Posted by William Charles on March 30, 2015
Bank Account Bonuses

Published on March 30th, 2015 | by William Charles

37

Common Bank Bonus Misconceptions + Why You Should Give Them A Go

Last week I asked on Twitter if anybody gets as excited for checking & savings bonuses as much as I do. There were a number of responses which made me realize that a lot of people have misconceptions about bank bonuses and how they work. I thought I’d address the most common misconceptions and try to convince you to give them a go.

Common Misconceptions

  • I don’t want to waste a hard inquiry on a bank bonus, I’d prefer to sign up for a credit card instead. The vast majority of banks will not do a hard inquiry on your credit reports when you sign up for a new bank account, they will just check your ChexSystems report (which is basically the credit report of the deposit account world). We always list whether opening an account is a hard or soft pull on each post we do, there is also this dedicated page which lets you know if a bank does a hard or soft pull as well.
  • I don’t want to change my payroll regularly. Most bank bonuses require you to receive a direct deposit of your paycheck or government benefit to trigger the bonus. Obviously it’s a pain changing your payroll details on a regular basis and the accounts department isn’t going to be thrilled if you’re doing this. Thankfully there are two solutions:
    • The first solution is that not all bank bonuses require a direct deposit. If you only want to find bank bonuses that do not have a direct deposit requirement, go to this page and then sort by the “DD required field (click on it to sort).
    • The second solution is that an ACH transfer will usually trigger this requirement. While almost all bonus pages will state it needs to be from employer or government, in reality an ACH transfer will usually cause the bonus to trigger. This isn’t always the case and sometimes some ACH transfers will count and others won’t, which is why we created this dedicated page containing data points on what does and doesn’t count as a direct deposit.
  • You have to pay taxes on the bonuses. This is right, you’ll always be sent out a 1099-INT form at the end of the year and you’ll be required to pay taxes on any bank bonuses you receive. Obviously how much you pay will depend on your tax bracket, but I still find these deals worth doing and I pay a lot of tax – at the end of the day it’s all extra money in my pocket. There is an exception to this rule though, Citi doesn’t send out 1099-INT’s for their ThankYou point + American Airline offers.

Why You Should Give It A Go

Now that we’ve gone over the common misconceptions, let’s have a look at why you should give these bonuses a go:

  • You can do these bonuses in your underpants. I’m a big fan of the underpants factor, anything that I can do at home in my underpants is very appealing. I’m a lazy person by nature so if I can avoid leaving my house to do manufactured spending or to earn a little extra money then I’m a happy man. Most bank bonuses can be completed without ever leaving your house. I typically do these bonuses when I’m bored watching trashy television, at least then I feel somewhat productive.
  • You can fund most accounts with a credit card. Credit card sign up bonuses are great, one downside to them is that they come with a minimum spend requirement. Most bank accounts can be initially funded with a credit card which is very useful for meeting these minimum spend requirements. You can see a full list of what accounts can/can’t be funded here, along with the load limits and what has/hasn’t coded as a cash advance in the past. You can also go to the bank bonus page and sort by the amount that can be funded with a credit card.
  • The bonuses can be quite high. A lot of people get turned off by the small bonuses and I agree, they suck. That being said the best bonuses are for 30,000 Miles/40,000 Points and even $400 in cold hard cash. If you just want to see the best bonuses, check out this page which we update monthly.

I made a lot of money from these bonuses last year, I’d recommend giving one a go to see how you like them. Have you tried one before? What did/didn’t you like about doing it? Has this post convinced you to give them a try? If not, why not!

 

 



37 Responses to Common Bank Bonus Misconceptions + Why You Should Give Them A Go

  1. NoonRadar says:

    I had the same overall common understanding of “its gotta be too good to be true” about these, as one local bank kept mailing me coupons. Could it really be as easy? Late last year I decided to look into it, consulted a few other sites but my go to site for these bank bonuses became Doctor of credit.

    Thank you much and keep up the good work! I started doing the bank bonuses well before deciding to comment here, and like me I’m sure there’s many other grateful internetons (its a word from now on).

    • I’m glad that you’ve seen the light NoonRadar, it surprises me how few people into travel hacking do them. It’s a great way to get some extra spending money for all those award trips we take.

