Have you thought about the repercussions of opening a checking account just for the bonus and subsequently closing it? Discover the potential pitfalls and benefits of this strategy before making a decision. Learn how to maximize your banking experience with smart account management. #checkingaccount #banking #bonuses #financialplanning #savemoney
## The Pros and Cons of Opening a Checking Account for a Bonus
### Pros:
– Quick way to earn extra cash
– Access to promotional offers and perks
– Opportunity to try out different banks and their services
### Cons:
– Potential impact on credit score
– Fees for early account closure
– Loss of relationship with the bank
## Is It Worth It?
Before jumping into a bonus offer, consider the long-term implications of opening and closing a checking account. Evaluate if the bonus outweighs any fees or negative consequences in the future. Make an informed decision that aligns with your financial goals.
No downside to opening multiple checking accounts, but make sure the fine print on the offer doesn’t say you must maintain a balance for a certain length of time in order to receive the bonus.
I used to churn bank bonuses and after a while some banks actually rejected my application due to the chex system history
Closing accounts
can go against your credit
Eventually some banks may decline to open accounts for you. But in general, no, lots of people churn bank accounts for rewards. I’ve gotten about 10k in bonuses that way. Realize the bonus counts as interest income so it will be taxable income at tax time.
Some banks like Wells Fargo will do a hard credit pull when opening an checking account.
No issues, just can be tedious and works best when your direct deposit can be easily changed online. I’ve been doing $500-1500 annually for 5+ years now
Watch out for minimum balance requirements. they’ll give you 250 and take it back 15 or 20 at a time. And 1099 the whole 250
There is no such thing as free money. You’ll end up paying for it, one way or another
There are three main downsides:
* Opportunity cost of missing out on interest income due to money being tied up in the account for some period instead of a higher interest earning account. It doesn’t sound like you’d have to tie up much money for this particular offer, but some similar offers them might require tying up something like $10k for 6 months, which would be forgoing $250 in much lower effort interest income at today’s rates.
* Time and energy cost to open the account, switch your direct deposit, keep track of it, close it, etc. This might only be a couple hours combined, but it gives you an extra chore to keep on top of. Having too many additional accounts also increases the risk that you get hacked or other fraud occurs that you need to deal with.
* Risk that you fail to keep track of the account properly and end up paying service fees.
Banks also use a system called ChexSystems that is kind of like a credit score for deposit accounts and you may get flagged if you have opened too many checking accounts, making it difficult to open future bank accounts. But you’d have to go really wild with opening tons of new accounts before this would be an issue.
I used to churn bank account bonuses when I had a low laying job and interest rates were lower. Now my time and effort are worth more to me, my need for extra cash is smaller, and I can make a good enough return just letting money sit in a high yield savings, so I don’t bother too much unless there’s a really good offer with easy requirements. But if you’re hard up for cash like I was before, it’s a pretty low risk and easy way to get some extra spending money.