Earning travel rewards can be an excellent way to save hundreds or even thousands of dollars on flights, hotel stays, and more. But there are some aspects of every trip that can be tough to cover with points and miles, such as food, local transportation and more.
Cashback credit cards can help, but in my experience, I can get a lot more value out of my travel rewards. As a result, I’ve turned to bank account bonuses to earn the extra cash needed to help make my trips even cheaper — if not completely free.
How bank account bonuses work
Banks and credit unions make a lot of money off of their customers, even if it's just using deposited cash to run their other business arms, such as loans and investing. But switching your bank accounts from one institution to another can be a pain, so some banks and credit unions provide incentives to make it worthwhile.
In that sense, bank account bonuses are in the same vein as credit card sign-up bonuses. Sign up for a checking or savings account — it can be one, the other, or both — and meet certain requirements, and you’ll receive the promised reward.
Over the years, I’ve opened checking accounts with roughly 20 different banks and credit unions to take advantage of these welcome offers. For a while, I was earning $2,000 to $3,000 every year from this little side hustle, all of which I deposited into a vacation fund savings account. The bonuses I’ve earned have ranged from $50 to $500.
The requirements you need to meet to qualify for a bank account bonus can vary, but you’ll typically need to do one or more of the following over a set promotional period, which is usually two or three months:
- Meet a minimum dollar amount for direct deposits from your employer or the government
- Make a specified number of purchases with your debit card
- Deposit a certain amount of money and leave it there for a set period
- Make a minimum number of bill payments from your account
The terms of the promotion will outline the exact requirements you need to meet and when you’ll receive the bonus — it can happen promptly once you’ve lived up to your end of the deal, or it can take a while.
How to find a bank account bonus
Banks tend not to advertise that they’re running a bonus on their checking or savings accounts, and sometimes promotions are sent in the mail to a targeted group of people.
As a result, although I sometimes come across bank promotions while I’m writing about money, it’d be challenging to find and keep track of all the different promotions that are going on both locally and nationally.
So instead of searching on my own, I follow the blog Doctor of Credit, which crowdsources information about the best bank account bonuses going on at any given time. You can compare bonuses offered on a national level, as well as ones available only for select regions or states.
And if you don’t get any targeted offers in the mail, don’t worry. Head to eBay and search for “bank account bonuses,” and you’ll see several people selling theirs for just a few bucks. I did this once a few years ago, and it worked well.
Keep in mind, though, that there’s never a guarantee you’ll be able to open an account with every bank and credit union. These financial institutions use what’s called a ChexSystems report to view your activity with past and current bank accounts, and some may deny your application if you’ve opened too many accounts during a short period.
5 tips for getting the most out of bank account bonuses
Bank account bonuses offer an opportunity to earn a little extra cash, which you can use to supplement your travel rewards — or use for anything else you want, for that matter.
But there are some best practices to consider that will help ensure you qualify for and get the most out of each bonus.
1. Apply for the ones you can easily earn
A lot of bank account bonuses require direct deposits, which sounds easy. But unless you can update your payroll information online or are friends with the payroll manager, it can be difficult to make frequent changes to your direct deposits.
Some bank account bonuses require you to make a deposit — sometimes thousands of dollars — and leave the cash there for a set period, which can be up to six months. If you’re going to opt for one of these promotions, make sure you won’t need the cash during that time.
2. Keep an eye on fees
Credit unions typically don’t charge monthly maintenance fees on their checking accounts, but it is more common with banks. Check to see whether the account you’re applying for has a monthly fee, and how many fees you’ll end up paying if you get the account.
For example, I once considered an account with a $300 bonus, but there was a $19 monthly fee and an early termination fee — the amount of the bonus — if I closed the account within six months. With the monthly fee, my net profit on the account would’ve been $186.
Fortunately, the bank offered to waive the monthly fee if I had $500 direct-deposited into the account each month, so I got the full $300 and was able to cancel the account after the early termination period. But if I hadn’t been able to avoid the fee, I wouldn’t have signed up.
And speaking of canceling, some bank account bonuses come with a stipulation that if you close your account within a certain time frame (often six months or less), you’ll be assessed an early termination fee, and you could also lose your bonus.
3. Have a system to keep track of your accounts
If you’re thinking about opening more than one bank account to take advantage of welcome offers, use a spreadsheet to keep track of your accounts.
With my spreadsheet, I have a column for the following:
- Bank name
- Bonus amount
- Date opened
- Bonus earned date
- Bonus received date
- Monthly fee, along with requirements to avoid
- Early termination penalty
- Date closed
Keeping your accounts organized can help ensure you do everything necessary to earn each bonus, and also avoid fees that can eat into the value of your haul. Even with a spreadsheet, though, it’s important to know your limits. I once got slapped with a fee for insufficient funds on one account because I had too many to keep track of and transferred money from the wrong one.
4. Read the fine print
Most of the bank account bonuses I’ve earned have come with lengthy terms and conditions, and there may be limitations and exclusions that can keep you from earning the cash. Also, some banks and credit unions will run a hard inquiry on your credit report for opening an account, even though you’re not applying for credit. Take the time to read the fine print for each offer before you apply for an account.
Keep in mind, too, that these bonuses can change fast, so plan to take a screenshot of the terms and conditions so you can keep track while you work to meet the requirements.
5. Don’t forget about taxes
Interest earned from a bank account is considered taxable income by the IRS, and bank account bonuses are classified as interest income by banks and credit unions. You can expect to get a Form 1099-INT from each financial institution at the beginning of tax season each year, which you’ll use to declare that income when you file your taxes.
Because roughly 72% of Americans got a tax refund in 2019, most people won’t need to set aside any cash to pay the tax bill on the money they’ve received. But just keep this caveat in mind, in case you do end up with a tax bill.
How to supplement your travel with bank account bonuses
Traveling on points and miles is never really free, because you’ll often be on the hook for taxes and fees on airline tickets; resort, parking, or other fees on hotel stays; and a slew of other trip-related expenses that don’t necessarily fall under the travel category on your credit card statement.
But by supplementing your travel rewards with bank account bonuses, you can get the cash you need to cover those extra costs. The more bonuses you get, the easier it will be to get your full trip expenses covered. But also be careful to avoid overdoing it so you don’t get caught with unnecessary fees for forgetting about accounts.
Done at the right pace, bank account bonuses can be a great way to save even more money on future travel.