I’ve made some oblique references (and soe less oblique ones, it was my #2 way to earn miles here) to earning miles by funding Citibank online checking and savings accounts with a credit card. Many times in the past I’ve been asked not to post about the deal by folks who were benefiting from it, the theory was that extra exposure was likely to kill it because the deal was just so good and not sustainable.
Citibank has been cracking down on many of the people taking uber advantage, and I suspect many of the folks who used to email me asking not to write about it are no longer able to use it themselves. Hence when I’ve written briefly about it on the blog here in the past few months I haven’t gotten such nastygrams.
And in fact there is now a thread on Flyertalk openly discussing the offer, and I’ve been a major contributor to that thread. There hasn’t been a pile-on of “please do not discuss this in the open or you’ll kill it” postings. Thus I’m pretty confident the only time banking churners have been put out to pasture by Citi. (Although I’m actually surprised that the thread hasn’t gotten more discussion than it has, considering how lucrative the technique actually is.)
Still, this is a great opportunity so I wasnted to describe it in greater depth for my readers while it’s still possible to take advantage of.
Several banks let you fund your initial deposit into an account opened online using a credit card. Usually they cap the amountof the deposit at $1000 or $2000. Citibank does not cap the amount of your initial deposit funded by a credit card. Thus your only limit is your credit limit.
They don’t accept American Express, only Visa and Mastercard. It doesn’t have to be a Citibank Visa or Mastercard, any will do.
They code the charge as a purchase, rather than a cash advance. This is crucial. Cash advances generally do not earn miles (or cash back, depending on the card), and come with hefty fees. They do warn on their funding form about the possibility of the charge being treated as a cash advance, so just to be 100% safe I set the cash advance limit of my credit card that I’m using to zero. And I print out online where it shows that cash advance limit as zero. That way if the coding of charges should ever change then the charge would simply be rejected. And in the extreme if it was accepted in spite of the limit being zero I have it in writing that it should not have been approved in order to argue later. But this has never been a problem.
So you open an online checking or savings account, and during the process there is an option to fund the account with a credit card. It’s kind of hidden, but they provide a form to fax in with your credit card information. (If you do not find the form, e-mail me and I can send it to you.) The form strangely does not have a place to fill in your newly opened account information, and this is necessary, so make sure to write it somewhere on the form. And then fax in the form.
Very large charges are sometimes flagged as potential fraud. Twice I’ve opened a Citi checking account using a Chase-issued credit card and my $50,000 deposit was flagged by their security group. I had to call Chase and tell them the charge was ok, and ask them to clear it. (Once it was flagged twice, and they had to give it the ‘highest priority’). Then I had to call Citi and ask them to run the charge again.
Once they run the charge, you earn the miles for the charge and you have a big deposit in your account. You then use the funds in that account to pay off your credit card.
If you’ve opened a Citi checking account, you can just write a check to your credit card company. But be aware that Citi requires you to activate your checks once you receive them otherwise the checks will be returned. Similarly, until you activeate your checks any payment initiated through your credit card company’s website may be rejected. Personally I get around waiting for the checks by just using Citi’s online billpay feature. They limit you to paying a single merchant $10,000 per day so I space the payments out $10,000 per day for several days, making sure to start this early enough that all the payments are in before the due date. Note that in the meantime if you sign up for an intereat-earning account you are earning interest on this free money. Some people even move the money out to a higher interest account in the meantime, but the short duration tends not to make it worth my trouble. I do tend to time my account openings so that the charge hits my credit card right after a billing cycle closes, in order to maximize the amount of time the free money sits in my account.
Bottom-line is rinse, repeat, and you earn a whole lot of miles. There are varying reports of whether Citi even pulls a credit report on customers when opening new online checking accounts, alhtough it’s hard to imagine that they do not.
How many times can you do this? Results vary. There are some people who have done it as many as ten times that I’m aware of, but Citi has finally started cracking down. Some people are being told “three times in a lifetime” while others space out their account openings and manage to open six or seven perhaps by flying under Citi’s radar. The number of times you can successfully do this is unclear.
Note that Citi accounts often come with fees if you do not maintain a sufficient balance. So you’ll want to close the account quickly rather than keeping it open, unless you’re going for an account opening bonus. The most recent Citi checking that I opened simply required two direct deposits per month in order to avoid fees. I decided to keep that account open, and I shoot over two $1 paypal transfers per month and that works for my direct deposits to avoid fees.
It is possible to have more than one Citi checking open at the same time, so you don’t even have to cancel.
Questions? Anything unclear? Ask away in the comments and I will do my best to answer. Consider getting in on this deal if you have a nice high credit limit on a cashback or mileage-earning Visa or Mastercard, who knows how long this opportunity will last before Citi cuts it out entirely or handicaps it further.