Canada’s big banks are trying to lure new customers to switch banks this summer by offering juicy incentives such as free iPads or hundreds of dollars in cash back. Don’t take the bait.

To get the sweet bonus you’ll have to sign up for an expensive monthly plan, and/or apply for other products such as a savings account or credit card. That’s not all. To prove your loyalty you’ll also have to complete a direct deposit (i.e. payroll) or arrange two or more pre-authorized bill payments within a certain period of time.

What it takes to switch banks

Banking is arguably the most sticky relationship we have as consumers. We stay with the same bank for years, decades, and in some cases throughout our entire lives. For many of us, getting a root canal sounds more appealing than switching banks.

Banks know they have to pull out all the stops to try and win your business. That’s why you’re seeing some of the richest ‘welcome offers’ ever advertised. They do look attractive at first blush.

RBC wants to give you the latest 9.7″ iPad at no cost. BMO can offer up to $350 cash, while CIBC and TD Bank each have $300 with your name on it. While I didn’t find a current promotion for Scotiabank, I did find a doozie from HSBC, which is offering up to $700 in cash back and rewards for making the switch.

HSBC $700 to switch banks

What’s the catch? There’s always a catch. Let’s take a peek inside the terms and conditions to see what those asterisks are all about.

How to get $700 cash back from HSBC

All you need to do to earn this bonus is open up an HSBC chequing account, make a minimum deposit, and register for HSBC online banking. No big deal, right? (Checks fine print). Not quite so simple.

You’ll get $500 when you open HSBC’s Premier account and make a $25,000 deposit within one month. Wait, what?!? There’s more. To be eligible for the Premier account you’ll need a minimum $100,000 in combined deposits and investments, or a mortgage balance of $500,000 or greater. If you can’t meet one of those requirements you’ll be charged a $34.95 monthly fee within six months of opening the account.

You can also receive $100 cash back when you set up a recurring payroll deposit within three months of opening your account. Then you can get up to $100 in rewards value when you apply for and receive the HSBC Premier World Elite MasterCard. The card comes with a $99 annual fee for HSBC Premier clients.

Let’s get real on this deal. If you’re the type of person who has $25,000 lying around are you really going to be interested in chasing $700 bank promos? Even if you manage to meet all the requirements and “earn” the $700 bonus it’ll take less than two years before fees completely erase that cash back.

How to get a free iPad from RBC

RBC iPad

Almost as incredulous as the HSBC promotion, here’s RBC offering an iPad (doesn’t everyone already have one of these?) at no cost for new customers who sign up for an All-Inclusive bank account. A quick Google search revealed this 9.7″ iPad retails for $429.

To get it you’ll need to open an RBC Signature No Limit Banking account ($14.95 per month) or RBC VIP Banking account ($30 per month), then set up your payroll as a direct deposit or add two pre-authorized payments.

At $30/month you’ll have paid back RBC for the iPad within 14 months.

By the way, if your devious mind is thinking about closing your account right after receiving your free iPad, think again. Get a load of this fine print:

If you received the Reward and then downgraded, changed or closed your Eligible Personal Banking Account or undid any of the Qualifying Criteria you performed to get the Reward, such as cancelled any payroll/pension deposit or pre-authorized payment, at any time before September 27 2019, we reserve the right to debit your Eligible Personal Banking Account or any of your accounts with us for the value of the Reward you selected as described in the table below, plus applicable taxes, even if this places you into overdraft. If your Eligible Personal Banking Account is closed and you do not have any other account with us at that time, we will send you an invoice for the value of the Reward you selected, plus applicable taxes, which you agree to pay in 30 days.

Ruthless.

How to get $350 cash back from BMO

BMO $350

BMO wins for the most complicated offer. Start with a chequing account. Choose either the Performance ($15.95/month), Air Miles ($15.95/month), or Premium plan ($30/month) for a $200 bonus, or choose the Plus plan ($10.95/month) for a $100 bonus.

To get your chequing account bonus:

  • Open a chequing account with one of the above plans and make a deposit of ANY amount.
  • Set up a direct deposit for three consecutive months with the first deposit posted to the account by November 30, 2018.

Add to your bonus by adding an eligible savings account, credit card or investment account. Each one earns you an extra $50 (for a total of up to $150). Fine print check: the balance of your savings account and/or investment account must be at least $5,000 as of November 30, 2018.

Once you’ve opened your accounts and met all the terms and conditions, you’ll receive your cash bonus by February 28, 2019.

Assuming you manage to earn the entire $350 worth of incentives it’ll take just under two years to give all that back to BMO in monthly account fees – and less than one year if you chose the $30/month Premium plan.

How to get $300 cash back from TD Bank

TD Bank $300

New TD chequing account customers can get $300 cash back by opening an Unlimited Chequing Account or All-Inclusive Banking Plan and then completing two of the following transactions with their new account:

  • Set up a recurring Direct Deposit
  • Make an online bill payment (minimum $50)
  • Set up a recurring Pre-Authorized Debit (minimum $50)

Pretty straightforward. Let’s check the fees and fine print.

