Starting Manufactured Spending by Funding Bank Accounts

What is the method?

Our rating

EASE OF USE

Easy to do

SCALABILITY

Nope

FLOAT DURATION

Short and sweet

COST

Near zero

Psst… We LOVE this method

In this post, we're diving deep into one of the most lucrative techniques for manufactured spending (MS) - funding new bank accounts. This is one of the easiest methods for churning large volumes of money I’ve discovered. I highly recommend this technique for when you need to hit a certain sign-up bonus amount. I’ve personally used this technique to hit $20,000 in spending this year alone! Note that this method will generally not work for Amex cards, only Visa and Mastercard.

Step-by-step process

Funding bank accounts is a powerful technique that allows you to leverage credit cards to earn rewards and benefits. It's a simple process that involves four key steps:

1. 01
   Opening a New Bank Account: The first step is to open a new bank account with a bank that allows funding with a credit card. This typically involves submitting an online application. It's important to choose a bank that explicitly permits credit card funding to ensure that your efforts will be rewarded (Keep scrolling for a list of banks!).
2. 02
   Funding the Bank Account with a Credit Card: Once your bank account is open, you can fund it with a credit card. This means using your credit card to transfer money into the bank account, which the credit card company will view as a purchase. The bank will typically provide instructions on how to initiate the credit card funding, which may include online or in-person options.
3. 03
   Earning Credit Card Rewards: The beauty of funding bank accounts is that the credit card company views it as a purchase, which means you can earn rewards on the transaction. This can include cashback, points, or airline miles, depending on your credit card's rewards program. It's a creative way to maximize your credit card rewards while generating spending to meet minimum spending requirements or earn bonuses.
4. 04
   Paying off the Credit Card: Once the funds have arrived in your bank account, you can use them to pay off your credit card. This can be done by transferring the funds back to your credit card account or using them to make credit card payments. It's essential to manage your funds responsibly and pay off your credit card balance in full to avoid interest charges or fees.

By following these steps, you can effectively leverage credit cards to fund bank accounts, earn credit card rewards, and meet spending requirements to unlock valuable benefits and rewards.

Risks and Considerations: Navigating the Potential Pitfalls

As with any MS technique, it's important to be aware of potential risks when opening new bank accounts. It's essential to be aware of these potential pitfalls and take necessary precautions to minimize any negative impacts. Here are some common risks and ways to avoid them:

Risks

Account Closures: Some banks may not be happy with immediate withdrawals of funds after funding a new account with a credit card.

Mitigation: To mitigate this risk, we recommend keeping the funds in the bank account for about a week. If you have no other use for the bank account, you can feel free to close it. Generally, after an account has been closed for a year, you can re-open a new account and again fund it using a credit card.

Impact to ChexSystems Score: While funding bank accounts with credit cards does not impact your credit score, it may impact your ChexSystems score. ChexSystems is a consumer reporting agency that tracks your banking history, including new account openings. Some banks may check ChexSystems to ensure that you are not opening too many new accounts in a short period of time.

Mitigation: To mitigate this risk, we recommend not opening more than 2 bank accounts per month. The best place to check whether a specific bank references the ChexSystems score is on Doctor of Credit.

Limitations

Amex support: Most banks that allow credit card funding do not allow Amex cards to be used. This makes this technique not viable for manufactured spending on Amex cards. Hence, you should apply this technique to Visa/Mastercards. The reasoning for not allowing Amex is that Amex charges merchants a higher transaction fee than other vendors.

Bank Account Fees: Some bank accounts may have fees associated with opening or maintaining the account, and may also require a minimum funding amount. It's crucial to watch out for these fees and funding requirements. Despite the fees, in almost all cases, it will make sense to fund the account due to the potential value of the sign-up bonus or reward play you are chasing. To give a concrete example, GESA credit union used to let you fund up to $10K with a credit card (no longer offered), and charged a $5 fee to open the account. That was a no-brainer, since you easily can reap thousands of dollars of value with a single sign-up bonus.

Maximizing Rewards and Benefits: When to use this technique

In most cases, this technique should be used for meeting sign-up bonus requirements, as credit card funding does not typically count towards any credit card bonus categories. Many credit cards offer lucrative sign-up bonuses, but these can come with substantial spending requirements, ranging from $1,000 to $10,000 or more. But now we can easily meet this through bank account funding.

You might ask, What if I don’t have enough of a credit limit to hit the sign-up bonus? Even if you do not have the full sign-up bonus amount available on your credit card, you can leverage multiple rounds of funding to meet the spending requirement and unlock the bonus. For example, if a credit card requires $4,000 in spending to earn a sign-up bonus, and you only have $2,000 available on your card, you can fund a bank account with $2,000, withdraw the funds, and repeat the process with another bank to reach the spending requirement and earn the bonus.

In addition to sign-up bonuses, bank account funding can also be utilized to meet spending-based bonuses on credit cards. For instance, some credit cards, such as the Amex Delta Reserve, offer bonus miles for reaching certain spending thresholds. By strategically funding bank accounts with these cards, you can easily hit these spending requirements and earn valuable bonuses. For example, the Amex Delta Reserve earns 1 Medallion Qualification Dollar (MQD) for every $10 you spend, so bank account funding can help you work toward elite status with the airline.

Bank Accounts that allow credit card funding

The best source I’ve encountered for finding the latest funding accounts is this page on Doctor Of Credit.

US Bank

Max Funding Amount$275 (personal), $3,000 (business)LocationsAny state with footprintSupported CardsVisa, Mastercard (Amex no longer works)NotesNot listed

Update September 14, 2023:

1. 01
   Affinity Federal Credit Union [Up to $1,000 with Visa, Mastercard or Discover]
   Nationwide. Check Affinity's current membership eligibility page for the donation or association option to join.
2. 02
   Fairwinds Credit Union [Up to $500 via credit card]
   Nationwide. There is no account opening bonus yet, and there may not be a referral bonus of $100. Pass the CC funding through PayPal (Amex might be usable).
3. 03
   US Alliance Financial [Now only about $100 via credit card, per Doctor of Credit]
   You can pick out of four different organizations to qualify for membership. For funding, you need to call customer service after opening an account and tell them to use card funding and then report the card number.
4. 04
   Securityplus [$2000 via discover, visa, mastercard, but there are no recent data points, so verify before applying]
   Need to join ACC, OOS approval via the ACC certificate which can be obtained for free with the code “CONSUMER”.
5. 05
   Keypoint Credit Union [Up to $500 via credit card; many cards code it as a cash advance]
   Available nationwide with a Financial Fitness Association membership, which they arrange for you for free when you open the account.