Churn Up: How To Make Money From Bank Bonuses

The Notorious B.I.G. once famously said, “Mo’ money, mo problems.” That’s true for many Americans sitting on a bank account full of cash—decades-high inflation and recession worries aren’t helping much.

It’s easy to make sure your money is making money for you rather than some bank bros. For starters, you could open a new checking account or savings account at a neobank and get up to 100x more interest on your cash. However, more dedicated users could take advantage of large and regional banks by capitalizing on bonus offers for opening accounts—AKA bank churning.

Let's look at how you can use bank churning to make free money. We’ll also look at the best passive income strategy to ensure your bank account is making the most of your moolah.

'Churning' is a common expression among the personal finance savvy. It refers to opening bank accounts, credit card accounts, brokerage accounts, and other new financial accounts. Sometimes, it’s an easy way to make some extra money.

However, it comes with conditions. While we call it “easy,” you’ll need to read the fine print to make sure you get paid at these banks, creditors, brokerages, crypto exchanges, or other financial companies—and it might be hard for some.

Welcome bonuses and bank bonuses are designed to attract your eyes, cash, and customer loyalty—but there are often hidden costs and monthly fees behind every good bonus offer.

And getting in the door isn’t exactly easy, either:

• Many bonuses are time sensitive: you have to claim them using a code or special link, sign up, and jump through all their hoops within a certain period of time.
• You’ll still have to be approved for credit cards—it requires a strong credit score. You’ll have to track your spending and keep track of annual fees to avoid an unexpected bill.
• Brokerage bonuses will often have certain requirements: identity verification, minimum deposit, invite friends, or do any number of things.
• Earning bonuses at crypto exchanges has a lot in common with brokerages, but an added layer of complexity is sure to make a bonus difficult.

There’s a lot of nuance to navigate in the world of churning, which is frankly why the vast majority of people don’t do it. However, in this article, we’ll focus specifically on bank account bonuses. We’ll give you some ideas of how bank account churning works—and strategies to help you get those signup bonuses.

Now that you grasp the basics of churning, we’ll zoom in on how you can make it worth your while.

Let’s start with the basics: why do banks want your money? Well, because your money makes money. Central banks are raising interest rates—and few are raising them as fast as the United States’ Federal Reserve is. That’s why some banks are whipping out abnormally large bonus offers—both for new customers and old ones alike.

In short: they’re hoping giving you money now will make them more money later.

Bank account churning is a way that people can get while giving very little. You simply open an account where a bank is offering account bonuses, satisfy the terms of the bonus, and then either close your account or empty it out and move onto the next bonus.

Simple bank bonuses generally require you to hold a minimum balance and send a certain number of direct deposits to the bank. More complicated ones might require you to deposit a large amount of money, maintain a balance for a certain period of time, or spend on a debit card. As with everything, it’s important to read the fine print.

Most institutions will offer a bank bonus for opening an account and sending a certain number of direct deposits.  Some banks will require you to make a large deposit and keep your money in there for a certain amount of time.

Ultimately, your largest constraints are your paycheck, staying organized, and the bank's terms.

Consider your paycheck

Many Americans have the ability to slice and dice their direct deposits across banks thanks to modern payroll software. However, if you lack the ability to deposit your income to multiple accounts, you might find churning difficult.

Another factor is that some Americans—like freelancers and contractors—might get paid directly and not through direct deposit. These are the types of things things to consider before starting to churn.

Stay organized

There's a misconception among Americans that you can only have one or two bank accounts, or that opening new financial accounts is bad. This is just untrue. However, if you’re going to open accounts at other banks or financial companies, you’ll need a way to stay organized or you might end up paying.

You could use a platform like Wealthfront or SoFi Relay to keep track of your financial accounts all in one place, but you’ll also need a way to make sure you’ve checked all the boxes to secure your bonus. We recommend keeping a note in your favorite notes app or using a spreadsheet.

Read the terms

Like we said, you have boxes to check, so making sure you check them is critical to getting a bank bonus. There's no negotiating your way into a bank bonus that you have failed to satisfy. That’s why it’s essential that you read the fine print and understand the expectations of a bonus, as well as the period of time in which you must satisfy those expectations.

From there, it’s up to you to decide how much marketing money you’d like to take from banks—and it’s also your choice to keep an account open or to close it. Just make sure that closing an account doesn’t mean losing the bonus you’ve worked to get.

A bank bonus is generally a Google search away. However, once you get familiar with the finer points of bank account churning, you’ll probably run into your fair share of bonuses in the wild—on bank sites or personal finance communities like the Churning subreddit.

You can have multiple financial accounts—but should you? How many accounts you choose to open, close, or keep empty is up to you. However, people dedicated to fishing for bank bonuses tend to be comfortable moving their money from bank to bank to get the highest yield.

It might pay to think of your interest-paying bank account as a passive income opportunity and the new bank accounts you open for churning as an active one. Your main bank should be the one where you glean the greatest benefit—whether that’s high interest, wealth management services, or more cash back on your spending. And the other ones—well, who really cares, right?

For most people, the noise is what keeps them loyal to their primary bank. However, it pays to check every few months to see where the most competitive yield is offered. Right now, the neobank Quontic is paying 2.15% APY on savings account deposits. While that’s certainly competitive with Bank of America and Chase—who pay 0%—there are actually dozens of neobanks paying in that ballpark.

In short, it pays to shop for offers and better rates—they’re not mutually exclusive and your pocketbook will thank you for the spare change.