The Unlimited Chequing Account comes with a monthly fee of $15.95, while the All-Inclusive Banking Plan comes in at $29.95 per month.

The $300 will be deposited to the new account within eight weeks after all conditions have been met. (Looks like TD is not as strict about closing or downgrading your account after receiving the bonus).

Choose the Unlimited account and you’ll pay back your bonus to TD within 18 months. Take the All-Inclusive option and you’re back to even after just 10 months.

How to get $300 cash back from CIBC

CIBC $300

New CIBC chequing account customers can earn $300 cash back by opening a CIBC Smart account. It’s the most straightforward and potentially useful offer to switch banks, but still requires a closer look under the hood.

The first step is to open the Smart Account and also provide your email address (for some reason). Next, complete a direct deposit or two pre-authorized payments within three months. Seems reasonable.

Pay as little as $4.95 per month if you stick to 12 transactions or fewer per month. Once you’ve made 20 transactions the monthly fee is capped at $14.95.

The cash reward will be deposited into your Smart Account within 12-16 weeks of completing the required transactions. At worst you’ll pay back CIBC in 20 months, but if you only paid the minimum $4.95/month it would take 5 years for CIBC to recoup its bonus from you.

Final thoughts

Acquiring monthly recurring revenue is the Holy Grail for any business. Banks feed off of it. That’s why they’re able to offer seemingly rich incentives like the ones highlighted here – because they know that a one-time $300 outlay will be paid back easily within two years, if not sooner, plus the potential for a longer term relationship and cross-selling other products.

It’s smart business for the banks, not so much for you and me.

While I’ll admit I’m the first to jump on a new credit card offer (as long as it meets my four rules for credit card churning), I’m reluctant to switch banks for what amounts to be a few hundred bucks and ultimately a huge hassle.

Save yourself some aggravation and don’t fall for the shiny toy in the window. If anything, use these advertisements as leverage with your own bank – negotiate a fee or a better interest rate for yourself. After all, wouldn’t it be nice to get something for your loyalty?

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23 Comments

  1. Rich on July 18, 2018 at 6:57 am

    Great analysis. Thank you.

  2. Garth McLeod on July 18, 2018 at 7:45 am

    Am I missing something here? I’ve had a PC (now Simplii) no-fee chequing account since 1999. That means I haven’t paid any monthly fees since the last century. What am I doing wrong???

    • Robb Engen on July 18, 2018 at 7:55 am

      Hi Garth, I think you’ve got it exactly right. I don’t pay bank fees either, but millions of Canadians still do – presumably some are tempted by offers such as these.

    • Ryan on July 18, 2018 at 11:50 am

      Nice #humblebrag Garth.

  3. Matt on July 18, 2018 at 8:34 am

    The TD monthly fees can be waived by holding a minimum balance. Open a TD Unlimited Chequing account, deposit $4000 as minimum balance to waive the $15.95/month fee, set up direct deposit/bill payment, collect $300 bonus, switch direct deposit back/move money out, and cancel.

    A hassle, yes (especially to be switching direct deposits around). But free money, yes.

    • Robb Engen on July 18, 2018 at 12:18 pm

      Hi Matt, fair point and I suppose you could say that’s a 7.5% return on your $4,000!

      I’ve done this exactly once (through a provincial credit union) and it was a huge hassle for $300. I’ll stick to credit card churning.

      • Graham on October 17, 2018 at 4:40 am

        Hi Robb,

        I would advise you to reconsider scaring people away from the TD bonus, or at least make a point about the main deterrant being that one would be unwilling to keep $4000 in the account to waive the fee. as Matt mentioned above. In a total of about an hour’s simple work I met all the conditions, and within a few weeks had my bonus. If I wasn’t enjoying the free unlimited e-transfers (which saves me more per month than that 4000 can fetch elsewhere) this account comes with, I would be closing the account to invest my $4000 elsewhere, because like you said, there is no penalty for doing so. Plus, unlike with credit card bonus hunting, closing and opening any number of bank accounts as much as you want has no negative impact on your credit rating, as long as they are in good standing.

        I’d tell the 99% this deal is worth their time.

      • Aj on September 6, 2019 at 4:08 pm

        The HSBC one can be done the same way deposit the funds for 6 months, maintain the balance and close accounts when you get the $500

  4. Chris on July 18, 2018 at 9:29 am

    I’m continually amazed that any Canadians deal with the big banks. I have accounts at two local credit unions, plus an online account at Tangerine. Generally better customer service at the credit unions, and not as much up-selling of things I don’t need.

    • Ryan on July 18, 2018 at 11:52 am

      Why do you have your business spread over 3 institutions? #poorplanning

      • Chris on July 18, 2018 at 1:14 pm

        It’s just that I have so much money I like to spread it around. Good deflection, though; I take it you agree with me about the big banks vs credit unions?

