A bank bonus side hustle is a great way to earn passive income. It requires a little work because you must find the best bank accounts with great rewards, but your work is complete after opening the account.
Did you know you can use credit cards to level up your bank bonus side hustle? It doesn’t work in every situation, but when done right, it can increase your rewards.
What Is a Bank Bonus Side Hustle?
Not all side hustles require you to do work. A bank bonus side hustle is one of those options where you can earn passive income.
Banks often pay bonuses or rewards for opening a new account. They may pay a few hundred dollars just to open a specific account, deposit money, and leave it there for a specified term.
If you meet the terms of the rewards, you’ll receive the bonus as a direct deposit after the term ends and the bank determines you satisfied the requirements.
You can make good money earning bank bonuses if you follow the terms, with little work required.
How Does Using Credit Cards in Your Bank Bonus Side Hustle Work?
If you want to level up your rewards, you may use credit cards to fund your bank account, earning rewards on the credit cards and the bank bonus.
However, use caution because not all banks or credit cards allow using a credit card to fund a bank account.
Even credit card companies that allow it may treat the deposit as a cash advance, subject to much higher interest rates than a purchase, and won’t count toward the reward.
If you have a credit card that treats the deposit as a purchase and pays rewards, you may earn a reward from the credit card and the bank, double dipping on your rewards for one transaction.
Why You Should Include Credit Cards in Your Bank Bonus Side Hustle
Including credit cards in your bank bonus side hustle increases your rewards.
For example, suppose you have a credit card that pays a $300 bonus for making at least $1,500 in purchases within the first three months.
Say you then open a new bank account that pays a $150 bonus for opening an account with at least $1,500 and leaving the funds there for three months.
In that case, you can fund the bank account with your credit card and receive rewards from both.
You can also earn bank rewards with credit cards you already own. For example, if you have a credit card that offers 1% cash back on all purchases and bank deposits aren’t excluded, you can earn $150 on your $1,500 deposit, plus the applicable bank reward.
Interview with Brian Kelly: The Points Guy
Tune in to one of our Bank Bonus Podcast episodes where Grant Sabatier chats with Brian Kelly, the Founder and CEO of ThePointsGuy.com.
Brain gives our listeners an intro to travel rewards and credit card points.
Showing just how lucrative it can be to include credit cards in your bank bonus side hustle.
What Types of Credit Card Rewards Are Beneficial for My Side Hustle?
Most people who fund bank accounts with a credit card do so to get cashback on their credit cards.
However, the best credit card rewards are the ones you’ll use. For example, a travel rewards credit card makes the most sense if you travel often, but a cashback card makes more sense if you don’t travel.
Benefits & Risks of Including Credit Cards for Bank Bonuses
The largest benefit of including credit cards for bank bonuses is you can double dip, getting more rewards for the same transaction.
But there are risks to consider:
- Interest charges: If you charge more than you can pay in full, you’ll pay interest on the balance. If you carry the balance for a long time, it depletes the bank bonus
- Damaged credit scores: If you use too much of your credit card limit, pay your bill late, or open a new credit card to get the bonus, your credit score may drop
- Cash advance fees: Some credit card companies consider bank deposits a cash advance and charge a higher APR without a grace period, depleting your bank bonus rewards and eliminating any credit card rewards
How To Incorporate Credit Cards Into Your Bank Bonus Side Hustle
If you decide to use credit cards as a part of your bank bonus side hustle, here are some factors to consider.
Choosing the Right Credit Card
If you already have credit cards, decide which offers the best rewards. Read the fine print on each card to ensure it will be treated as a purchase.
Next, compare what you’d earn on each card. This works best with credit cards with a blanket percentage cashback reward for any purchase versus those with specific rewards, such as 3% back on gas or groceries.
Maintaining a Healthy Credit Utilization Rate
Ideally, you shouldn’t have a credit card balance that exceeds 30% of your total credit line. If you already have credit card balances or a small credit line, calculate the credit utilization the deposit would take. Ensure you are under 30% of your credit utilization.
A higher credit utilization rate can damage your credit score, making it harder to pay your balance in full.
Keeping Track of Your Spending
Don’t get caught up in the excitement of the bank bonus that you ignore how much you’re spending. Ensure you can afford the credit card payment, ideally paying the balance in full before the grace period ends to avoid interest charges.
Taking Advantage of New Credit Card Bonuses
If you don’t have a credit card that will reward you for the purchase, consider applying for a new credit card that pays a reward. Many credit cards have bonus rewards for the first couple of months you own the card.
If you qualify for a card that allows bank deposits, you can earn the welcome reward from the credit card and bank account.
Strategies for Maximizing Credit Card and Bank Bonus Rewards
Always check your credit card and bank account’s fine print before assuming you’ll earn great rewards.
- Qualifies as a purchase: Ensure the credit card company doesn’t consider bank deposits a cash advance
- Maximum rewards: Find the card that pays the highest reward for any type of purchase; you won’t find a credit card that specifically names bank deposits for rewards
- Pay balance in full: Ensure you can pay the balance in full to get the most out of your bank and credit card rewards; any interest you pay decreases the rewards
- Minimum deposit requirement: To get the bank bonus, ensure you can meet the minimum deposit requirement or any other requirements, such as a specific number of direct deposits or debit card purchases
- Time requirement: Most banks require you to leave the money in your account for a specific amount of time; ensure you can meet the timeline without withdrawing the funds early or you lose the bonus
Tracking and Managing Your Bank Bonus Side Hustle
It’s important to have a strategy to track and manage your credit card and bank bonuses to ensure you meet all the requirements.
Read the fine print and create a spreadsheet, or note the dates you must keep the funds in the account and when you should receive your bonuses to follow up and ensure you receive them.
How to Balance Credit Card Use With Bank Bonuses Effectively
The most significant factor is using your credit card wisely. It doesn’t make sense to max out your credit card, hurt your credit score, and make it hard to afford the minimum payment to get a bank bonus.
If you have credit cards without a balance and can afford to pay the bill in full, you’ll get the most out of your credit card and bank bonuses.
- Not reading the fine print: Missing the fact that your credit card company counts a bank deposit as a cash advance can negate the bank and credit card rewards
- Carrying a balance: Don’t use your credit card for a bank deposit if you can’t pay the balance in full; the interest charges negate the rewards
- Choosing a bank that doesn’t allow credit card use: Some banks don’t allow you to fund your bank account with a credit card, leaving you without a bank bonus
Is Including Credit Cards Into Your Bank Bonus Side Hustle for You?
Including credit cards in your bank bonus side hustle is the best way to get the most out of your bank bonus.
It’s like an extra reward when you can earn rewards from your credit card and the bank. It doesn’t work in every situation, especially if you can’t pay the balance in full, so look at the big picture before deciding.