Bank account churning, or checking account churning, is the process of openining a new bank account for a new customer bonus. Banks like Truist, Chase, Capital One, and PNC will entice new customers into opening accounts with them by offering a bonus. The bank “wins: because they’re flooded with thousands of dollars in new deposits which they can use to lend money to others (& charge interest to make money), invest deposits (to make money) for the bank or customers (also called interest), and to fund operational costs.
You win because you’re rewarded with a lump sum payment within just a few weeks and a new bank home if you like their UI, debit card, account features etc.
What else is Bank Account Churning?
To actually churn, you complete this process every so often with new accounts. You might start with Truist in January, then Chase in June, and end with PNC Bank. The process is opening the eligible account, completing the offer, which is often earning a paycheck (which you already do) or transferring money from savings, and then closing the account after receiving your bonus. Easy enough, right?
What are the pros to churning?
- Minimal active labor
Some of the benefits of checking account churning include that it requires minimal active labor and bonuses are often large compared to working on campus, at a grocery store, or even some gig jobs such as DoorDash, checking account churning requires minimal active labor. You’re most finding accounts, filling out forms, reading terms, and updating direct deposit info all from the comfort and privacy of your home.
Additionally, bonuses range from $100 to $600 on average with most bonuses sitting between $200 and $300 dollars. Even a $15 per hour, this is anywhere from 7 to 40 hours of labor converted to 3-5 hours for a beginner and 2-3 for advanced churners.
- Consistent source of income
Checking account bonuses can also serve as a consistent source of income. Bonuses regenerate often regenerate in as little as six months to as long as 2 years. Combined with the virtually unlimited number of banks to churn, it’s very common to find spending money or Christmas present money with some planning.
- Large lump sums make a dent
Lastly, bonuses are paid in large sums so you’re able to reach your savings goals faster. For example, I have a friend who is paying their way through college. They were able to use this Truist checking account offer (link not sponsored) to pay for almost an entire class removing a large load from his back. Or you can use it to fund a retirement account or even start a business.
What are the cons?
- May hurt your credit score
Some banks do a “hard inquiry” or “hard pull” of your credit score, meaning other credit institutions can see that you requested an account at this bank. Ten percent of your credit score is the number of accounts you have opened in the past 2 years, so if you start churning, open 5+ accounts in 2 years, it can lower your credit score.
Whether a bank will do a hard pull is usually in the terms and agreements but if you have questions, email, or call customer service.
- Time and effort involved in checking account churning
Bank account churning can take on average 3-5 hours of active effort between reading the terms, saving the terms (via spreadsheet and saving the page itself in another folder), moving money and several months of waiting per offer. For a first, timer, this might be intimidating and longer than say, working a regular job.
However, remember that there is less active effort. Sitting at a desk, ringing up customers, or walking dogs require much more active effort because you still need to get ready, often drive to work, and much more to obtain a paycheck in 1-4 weeks. With credit churning, you can complete the offer within a few hours spread over several weeks and sit back for your check to hit your account while sitting at a desk, ringing up customers, or walking dogs.
- Risks of overspending
Some bank account offers require you to swipe your card a certain number of times and you earn a bonus for each swipe.
For a Citizen’s Bank offer I did, I received $2 for every transaction (up to 50 transactions or $100). It is easy to overspend thinking “Oh, I’ll get this money back” but in reality, it can add up especially, if you’re purchasing things that you would not have normally have bought.
Hack: Find a low-cost item and purchase on multiple transactions. I found taffy and mints at Whole Foods for under $0.20.
Alternative hack: Purchased your normal groceries in smaller separate transactions. For example, if you’re buying 3 lemons and 2 packs of pasta, go into self-checkout (for the love of God, on a slow day), and purchase them in 2-3 separate transactions.
Conclusion
Bank account churning can be a great way to earn some extra cash with minimal active effort. It’s also great way to familiarize yourself with new banks and credit unions and their services. Make sure to check your own credit score and the details of the offer to determine if this would be beneficial to you. Also, keep up with terms so that you’re not charged fees. If you forget to close an account, you could be charged fees that can add up and cancel out your bonus
Now that you’ve learned all this information about checking account churning, what can you do with it? Start! Check out this article to see me checking account churning at Citizens Bank. I’ll define the terms and conditions in detail, explain why I chose this account, and much more.