This is series 3 of a 5-series guide on credit scores, credit cards, and bank accounts. Head back to the Main Concourse to see the table of contents.

The Proper Mentality (Natural Payroll)

If you’re working a job, you get paid at some interval (weekly, biweekly, monthly).

There are usually only 2 ways this money gets to you:

• Direct deposit (DD): Electronically deposited into your bank account

• Cash/check/other: Handed directly to you and you have to manually deposit it into your own bank account

Churning bank accounts is easier if you get paid with direct deposits (DD).

However, even people with DDs from their jobs prefer simpler/faster alternatives that trigger the “DD” requirements. These alternatives can also be used by those who get paid with cash. We’ll discuss them below.

Historically (and even today really), it’s been a hassle to move your DD between banks. That’s why banks prioritize and try to “own” them.

If they have your DD, it’s much more likely they can sell you on their other financial products. Your money also sits on the bank’s balance sheet.

What is bank account churning?

Banks offer sign-up bonuses for many of their accounts (checking, savings, money market, etc.). These are usually in the form of:

• Do [$X] in direct deposits over [Y] months

• OR deposit [$X] and leave in your bank account for [Y] months

• to receive [$Z] in cash bonuses

Starting to see the connection?

We just talked about how your work gives you direct deposits for payroll and how there are ways to trigger direct deposits if you get paid by cash.

Banks have direct deposit requirements for their sign-up bonuses.

The two go hand in hand.

You’re not making any changes to your financial behavior other than altering the path your money takes to your bank accounts. If you’re going to get direct deposits, might as well have them count toward something extra.

Here’s the catch with sign-up bonuses: There’s a cooldown period.

On average, these cooldown periods range between 12-24 months.

Like the credit cards restrictions we mentioned in Gate 2, these really aren’t that bad. You’d adopt a similar waterfall strategy but instead of opening credit cards, you’re opening bank accounts:

Banks are much more lax with opening checking/savings accounts, making it significantly easier to churn them regularly. This turns it into a reliable, humble source of recurring income.

I’ve seen people scoff at this, saying the time spent isn’t worth the return.

Let me just say that different people are at different stages of life. For some, a few hundred or thousand make a meaningful difference.

Over the past few years, I’ve gotten over $15,000 in sign-up bonuses from 82 (and counting) bank accounts, and it required close to no effort.

It takes me:

• 2-3 minutes to open a bank account online

• 1 minute (literally) to change my DD info on Gusto

• 3 minutes to check that nothing went wrong

I get $300 - $600 for free for 6-7 minutes of work.

That’s an hourly rate of $3,000 - $6,000 dollars.

Most people who scoff at this don’t have hourly rates anywhere near that, and I can do this faster than they get their $20 drinks at the bar.

Fees and Fine Print Restrictions

Nowadays, modern banking institutions try to reduce as many nonsense fees as possible. However, it’s inevitable you’ll run into more traditional banks that still charge tedious fees.

Pay attention to these two as they’ll eat into your bonuses if you aren’t aware.

Monthly Maintenance Fees

Some banks charge you a fee to keep your account open. They’ll be very explicit in what you need to do in order to have these fees waived so be sure to read the fine print.

Common requirements:

• Minimum cash balance

• Minimum direct deposits each month

Early Termination Fees

Some banks have a minimum number of months you’ll be required to keep your account open.

On its own, this restriction isn’t too bad, but it does get annoying when it’s combined with monthly maintenance fees which result in money being locked up.

These usually range between 3-6 months. Again, be sure to check the fine print.

Credit Score / CHEX

Checking/savings accounts have nothing to do with your credit score so you don’t need to worry about this impacting your personal credit report.

However, it’s worth mentioning that banks check a separate type of report called CHEX. You can request a copy of your CHEX report for free online if you’re curious and want to see exactly what’s on it.

It’s basically just one long list of all the bank accounts you’ve opened or tried to open. Some banks are sensitive to this and will reject you if you’ve opened too many in the past few months. Just something to keep in mind.

Techniques and Hacks For Sign-Up Bonuses