in e-statements
- Opening more than one account
- Signing up for and using bill-pay
At some point I’ve run into every one of these requirements. Let’s look at them one at a time…
Live in a Certain Place
Many banks are national and you can open an account online from anywhere, but for some you have to live in one of the states they service. A good list of bank bonuses will include data on which states qualify.
Open the Account Online
In some cases you have to open the account online, whether that’s because the bank doesn’t have physical branches or because it’s just a requirement to earn the bonus.
It does save you driving costs and time, and some banks let you fund your online accounts with a credit card, so you can earn cash-back or reward points just for putting money into their bank. Just be sure the accounts are FDIC insured.
Open the Account In-Person
Even banks that normally allow you to open an account online may have an in-branch opening requirement for earning a bonus. In that case Google the nearest location to decide if it’s worth your time and effort.
I’ve driven to banks that were almost an hour away to earn a good bonus, but to make it more efficient I timed those trips to coincide with other errands in that direction. And yes, I accounted for the expenses of those commutes.
Be a New Customer
Typically only new customers are eligible for an account-opening bonus, but that means different things at different banks. The Capital One 360 Savings Account excludes from bonus offers anyone who has ever had that account. Because I had an account there many years ago I can never collect that bonus.
On the other hand, the Chase checking account offer I’m taking advantage of stipulates only that “You can receive only one new checking account related bonus each calendar year.” This was my fourth bank bonus from Chase, and because the bonus posted just before the end of 2016, I’ll be watching for their offers in 2017.
If you’ve ever had an account with the bank, read the fine print carefully to be sure you qualify for the bonus offer.
Set up Direct Deposits
This common requirement for earning a bank bonus is also one of the trickiest ones. Two important questions: What qualifies as a direct deposit and how do you get your employer to keep changing where your paycheck is sent?
Most banks require a direct deposit of a paycheck, pension, or government benefit check. A list of methods that actually get counted as direct deposits suggests many banks are pretty loose about this requirement.
But be careful; if you do an ACH transfer from another account hoping it will count as a direct deposit because that worked for others, the bank could rightfully refuse to pay the bonus.
I’ve used my business account to do direct deposits of my paycheck and it has always worked. I’ve asked some bankers if this is okay and they’ve said yes. It seems the banks just want a source of regular income set up to be deposited automatically, even if they only require one direct deposit before they pay the bonus.
BMO Harris did try to deny me a bonus for a lack of a “qualifying direct deposit,” perhaps because my business account “direct pay” service looks like a regular ACH transfer. I let a supervisor know that the banker who opened my account had told me direct pay from my own business account was fine, and they paid the bonus.
One lesson to take from that could be to ask if a particular type of direct deposit is okay, get a business card from the person who opens your account, and fight for your bonus.
On the other hand, some bonus chasers recommend you operate more quietly. Specifically, some say “don’t call the bank,” because if you’re using a non-approved direct deposit method that will work anyhow you may lose the bonus by alerting the bank.
The “direct pay” feature on my business account cost $10 per month and 50 cents per transaction. I don’t use it otherwise, so this is entirely an expense of earning those bonuses. To keep that expense lower I cancel it for about six months per year and during those times focus on bonuses that don’t require a direct deposit.
If your employer isn’t happy to constantly change where your paycheck is sent, alternate between opening accounts that require direct deposits for a bonus and those which don’t require them. Most employers should be okay with a couple changes each year, so by alternating in this way you might still collect five or six bonuses per year.
Keep a Minimum Balance
This requirement is pretty straight-forward. Just be sure you know what the minimum is and whether it’s absolute (as in you lose the bonus if you ever go a dollar under it) or a minimum average daily balance. In the case of the latter, if your balance dips too low you can beef it up before month-end to bring up the average.
Keep a Large Balance
Most checking account bonuses do not require large balances. Some are as low as $25, but you may want to keep a higher balance to avoid fees.
Savings accounts are more likely to require a large balance to earn a bonus. For example, the current Chase Savings account offer is a $150 bonus if you deposit $10,000 within 10 days and keep that much in the account for 90 days.
Bonuses for savings accounts with large balance requirements are never big enough to justify paying interest to borrow the money, so if you don’t have the money in savings already you should stick with offers that have smaller-balance requirements.
Keep the Account Open for a While
Keeping an account open for three or six months is a common requirement. Since you have to keep it open until you get the bonus, and sometimes that comes weeks after the qualifying amount of time, in practice you’ll tie up your money for four or seven months when three or six months is the requirement.
Read the fine print! Whether banks are trying to trick you (as I believe) or just like things to be complicated, the fine print usually provides several ways for them to avoid paying you the bonus..
For example, if you get the $150 Chase bonus mentioned above ten days after the three month requirement, you might think you can close the account, but if you do they’ll take back the entire bonus. The fine print says you have to keep the account open six months even though they pay the bonus after three.
Fortunately, after you get the bonus you can reduce your balance from $10,000 down to $300 — the minimum needed to avoid monthly fees. Read that fine print!
And mark your calendar! You don’t want to leave money in the account longer than necessary since most accounts are worthless apart from the bonus. That Chase savings account earns just .01% interest, or $1 per year on $10,000. Why would anyone ever open that account if not for the bonus?
Use Your Debit Card
This requirement seems straightforward. For example, to earn the bonus you might have to have to use the associated debit card ten times in a month.
But is the bank referring to a statement month, a calendar month, or a month from the date you opened the account? And does a transaction count when it happens or when it clears? Usually it’s the latter. One mistake and you will have wasted all your time because you won’t get the bonus!
To avoid problems, meet this requirement quickly and put an extra purchase on the card to be safe. Usually you just have to use the debit card a certain number of times by a deadline, and not every month. If it is an ongoing monthly requirement check your statement to see what date it ends on, so you can use the card enough and on time.