        • Ryan on July 18, 2018 at 2:12 pm

          #humblebrag

          I tell people who ask about where to keep their business that they should go to the institution that gives them the best service or most satisfies their relationship criteria. To your point, lots of upselling at the banks. Some people like that, though – all subjective. Two CUs and one OB is overkill, IMO.

  5. Owen @ PlanEasy.ca on July 18, 2018 at 10:06 am

    Ha! Great summary!!! I must admit, I did the CIBC one a few years ago to try and get the $300. It was way more trouble than it was worth. You’re absolutely right, banking is very sticky and the banks know this. A $400 iPad is nothing compared to 10+ years of $15/month fees.

    I’m sticking with Tangerine and Simplii and maybe doing a couple of credit card reward bonuses each year (those are way easier to get and worth about the same).

    • Robb Engen on July 18, 2018 at 12:22 pm

      Hi Owen, the CIBC offer appears to be the most reasonable of the bunch. BMO’s and HSBC’s are so complicated or unattainable that it would not be worth the effort. RBC’s, ehhh, I guess if you really want an iPad? TD’s looks okay if you can minimize or waive the fees. Altogether too big a hassle and you’re smart to stick with no-fee banks and credit card rewards.

      • Owen @ PlanEasy.ca on July 19, 2018 at 9:29 am

        The CIBC offer is the easiest, and it’s the same when I did it a few years ago, but its funny because even I wasn’t able to hit all their requirements in the time frame.

        I think I lost out on $100 out of $300 because one of my pre-authorized payments missed the cutoff window by 2 days. I believe the cut off window was 3-months from the initial application but the setup process is so annoying (I had to go into a branch during certain hours to finalize the application) that it took me a few weeks to even open the account.

        If you can hit the requirements then it’s great, but it does take a fair bit of work.

  6. GYM on July 18, 2018 at 11:45 am

    I just signed up for the TD bank one and we got an Aeroplan card fee waived. It’s like double hacking! (Used the minimum amount to get monthly fee waived)

    The iPad one looked enticing but it’s actually not. And the HSBC one is kind of ridiculous.

    • Ryan on July 18, 2018 at 11:59 am

      Could be enticing if you’re looking for a new bank relationship AND in the market for an iPad.

  7. Ryan on July 18, 2018 at 11:58 am

    Good analysis but a little one-sided. If you’re in the market for an iPad (yes, believe it or not, not everyone owns one), the RBC offer could be worthwhile. 1 year of fees @ $14.95/month = $179.40, $429-$180 = $249 in your pocket. If you’re just looking for another iPad, it’s an outlay of $180 you could have saved by keeping your current model iPad. Need to decide what you’re looking for. ALSO this doesn’t include RBC’s Multi-product rebate (having additional products), OR using leverage with the advisors (who are measured on sales) to get 6 months of charges waived, OR any costs you incur for switching, like a missed payment, etc.

    Anyway, cheers!

    • Robb Engen on July 18, 2018 at 12:25 pm

      Hi Ryan, it was completely one-sided and for a good reason. I wanted to draw attention to how these promotions actually worked in practice and that it is most likely more trouble than it’s worth. Yes, of course, savvy consumers can put the time in and find the workarounds. But this post is aimed at the general consumer who might have been drawn to some free cash.

      Appreciate your comment!

      • Ryan on July 18, 2018 at 2:13 pm

        Fair, I agree with all your points. Just keeping you on your toes.

  8. Celyne on July 18, 2018 at 12:53 pm

    Big banks are not going to give anything away for free. Have been with same bank for 40 years. No fee because multiproduct customer. When I paid off my morgage, had left only my credit card and credit magin, which I pay fully every month. They wanted to start a monthly fee for the use of my bank accounts. I told my bank manager if she adds a monthly fee, I am closing all and walking. She said ok, no fee. They make plenty of $ with my investments and after so many years, if they want me to pay monthly fees, I will be gone. They don’t care about their customers, they only care about their bottom line for their shareholders.

    • Ryan on July 18, 2018 at 2:15 pm

      100% correct on all points. Will never change either re: capitalism and Canadians being dumb as rocks about personal finance.

  9. Bankrupter on July 19, 2018 at 12:13 pm

    To anyone savvy these promotions can be capitalized on. Since 2015 I have done multiple new account promotions with CIBC, TD and BMO. Between my SO and I have that has earned us over $2500 cash. Given changes in 2017 and 2018, the banks have inserted terms to prevent this.

    I found doing this very little effort on my part. I did not really mind testing out the various banks services for my own interest and the most time I spent with a bank advisor was maybe 20 minutes over a lunch break. Otherwise, direct deposits can be done without switching your payroll, minimum balances waived monthly fees (I think all agree these are never worth paying for) and meeting the other requirements was simple.

    I agree the promotions are becoming more cumbersome, but I do not qualify anyway. I would not waste my time with RBC for the reasons you have mentioned. I do not bother with promotions unless I can net at minimum $250 in cash or equivalent. We’ll see what back-to-school brings for the next batch.

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