Credit card rewards get a lot of fanfare, and for good reason. Over the past several years, I’ve paid out of pocket for flights and hotel stays only a handful of times. But credit card rewards don’t cover everything, so I found another way to drive down the costs of my trips: bank account bonuses.
I’ve earned thousands of dollars in bank account bonuses over the years, typically in the form of cold hard cash. I’ve used the money to pay for certain trip-related expenses that I can’t or don’t want to cover with points and miles. Earning them can be a little tricky, though, so here’s what you need to know.
How to earn bank account bonuses
Bank account bonuses are similar to credit card sign-up bonuses. You open a checking or savings account (or both) with a new bank, meet the requirements and get the money.
In the past, I’ve earned bonuses ranging from $50 to $500 in value, and some have been easier to get than others. Requirements to earn a bonus can vary by bank, but here are the ones I’ve come across:
- Set up direct deposit with your new account (you may also need to have a certain amount direct deposited within a set timeframe).
- Make a minimum number of purchases on your debit card, sometimes over the span of a few months.
- Spend a certain amount with your debit card within a set period (these are rare but I’m working on one like this right now).
- Deposit a minimum amount of cash and leave it in the account for a few months.
- Make a certain number of bill payments from your new account, sometimes over the span of a few months.
The most common requirement I’ve seen is the direct deposit requirement. For example, you open the account, set up direct deposit and have $2,000 deposited via paychecks or government checks in the first 90 days.
Unfortunately, this can be tricky if you don’t have easy access to update your direct deposit settings at work. It’s also a bummer if you’re self-employed and don’t use payroll software to pay yourself. If your situation makes the process too complicated or impossible, focus on the bank account bonuses with other requirements.
Before you apply for a bank account, make sure you read all the fine print to understand what’s required of you. The last thing you want is to open a new bank account then fail to get the bonus. (And yes, I’ve done this before, and it’s incredibly frustrating.)
Leveraging your bank accounts for travel
I focus mostly on credit card rewards to help cover the costs of travel. Using points and miles to book award flights and hotel stays takes care of the most expensive aspects of my trips. But I typically can’t use my travel rewards to pay for things like food, gas or museum or event tickets. Also, I never want to use points and miles to get gift cards to restaurants, because I’d rather eat at local places instead of big chains.
So when I earn a bank account bonus, I’ll transfer that money into a separate savings account earmarked for travel. Then when I start planning my next trip, I create my travel budget and determine which expenses I can cover with points and miles. For the rest, I use the money I’ve made from bank account bonuses.
Because I travel a lot, bank account bonuses don’t cover everything. But with hundreds or even thousands of dollars in bonuses every year, they’ve saved me quite a bit. Even if you only manage to earn a few hundred dollars in bonuses every year, that’s money you don’t have to spend out of your own pocket.
Where to find bank account bonuses
There are a few ways you can find bank account bonuses, including:
- Bloggers: I’ve found most of the bonuses I’ve earned from Doctor of Credit. The writers crowdsource information from readers and other bloggers to provide a long list of bank account bonuses. Many of them are available nationwide, but some are only offered in specific states or regions. The best thing is that the blog provides a post for each bonus, so you can get the full details about what you need to do to earn it, when you can expect to receive, whether there’s a monthly fee or a penalty if you close the account too early, etc.
- Targeted offers: Sometimes, banks and credit unions will send you a mailer with a targeted promotion. I’ve only seen a few of these in the several years I’ve been doing this, though, so don’t count on them.
- eBay: While I’ve only received a few targeted offers in the mail, I’ve been able to cash in on offers sent to other people. Some of these offers require a code, and some people are willing to sell that code for just a few dollars on eBay. Search for “bank account bonuses,” and you’ll see several. I’ve done this a couple of times and have never had an issue.
Keep in mind that bank account promotions typically aren’t ongoing. So if you find one you like, check for an expiration date. Some banks and credit unions will run similar promotions over time, but the bonus amount and requirements can vary.
What to know before you get into bank account bonuses
Bank account bonuses can be a great way to pay for travel (or anything else, really). But don’t think there aren’t any potential drawbacks that could cost you. Here are some things I’ve learned over the years, sometimes the hard way:
- There’s no guarantee of approval: Banks and credit unions check your ChexSystems report — it’s similar to your credit report but for bank accounts — before approving your application. If you’ve opened too many bank accounts in the recent past or you’ve previously misused a checking or savings account, you may get denied.
- Bank account bonuses are taxable: The money you receive from a bank account bonus is considered interest and is taxable. You’ll typically receive a 1099-INT form at the beginning of tax season, which you’ll use to claim the income on your tax return.
- Some banks charge fees: Monthly fees aren’t necessarily a deal-breaker for me, but it’s important to consider them when deciding whether a bank account bonus is worth it. Those fees eat into the value of your bonus. What’s more, some banks require you to keep your account open for several months, which can significantly reduce that value. If you close your account before that minimum period ends, you could face an early termination fee.
- It’s easy to get overwhelmed: At times, I’ve juggled three or even four bank accounts simultaneously to maximize my bonuses. On two occasions, I’ve been slapped with an overdraft fee because I wasn’t paying enough attention to what was going on. To make things a little easier, here’s a spreadsheet I’ve used to track my bank account bonuses. I also use You Need a Budget software to track account balances.
None of these things are bad enough to stop you from gaining value from bank account bonuses. But if you’re mindful of these potential pitfalls, it’ll be easier to maximize the value you get from each one.