Doc’s Prescription For Manufactured Spending – Fund Checking With Credit

Whenever you open a new checking account, you need to fund it with an initial opening deposit. A lot of banks allow you to use a credit card for this and you can fund anywhere from $100 to $2,000 depending on the bank. This obviously isn’t a scale-able manufactured spending technique as you’ll need to make sure you complete certain requirements to avoid monthly fees and typically cannot close your account for a period of six months unless you pay an early account termination fee but it is a great way to meet minimum spend requirements on credit card offers.

This method first became popular when you could fund your Citibank checking account with an unlimited amount via credit card. It regained popularity when Oceanside Christopher Catholic Union allowed credit card funding of up to $10,000, which was quickly shut down. Due to the much smaller funding limits banks have now set this looks to be much more sustainable. Especially considering they sometimes give bank account signing bonuses of up to $600 which makes the credit card processing fees they need to pay look measly in comparison).

If you plan on using this method, you should ring your card issuer and request that they set your cash advance limit to $0. Most banks will not charge a cash advance fee for bank account funding (Citi almost always will), but it’s better to be safe than sorry. Most banks will do a chex systems inquiry when you open a bank account, which doesn’t affect your credit score. Some banks will do a hard credit pull, this is usually when they offer overdraft protection, this will affect your credit score.

Below we’ve listed 12 banks/credit unions that allow credit card funding for the initial deposit, totaling $8,300 in possible manufactured spend.

Nationwide Banks

State Specific Banks

* indicates that it’s a hard credit pull to open a checking account with this bank
^ indicates that this account currently has a sign up bonus on it, in these cases we’ve linked directly to the sign up bonus offer rather than the bank’s homepage.

This list will be updated whenever we receive new information on which bank accounts can be funded via credit card. If you know any, then share with us in the comments.

This guest post was contributed by William Charles who blogs at http://www.doctorofcredit.com. He regularly posts about bank account bonuses and other consumer credit topics such as credit scores & consumer credit laws (such as the new SECURE act which would allow consumers free access to their credit scores). On Friday he offered $25 to whoever guessed what this manufactured spending technique was first (commenter ‘aegt’ is the winner! Coincidentally, also the first post).  He’ll be giving out $25 to somebody who tweets out or shares  this blog post on Facebook at random.

25 comments… add one
  • Congratulations to aegt for winning the first competition and thanks to everybody who guessed, it turned into a nice little discussion of different MS methods. Hopefully some of you find this bank account method useful.

    Remember to share this on twitter/facebook to have a chance at winning another $25. If anybody has any specific questions or knows of other banks that are fundable by bank accounts let me know in the comments here.

    Big thanks again to CTP for letting me steal his blog away for a couple of days.

    • What a spammy contribution. Why would anyone run the risk of this?

      Figures you’re not using your real identity anyway. If you’re going to use a fake one why not make it your site name? Misleading.

  • Yay! I actually won something on a blog. Thanks

    • Congratulations again on winning, Aegt. I’ll be in touch with CTP to get your details and your preferred payment method.

  • What a joke.

    Your teaser post claimed it was scalable. This doesn’t get remotely close – it’s a waste of time unless you can use those bank accounts for much more useful activities. A single visit to grocery/drug can accomplish more in 5 minutes than the hours required to set up these accounts.

    • Sorry that you were hoping for more, Paul. I think you must have misread the teaser post though: “This obviously ISN’T a scale-able manufactured spending technique”. Capitals are mine.

      This method is really for people who are getting their feet wet with manufactured spending. Also I disagree that one grocery/drug store can accomplish more in 5 minutes. You need to pair this method with the fact that these accounts also come with bonuses.

      I got $400 from Chase earlier in the year for completing one, plus I was able to charge an additional $500 which helped meet a minimum spend requirement.

  • Just to confirm, there are no asterixs shown next to any of the banks. So as far as you know, at this time, (insert whatever caveat you like here) these banks don’t routinely do a hard pull for account opening?

    • First Citizen’s has an asterix next to it, it might be a bit hard to see because it’s next to the ^ indicating there is a bonus as well. As far as I am aware (and all of the data points I’ve seen) the others aren’t hard pull.

  • this used to be huge and highly scalable. i’m talking six figures per annum kind of scale. in the past 18-24 months most of those loopholes have been shut down.

  • Way to go in ensuring a few of the small number of banks that accept cards for funding get shut down sooner rather than later. Surprised and disappointing to see this post. And no mention of cash advance fee risks.