To quickly meet this requirement start by using the card for all small transactions. Personally I won’t use a debit card for larger purchases because I would miss out on credit card cash-back and other rewards.
Normally any use qualifies, but read the fine print! Sometimes (not often) it has to be run as a credit card rather than a debit. In that case select “credit” and don’t use the PIN. I’ve also completed one offer where each use had to be for more than $3.
One way I make those transactions quickly is to charge the first $3 of gas to the debit card, and then finish filling the tank with a credit card that earns 3% cash-back on gas. You could also just put $3 in gas in your car many times weekly. Or buy your soda and candy bar separately to make one stop into two transactions.
The one thing you shouldn’t do is make purchases that you wouldn’t otherwise make just to meet the debit card requirement. If you have to do that, count it as an expense of earning the bonus.
Enroll in E-Statements
This is a common requirement. Set up your account online as soon as you can and click the button that says “Paperless Banking” or something similar (ask a banker if you’re not sure). Print out your statements if you like to have something in your files at home.
Open Another Account
Credit unions usually require a “share account” before you can open a checking account, and you may have to keep a $50 or $100 balance there (whatever the minimum is) to earn a bonus on a checking account.
I once had to open three separate accounts to earn a bonus at PNC bank. They seem to think complicated banking is better. Fortunately, if there is a requirement for extra accounts you’ll rarely have to keep much money in them.
Enroll in and Use Online Bill-Pay
I’ve run into this requirement a few times. If you have to use bill-pay, do so quickly to get it over with. Pay a couple utility bills using their system (typically you have to pay at least two bills to earn the bonus).
When I had two accounts with this requirement at the same time, I made partial payments on my water bill, so I could pay on it from both accounts. I even paid in advance (some utilities and other services allow this) to quickly meet the requirements.
Avoiding Fees
Some accounts have monthly fees. Treat them as a cost of getting the bonus, or read the fine print to see if you can avoid them. The three most common ways to avoid fees are:
- Maintain a minimum balance.
- Use the debit card a certain number of times monthly.
- Have a minimum direct deposit each month.
The latter may be a requirement to earn the bonus anyhow. Sometimes to avoid the fees you just have to do any one of the above, in which case you can choose which works best for you.
The “early account closure fee” has also become popular with banks. You might earn the bonus after three months but get docked $25 for closing the account before six months have passed. To avoid this just reduce the balance to the minimum needed to avoid other fees and wait.
You can also just close the account and pay the early account closure fee as a cost of getting the bonus. I’ve done this, figuring I was happy with $275 of a $300 bonus for three months rather than waiting another few months to keep that last $25.
One other fee or expense you may face is for checks. I never order checks. I ask for a few starter checks, which most banks provide for free, and I explain that I do almost all my banking online, so I don’t need many checks.
Other Considerations
You Need Some Money to Play With
I usually have thousands of dollars tied up in various accounts, but you can start by going after bonuses at banks with the lowest balance requirements and work your way up from there.
You Need to Get Money Out of Those Accounts
If the account you open has a direct deposit requirement the balance will grow beyond the minimum you need to avoid fees. There is no point keeping extra money tied up, so you’ll want to move some out. There are several ways to accomplish this.
If there is a physical location nearby you can just make a withdrawal. If you have a few starter checks you can write one out to yourself and deposit in your primary bank account. For those who have a debit card you can access the money using an ATM, but be sure it’s a fee-free one.
Finally, you can set up an ACH transfer online to send the money to your primary account. Most checking accounts have this feature as an option.
Your Credit Score May Be Affected
Some banks do a “hard pull” on your credit report when they open an account while others do a “soft pull.” Too many hard pulls in a short time will hurt your credit score, at least temporarily. This doesn’t matter to me because I’m never seeking a loan and the score bounces back after a while. But be careful if you plan to get a mortgage loan.
You can check a list of banks and what kind of credit check they do online. If keeping your credit score from dipping will be important in the near future, stick with bonuses offered by banks that do a soft pull.
Consider the Opportunity Cost
Your money would be working for you elsewhere if it wasn’t in those accounts just to earn bonuses, right? It’s not much of a factor for small accounts, but it does matter if you need to use more of your capital.
For example, to earn a $175 bonus on a savings account I once tied up $15,000 for four months. It came from an account that paid 1.25% annually, so I lost out on $62.50 there — the opportunity cost. In other words, I was really only $112.50 further ahead for my efforts ($175 minus $62.50).
Be Ready to Deal With Problems
Besides arguing with BMO Harris about my “direct deposit,” I’ve had to call and visit banks to resolve problems at least six other times. It is frustrating to say the least. You can sometimes find better phone numbers by which to reach the bank (they really don’t want to ever talk to you) by using GetHuman.com.
For example, Bank of America once refused to honor a $300 bonus because I had not received an “invitation,” to apply. The offer was publicly available online and the banker (I applied in person) said it was fine and he entered the appropriate code when opening the account. But months later the bank refused to pay, saying I wasn’t supposed to even see that web page (strange argument). In the end they gave me a $100.
It was the only time I’ve lost out on a bonus, but at least I got something for the several hours and $10 in car expenses it took to argue my case. Be ready to deal with banks by email, phone, and in person. If you do this enough you will have some problems.
Is It Worth the Time and Trouble?
I like playing financial games like these, so I would probably chase after bank bonuses even if I made just $15 per hour for my efforts.
If keeping track of various accounts and dealing with bankers sounds really tedious to you, at least aim to be well-paid for your time and trouble. You could apply only for the biggest and best deals, like the $2,000 business checking account bonus Bank of America offered a couple years ago.
If you’ve received any bank bonuses tell us about your experience in the comments section below. Thanks for reading and happy frugaling!