  2. Fafa123 says:

    One thing I don’t get about chasing bank bonus – don’t most accounts require you to keep a minimum amount in the account for a minimum amount of time? How do you manage the float?

    • Some do, some don’t. Usually it’s required to waive the monthly fee but you can often get around this by continuing the direct deposit requirement. I always have emergency money in cash (well, in a bank account as cash) so I just use some of that. Yes you don’t earn any interest, but usually that’s fairly minimal compared to the actual bonuses.

  3. Kishore says:

    Inspired by your posts and started feeling the benefits ok bank bonus with Santander $20 every month. Sweet $240 a year. Thank you very much.

  4. DanR says:

    What’s your experience with being able to open account? How many banks deny you due to too many Chex inquiries or is that not an issue?

  5. Elaine says:

    I am leary of opening too many accounts since I know little about ChexSystems and the implications of many new bank account openings. I have two questions:

    1) Does opening lots of bank accounts count against your ChexSystem rating in any way, the way too many inquiries or too many new credit cards can impact your credit rating?

    2) Similarly, can the opening of many new bank accounts impact your Experion, TransUnion or Equifax rating?

    If so, how many is too many? Thanks!

    • 1. As far as I know there isn’t any ChexSystems score, but inquiries will show up on your report. Some banks are inquiry sensitive, but most don’t care.
      2. As long as no hard pull is done, it will not affect your Experian/TransUnion or Equifax credit reports/scores.

      We’ve listed which banks are inquiry sensitive here: http://www.doctorofcredit.com/an-introduction-to-chexsystems-inc/.

      • Elaine says:

        Thank you! Much appreciated!

      • Jon says:

        Hi,

        I must tell you that I can confirm this is wrong. ChexSystems does issue a score. I’ve recently been denied several bank accounts, most of which didn’t refer to any type of score, while they all cited Chex for my denial. However, one, I think Discover, informed me of a specific 4 digit numeric score when they cited Chex in my denial, and I think it goes from something like 350 to 9999.

        I’ve requested my file from Chex several times, and received my full file/report from their systems, and that doesn’t give you the score.

        Just wanted to let you know this.

        • Tory says:

          Are you sure this is Chex and not Discover’s score?

          • Jon says:

            I have no way to be sure. That said, I clearly noted it as a Chex score, and I’m by nature quite thorough.

          • Jon says:

            Unfortunately, not. I just checked my mail for the denial letters, and it looked like I had thrown all of them away, but just as I went back to type this, I found the last one I got on my desk, so you’re in luck. You have to trust me not to be making it up, but I can give you a transcript of the letter:

            Dear ,
            We are writing to let you know that we are unable to approve your request to open a Account with Discover Bank. The decision was based in whole or in part on information obtained in a report from the consumer reporting agency listed below. The reporting agency played no part in our decision and will not be able to provide you the specific reasons [blah, blah, blah]. You have the right to dispute the matter with the reporting agency.

            Chex Systems, Inc.
            Attn: Consumer Relations
            7805 Hudson Road, Ste 100
            Woodbury, MN XXXXX
            Tel: 800-xxx-xxxx
            Fax: xxxxxxxxxx
            http://www.consumerdebit.com

            RELEVANT PORTION:

            We also obtained a ChexSystems score from this consumer reporting agency and used it in making our decision. Your score can change, depending on how the information in your consumer report changes. (This score should not be confused with the FICO credit scores reported by the three major credit bureaus.)

            ChexSystems Score: 0538 Score Date: 1/23/2016

            Scores range from a low of 100 to a high of 9999

            If you have any questions regarding your ChexSystems score, you should contact the consumer reporting agency using the contact information above.

            Key factors that adversely affected your score:

            * UNIQUE FI DDA INQUIRY HISTORY
            * ASSET OWNERSHIP HISTORY UNKNOWN
            * DDA CLOSURE PAYMENT HISTORY
            * DDA CLOSURE(S)

            If you have any other questions regarding this notice, you should contact:

            Discover Bank

            Discover Bank * POB 30414 * Salt Lake City * Salt Lake City, UT 84130

            Discover Bank, Member FDIC DBLTR.01XX

          • Thanks, I’ll research this more.