    • “you should ring your card issuer and request that they set your cash advance limit to $0. Most banks will not charge a cash advance fee for bank account funding (Citi almost always will), but it’s better to be safe than sorry”

      I don’t think this will be shutdown for a few reasons, first the maximum limit shared is $2,000 which is one off. Let’s assume the card processing fee is 3% (which is quite high), that’s a fee of $60. Banks give out bonuses as customer acquisition, most of which are in the $100-$300 range.

      You’re also required to do some non-menial tasks to keep the accounts fee free, usually for a period of 6 months. It’s not possible to do hundreds of these accounts at once and you can’t hit it and quit it.

  • This is hugely irresponsible. Aside from the you’re-killing-the-deal side of things, any readers of yours who get dinged with an adverse action from a bank can be in for a much bigger world of hurt than a few miles would ever be worth (re: chex systems, early warning service, etc). I guess the new angle will be what buying prepaid products is like when you actually need them.

    • Adverse action for what exactly? As long as you don’t close your bank account with a negative balance there really isn’t a lot that can be reported on your chex systems report.

      I’ve done a lot of these bonuses before and haven’t had any issues at all, I’d be interesting in reading more though. Can you recommend any sources or reading material?

      • When Oceanside last hit the frontpage of all the blogs (and slickdeals, among others, IIRC), suddenly, this tiny credit union got slammed with far more volume in sign-ups than is normal for them. And what trait do all of these new accounts have in common? Being funded by CC to the max amount (at the time, $10k). My account was closed immediately upon opening and I received an AA for “fraud” in the mail. I haven’t seen any blackmarks on my own bank reports (and I don’t know if Oceanside works with any of the big reporting services), but that was dumb luck that I didn’t get hit with anything. All you need is one underwriter to not like what you’re doing and report it as fraud to chex, et al. Its not a simple matter of playing by the rules and having a nonnegative balance. Fly *under* the radar.

        • You can’t just report things you don’t like as fraud to chex, that’s not how the credit reporting industry works. Most of these banks have purposefully set these limits to be at such a rate to absorb the costs of card processing fees.

          Did anybody actually receive any fraud flags on their chex systems report as a result of oceanside? I know people receive letters, but I didn’t see anybody who actually saw a flag on their report.

  • I don’t consider this manufactured spending. Most people involved in MS already have one or more bank accounts and don’t need another.

    If someone was already planning to open a new account, then sure get some cash back in the process. Yet, just opening additional bank accounts for $50 worth of cash back doesn’t seem like a good idea. Furthermore, opening and then closing bank accounts for $50 worth of cashback is a seems like a bad idea. It’s inefficient and may draw unwanted attention.

    There is a reason this method is “underutilized”.

  • I also got a letter from the catholic cu last year and whether or not I got a mark I dont know. What I do know is that I have been refused by other banks since then, and have had troubles with one of my existing cu’s. So buyer beware. I agree with what others have said about how lame it is for you to post this. Banks will shut this down both these and the banks that are out there that are way more lucrative may see or hear of this and shut down as well. Does anyone not remember what Jeff had to say in his talk at the DO in charlotte over the weekend about being discrete?

    • If you’re being denied for bank accounts, you should check your chex systems report. If Catholic CU has issued a fraud flag it’s easily disputable. Again I’ve never seen anybody that actually has one of these flags on their account.

      If you want to be discrete about deals, I’d suggest participating in private communities/blogs. Credit card funding isn’t a make or break for these banks and if it was CC funding would’ve been shut down long ago. Look at the fees vs bonuses on offer and you’ll see why it isn’t an issue.

  • Thanks CTP & DoC. I agree it’s probably not the best idea for MS, but I don’t think the purpose of the post was to encourage signing up and closing. For me, I am looking to move away from just using my 1 or 2 banks that i’ve used for decades, and looking to other banks that offer other perks, treat me better, and let me distribute my normal spend and MS more. I won’t necessarily use the banks in the post but it’s nice to know that I can load with CC.

    On a side note, I signed up for UFB, which allows up to $100 CC load. Used my CSP with $0 cash limit. Will let you know how it goes

  • Curious, when looking for these how do you know they allow credit card funding? I would hate to go through the process with each offer I see only to find out after I had opened an account or at the end of a long application process that I couldn’t use a credit card to fund it. Thanks!

    • great question….would love to hear the answer. i suspect it’s not going to be anything sexy. he must be calling each one of tem.

    • There is no way in knowing for sure without opening an account. You can call up and they’ll usually give you the correct information, I’d suggest asking if it’s considered a cash advance as they generally have the wrong information.

      I was able to compile the list through my own trial and error and various other data sources. As you can see pretty much everything on the list has a sign up bonus which is the main reason I signed up for the account in the first place – that way even if their is no credit card funding I’m still ahead.

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