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!
My wife worries that I will open too many accounts then lose track of them and be hit with some fees for having a too-low account balance. I have received a bonus from a bank with a strange mathematical fraction in its name (talking in code to avoid data scraping/surveillance by the bank). I wanted to close the account — they wanted to refer me to their retention team. I asked, You cannot close the account for me? She said, Sadly no. In response, I’m going to send a short letter to the corporate headquarters in the Midwest to close it — with a zero balance after receiving $300+ bonus.
i like them, but feel guilty knowing I don’t plan on keeping the account. Any answers?
Why feel guilty about taking money from huge financial corporations? They don’t feel guilty charging you fees
Just curious, how much people make in bank bonuses every year? I made up to 6000 for myself and spouse in 2023.
I’m at $5500 since May just for myself
Around 6k$ in bank bonus 🙂 Solo
If a person is a remote employee home based in one state (NJ) but works for a large international company headquartered in a different state (NY) could they qualify and sign up for regional banks in both?
The main concern that I have opening bank accounts in the same month, week or year if other banks or even the existing banks will get notified or pull the reports to see my bank activities. This would flag them as fraud or whatever they assume as risks. Can they do this? Existing banks or new banks close your acounts because they do regular check on your Chex report or EWS and decide to close and terminate your account. Any comments?
I’m relatively new to all of this, and my biggest concern/question is how to manage all of these new accounts? When can I liquidate them or close them without incurring fees? I know the answer will be different for each account; the management of it is a bit daunting. Tips appreciated!
Each account needs to be investigated separately. E.g. some don’t have any fees at all, others require a minimum balance to waive fees. Etc, etc
Also I think everyone who goes for bank bonuses on a regular basis keeps track of the accounts, bonuses, fees and ways to waive them, etc. I use a word doc, a lot of people use spreadsheets. Find whatever works for you (you’ll want it to be a document you can actually use/keep up with), but whatever format you use, there are some key details you’ll want to keep track of: -the bank and account type (I also note the last 4 digits of the account number so I don’t have to look it up all the time when I’m setting up direct deposits or transfers from an external account) -the date the account was opened and the amount of the bonus -bonus terms (what do you need to do to get the bonus, how quickly you need to have done it to receive the bonus, when the bank will pay out the bonus after successfully completing all requirements) -bonus activities (when did you complete each requirement for the bonus, and when did the bank actually pay the bonus) -any fees associated with the account and how to waive them (do you have to keep a minimum balance or receive a certain amount of direct deposit each month, and if so, what)- also make a note which method you’re using to avoid the fees while waiting for your bonus (if you have the option to pick an account type that doesn’t have any fees but is still eligible for the bonus, go for that one- one less thing to have to keep track of!) -how long the account has to stay open to avoid an early close fee or clawback of the bonus (if you can’t find something in writing, double check with the bank before you close your account to avoid an unpleasant surprise) -when you closed the account (this resets your clock with the bank on being considered a “new” customer and/or eligibility for future bonuses) **You should also always print out or otherwise save a copy of the promotion terms at the time you opened the account. That way, if there is a dispute about payout, you can refer to it and argue your case. **There are also a couple of things that are nice to include in your tracking if you think of it (these will help you for future bonuses with that same bank)- these are more advanced/I wish I’d known to keep track of them when I first started out with bonuses: -what activities triggered the bonus and/or how were things coded by the bank (for example, what does a “real”/payroll direct deposit look like in their system vs an ACH transfer from an external account- if the latter worked, what did that code as and which bank did you use) -what terms did the bank set for your current bonus regarding eligibility (how recently can you have closed an account with them and be considered a “new” customer for promotion purposes, how frequently… Read more »
These are all good tips!
Not sure where to post this, but does anyone know the trigger amount that notifies the Chase fraud department? I’ve had to deal with them for both P1 and P2 in the last week. One was a $755 transfer the other was $1005. I’m thinking I need to send a smaller trial deposit or to initially.
Apologize if this has already been suggested, but if bank account bonuses count as taxable income, they might be an excellent way to fund a traditional IRA. The tax deferral would allow you to kick the tax hit down the road, and allow you to fund your retirement on somebody else’s dime…
Doesn’t it have to be W-2 income to fund an IRA? These bonuses would be 1099 income.
I’ve gotten the Citi bank bonus and boy do they ever make you pay! I asked about the 1099-INT, right after they told me no we don’t send – yep, got one that had to be added to my taxable income. You will also notice most of these bonuses state payment will be received ‘…up to 90 days after requirements are met…and your accounts must be open.’ Citi will not pay until at least 90 days have passed and requirements met and you’ve complained non-stop to their executive office. As I said, Citi really gets their pound of flesh out of you for the bonus. Be ready.
I’ve got news for you. Whether or not the bank reports the bonus, YOU are still required to report it on your income tax return!
Also, even though banks are not required to report interest under $10, YOU are still required to include ALL taxable interest in your gross income, whether or not it was reported on a 1099!
As for your claim that “Citi won’t pay until …,” Citi paid my $500 bonus on 1/16/2020, just 47 days after I met the requirements!
Citi also paid me a $500 bonus on 3/13/2019, just 67 days after I met the requirements for that bonus. Citi sent me 1099-INT this month that includes that $500 bonus.
So I have to wonder what’s your problem.
One other question that commonly gets asked is in relation to this is: Why? Why would so many different banks give out money so easily?
While there is no written answer available for that anywhere, we all guess that it is to drum up the numbers and please the share holders that rules are lax and those that exist are also not enforced most times.
I think banks know what they’re doing. Some percentage will convert to profitable customer relationships. You don’t have to make money on every account to make money overall.