          • Jon says:

            Hey Will,

            I’ve got a question for you. I’ve seen you mention your speculation that about 10 new bank accounts per year shouldn’t cause any problems, but that’s only speculation. Do you have any data-rooted basis to say what is a troublesome number of new accounts? Further, what does it mean when you list in bonus offers’ details that an account opening is a soft or hard pull. Are ChexSystems inquiries really so differentiated? And, if a bank is listed as being a soft pull, would you not count it toward your figure of, say, 10/year?

            I’d really like to know your answer to this. Because in theory, I think bank account churning would be able to make me fully financially sustainable with a handful of churning-working days each month and maybe less as I get more efficient. The only problem is that I’d have to do 3-5 offers per month, and that would add up to about 50/year. The thought of that is kind of ridiculous, but hey, why not, if not “because Chexsystems”?

            God, are they a thorn in everyone’s side.

            That said, however, if 10, or on the liberal side, say, 15, is really the safe upper limit, what possible benefit is there for you to cover all the smaller bonus offers on your blog? If every person could only benefit from (say) 15/year, then it would make sense for them to find the most lucrative ones, and with that bottleneck limit, it seems like there’s no benefit to anyone to having most of the smaller bonus offers written up.

            I’m new to this whole thing, and waiting for my first few exploits to pan out, but I already can’t say how much I appreciate this resource.

            Also, for reference’s sake, I was a victim of ID theft, which is why I was originally in ChexSystems, although UNIQUE FI DDA INQUIRY HISTORY is probably my own doing.

            So I’m hoping that once my dispute with ChexSystems is processed and resolved, I at least won’t be “artificially” constrained by the history of delinquency.

            Thanks,
            Jon

          • Hard/soft pull refers to if they do a hard or soft pull on your normal credit reports (e.g Equifax/Experian/TransUnion). As far as I know ChexSytems doesn’t differentiate between hard and soft pulls, we just assume that a ChexSystems inquiry is always done (it almost always is). ~10 is based on my own experience others, all financial institutions have their own requirements but anything significantly more than that (e.g 50 like you mentioned) would almost certainly cause them to think some type of fraud is going on.

            Hope that answers your questions.

          • Jon says:

            Hey Will,

            I think we’ve reached WordPress’s maximal thread depth, so I’m replying here. My computer’s being a douchenozzle, and it’s taking forever for me to load pages, since I’m due for a reboot. Otherwise I would get it for you before I doze off in a few minutes, but I was just reading a DannyDealGuru page that referred to the topic. I think he mistakenly said that it goes up to 999, or else the discover rejection letter had a typo. You might search on his blog for “bank bonus churning: what you need to know” or “chex systems” – those are off the top of my head.

            I hope I haven’t racked up a whole bunch of inquiries with the ones that resulted in denials. If I have, then I think I’ll dispute it, because I wouldn’t have wasted all those inquiries if it hadn’t been for the ID thief causing me to get denied for everything. Chex is really a pain to deal with from my experience so far, for the record.

            Anyway, I’m sleepy and scatter-brained. Thanks for the info.

            =) Cheers

  6. Cy says:

    How many of these bonuses are churnable? Is there any way to find out

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  16. Robert says:

    I’m going to show my newbie colors here, but how do you actually do an ach transfer?

    • JuicyJosh says:

      So easy you wouldn’t even believe. Basically its a paperless check. You existing bank account probably already has this capability. Set up an external transfer account. Usually you will be asked to verify the account you are linking with your login credentials or to verify two small deposits made to the linking account. All that said, I would recommend you open a hub account (not your everyday bank account) to initiate transfers to/from. Ally is great. Alliant is another one that works a lot. Here is DoCs post with more info. http://www.doctorofcredit.com/hub-accounts-ach-transfers-capabilities-fees-limits-across-financial-institutions/

      Get ready for some easy cash. Start with one or two. Once you get the hang of it – GO CRAZY! I did 2 in first 4 months and then 18+ more in the next 6 months (myself and spouse).

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  21. John Collins says:

    Will an ACH transfer from a business LLC checking account to the new personal checking account satisfy the payroll deposit requirement?

    I am asking if something unique to a payroll ACH identifies it, or is it just a standard ACH transfer from a business account with a business name?

    • I think it sometimes codes differently as most business accounts have payroll management as well, depends on the bank though I believe. Don’t think it shows as P2P anyway and that’s what most have been coding against.

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