By Josh July 26, 2018
Despite making more money at my (new) day job than I’ve ever made before in my career, I am constantly looking for other ways to add to my banking and investment accounts. This post will cover two that are easy and relatively lucrative!
Bank Account Bonuses
Every once in a while, I receive fliers in the mail that are basically advertisements for banks trying to get me to open up a new checking or savings account with them. Until the past couple years, I would toss those straight into the trash, because I already had a free checking account, had been with my then-bank for 10+ years, and didn’t want to cause any extra work for myself in keeping track of multiple bank accounts across various banking institutions, credit unions, etc.
But as part of my growing travel-hacking knowledge base, I became familiar with Doctor of Credit, which also maintains a list of bank account bonuses that are available at any given time. This list opened up a world of *free* income to me, as long as I could read the fine print and comply with all of the listed requirements.
So what type of requirements does a bank spell out in order to get the bonus? Sometimes you have to set up Direct Deposit and receive a couple deposits from your employer or a certain amount of deposits such as $500. Other bonuses require a minimum number of debit card purchases/swipes, and I’ve been known to make 5 minor transactions in quick succession to meet the minimum requirement (pack of gum, 1 gallon of gas, a bottled beverage, etc). One bonus I am currently working on achieving requires either a direct deposit OR $2,500 minimum balance, 1 debit card purchase, 1 bill-pay of a recurring bill, AND a mobile check deposit. I will receive a $250 bonus for doing each of those 4 things! The one I received most recently was for setting up a Business Checking Account, for my Uber business, duh! 😉 This offer required a $1,500 minimum daily balance for 60 days, and a combination of 5 debit card transactions and/or ACH deposit/payments. I did 5+ of both, just to be sure! Free $300 in my account just the other day, which is basically a 20% return in 60 days for the $1,500 I parked there for a couple months.
So why do banks offer these bonuses? First, they think most people aren’t going to follow-through with all of the requirements, so they won’t have to honor the bonus. Second, they get you used to using the account for debit purchases, direct deposits and bill-pay, so they think inertia will work against the consumer and they will stay-put. Thirdly, many checking and savings accounts have monthly fees, but there are *almost always* a way to have the monthly fees waived, which usually requires a minimum balance of $1,500 in a checking account or up to $15,000 in a savings account, to remain fee-free. But I think that if I can figure out how to switch my behaviors TO this new account, I can just as easily switch FROM the account.
If you decide to proceed with going after these bank account bonuses, the best thing I can tell you is to read the terms and conditions carefully, keep a copy of those terms, and make sure you meet them within the specified amount of time. The next best thing I can tell you is that these bonuses ARE TAXABLE INCOME and will be reported to the IRS on a 1099-INT form. But I have earned $1,350 so far this year from bank account sign-up bonuses, and that’s almost 2 whole mortgage payments ($680/month) for me, so this is not an insignificant sum in my budget. And finally, beware that many of the accounts have language that the account must remain open and with a positive balance for 6 or 9 months, or the bonus will be clawed-back upon closure.
This next topic is a lot scarier to many people, and I spent a lot of time trying to wrap my head around it before ultimately giving it a try last December. I want to caution you, dear reader, that this is something I tried, did successfully for about 5 months, then stopped participating because I had one of my oldest credit accounts shut down without warning.
Tradelines are basically any contract you have with a banking institution for a consumer line of credit. AKA a credit card. You have a contract in place to borrow up to a certain limit, with payback terms, including interest payments per the agreed-upon terms. These tradelines are reported to the credit bureaus, and they are what make up your credit report.
So how does one make money with Tradelines? You basically “rent” access to them! There are companies out there who need a supply of tradelines to sell as inventory to borrowers with poor credit who need a temporary bump in their credit score to apply for a home or car loan of their own. The process is to add the person as an “Authorized User” on your long-standing, excellent credit account, thereby having your credit card tradeline report to the borrower’s credit report for a few months. The borrower NEVER gets any information about you, and they never receive an Authorized User card – the card (if issued at all) will be sent to you.
It generally only took me about a minute to log into my online accounts with a given credit card, click “add authorized user”, type in their personal information (first/last name, address, email address, sometimes SSN) and they would begin to receive a credit score boost within a month. At the end of 2-3 months, I would usually need to make a phone call (2-10 minutes depending on how much hold-time) to remove the authorized user. The telephone agent will ask if you can get the card back from the user (which you can do, because you’re still holding onto the card in the first place), and you tell them yes. Then you destroy the card! And you get paid anywhere from $50-75 for cards that have been open 2-5 years, and can earn quite a bit more for older cards and/or higher credit limit cards.
So why did I stop? As I mentioned before, I had one of my oldest credit cards shut down by Discover. I opened the card in 2012, because I liked the idea of 5% cashback on rotating quarterly categories. Discover actually had one of the easiest processes to add AND remove Authorized Users, so I thought things were going along really well… that is, until I tried to remove my 4th and add my 5th Authorized Users on the same day. I think that must’ve raised red flags at Discover, because my online request was denied and I had to make a phone call. “No problem,” I thought… “Discover has excellent, US-based phone agents.” I was able to talk to an agent and get the request approved. But then, a month or so later, without any digital or mailed communication, my DiscoverMore Card was shut down.
In all, I “rented” out my good credit (score over 800 on all of my recent credit card applications and using all of the free tracking apps) on 17 occasions. This earned me a total of $1,125 in 5 months, and I probably only spent a total of 2 hours online to add, and on the phone to remove, the authorized users. But after my Discover shutdown, I didn’t want to risk having the same thing happen with Chase (my beloved travel hacking cards issuer), so I stopped participating in the program.
The Wealthy Accountant has a good write-up about Tradelines, with more details than I have provided. Check out his post if you want to learn more.