How to Make Extra Money in 2021 - Account Churning
- millennialmil
- Nov 28, 2020
- 4 min read
When seeking financial independence, there are two things which massively affect the speed at which this is attained:
1. Reducing expenditure
2. Increasing income
The first of which seems easy enough and there are plenty of guides out there about how to do this. Be it through switching energy suppliers, cancelling subscriptions or banning yourself from Starbucks (the last of which is probably the most difficult).
I want to focus on increasing your income by spending as little as 15 minutes online – a few times a year. I’ll also share a referral link that rewards you with a free share worth between £3 and £200 later on in this blog.
The concept
There is one key concept that this blog will cover – churning accounts. Now, I want you to ask yourself, when is the last time that you changed your bank account? What about your credit card?
The likely answer is many years ago. In the US, the average adult has held their primary checking account for 16 years, according to Bankrate. So, you can see why there are so many incentives to make customers switch.
If you already have a bank account set up; it may seem like a lot of effort to have to change your details and then update everyone (e.g. your employer or landlord). However, here in the UK, when you change your bank account:
· Your pay will be redirected to your new bank
· There is a direct debit guarantee that ensures that all of your direct debits are changed to the new account
· Even payments from other people to your old bank account are redirected for 3 years to your new account
The upshot is that there’s very little to worry about when you change accounts.
Bank Accounts
As a result of bank account customers being so loyal – banks have started to entice them to switch with generous offers. I recently took advantage of switching from NatWest to the Royal Bank of Scotland which are both owned by the same entity – in return I was given £175.
There are other deals out there too – at the moment TSB have a cashback deal and Virgin Money are offering a free case of wine worth £180 when you switch to them!
With the current crisis many of the cashback deals have dried up, but expect them to return in 2021 – most of these deals offer at least £100 cashback. They also require you to pay in a certain amount each month and you normally have to keep the account for a few months.
Martin Lewis’ website is a great place to stay up to date with bank account offers – which you can view with the link here.
Credit Cards
Credit cards are offering great incentives too. There are many cards out there which could be for you depending on where you spend.
For example – the American Express Preferred Rewards Gold Card offers 20,000 points when you spend £3,000 in your first 3 months – and is free for your first year. This can be worth around £100 on Amazon! The points are increased when you’re referred by an existing cardholder, so be sure to ask friends and family if they have a referral link – they too will benefit from referral points.
There are also American Express Nectar cards available which give £120 to spend at somewhere like Sainsbury’s. So be sure to shop around before picking a card for you. Again – Martin Lewis summarises the best rewards credit cards here.
The application for one of these takes a couple of minutes to carry out – however, the minimum spend might be tricky to reach. Therefore, I recommend waiting until you’re about to spend a lot of money on something like a renovation or a big holiday before submitting an application.
The only catch with these is the interest rates can be quite high. You can go into the American Express app and set your bill to be directly debited from your account in full each month to prevent any expensive charges – which I highly recommend doing.
In addition to the introductory offers – these cards give rewards for spending generally and sometimes even cashback, so it’s worth looking at the current offers available in the American Express app and saving the ones that you fancy to your app.
Investment Accounts
There are other ways to earn some extra money throughout the year too – the last thing I want to mention are investment accounts.
Lots of investment platforms will offer incentives once you deposit a certain amount of money with them. One such platform is Wealthify. If a friend refers you and you deposit £500 for 3 months – they will pay you and your friend £25 each! That’s a 5% return in just 3 months. However, you should bear in mind that the £500 will be invested in a fund and therefore can go up as well as down.
A personal favourite of mine is Freetrade. I previously went through why I think they have the best Stocks and Shares ISA here.
They often run promotions where if you refer a friend, they then award you and your friend with a share worth between £3 and £200! I’ve used this time and time again to amass plenty of free shares.
More recently they offered a promotion where they send an extra free share for opening a Stocks and Shares ISA with them – mind you, this costs £3 per month. If you’re interested in starting up your own Freetrade account, use my referral link here and we can both get free shares!
If you combine the above approaches – it’s easy to make over £1,000 extra per year in additional income, in exchange for very little time. The bank account offers are often the most lucrative, followed by the investment accounts.
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