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.
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
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.
How to get $350 cash back from BMO
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
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
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.
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?