I opened a Wells Fargo account a few weeks ago for the $400 bonus. Made some direct deposits, got the money, then transferred it all out and closed the checking account. Took 2 weeks max.
Now I'm seeing one for Capitol One 360 and plan on doing the same.
Am I missing something here? Is there any downside to opening and then closing a checking account like this?
I feel like getting a bonus for opening a checking account seems to good to be true. Am I missing something?
byu/mtbaird5687 inpersonalfinance
Posted by mtbaird5687
14 Comments
Read the fine print. Usually you need to keep the account open for a specific period, keep a balance, and have a minimum of deposits.
Are you also sure you did ‘direct deposits’ as in from paycheck? Transferring from a savings or another bank is not counted as a direct deposit.
This is r/churning for checking accounts. As long as you are following the bank’s rules, and they don’t decide they don’t want your business anymore, you should be safe. I’ve made a few thousand churning bonuses
Generally no, but 3 things to keep in mind
1.) There is a company called Chex Systems that creates a score, similar to a credit score, but for general banking. So opening and closing (see 2) a lot of accounts can lower this score and make banks less willing to open accounts for you.
2.) Check the claw back terms. of you don’t keep the account open for x amount of time (maybe also requiring minimum balances) they may not pay the bonus / be able to claw it back. Make sure to read the terms and conditions.
3.) Unlike credit card sign up bonuses, bank account bonuses are taxable income. Credit card SUB count as “rebates” since you need to spend money to get them. But deposit bonuses are “free” therefore are taxable.
Noting the above, this is generally fine to do and is similar to credit card r/churning
Not really. I think bank bonus churning is like a fun and easy way to make money. Just read the terms and you can do all the big banks yearly except chase which has language for every 2 years. Some banks might be chex sensitive if you have too many inquires so you can’t do every single bonus.
Some ppl say you should keep the account open for 6 months but i just close it when i get the bonus unless there’s something specifically in the terms.
It took me three months before I got my bonus
As long as you follow the fine print for each bank, you are fine. Do check your Chexsystems score. Bank acct churning does not result in hard pulls on credit reports (most of the time). Keep your credit frozen so they can’t do a hard pull anyway. Bank SUB is taxable though. Banks issue 1099 at the beginning of the year for prior year SUB.
Come tax time, you will owe taxes on that $400. It’s income. Ask me how I know.
Not really, people do this all the time. Just watch for fees, minimum balance rules, and taxes since the bonus usually counts as income. Other than that it’s basically bank promo hunting.
just keep the account open for 6 months at least so you’re not flagged.
Eventually banks will stop opening accounts for you when your Chexsystems score looks bad due to opening so many accounts.
I just do it once every year or so.
I churn several bank account bonuses a year. Doctor of Credit is a great resource for this. Like what rules each bank has, which banks have notable offers, which banks are Chexsystems sensitive, etc.
Edit to note that you will receive a 1099-INT from each bank you do this with, and you will have to pay taxes on your bonus.
Visit DoctorofCredit if you want to do it as a hobby. Like others have said, you will eventually run against a wall when banks start denying you for opening too many accounts, and you have to pay taxes on it.
There may be fine print that you have to keep X amount of money in the account for 12 months or something to keep the bonus.
Several years ago I made almost 2k one year on churning. Citi is asking me to do it again for another $900 and I probably will. I set up a spreadsheet to track the accounts and the requirements. Once I met the direct deposit requirements of the first one, I moved on to the next. It’s much easier if you have a self-service payroll because you have to keep changing the direct deposit and your payroll department may not appreciate you making changes every few weeks if you have to run it thru them.