Understanding Bank Promotions in Canada

I moved to Canada a few years back and let me tell you, the banks here throw around bonuses like confetti. $300 for opening a checking account! $400 if you set up direct deposit! Free this, waived that!

Sounds amazing, right? Well… sometimes it is. Sometimes it is a trap. Here is what I have figured out after chasing (and sometimes getting burned by) Canadian bank promotions.

Why Banks Are Basically Begging For Your Business

Getting a new customer is expensive. Like, really expensive. Banks spend a fortune on marketing, branches, all that stuff. So throwing you a few hundred bucks to sign up? Actually cheaper than traditional advertising.

Plus, once you are in, you are probably staying. Nobody wants to switch banks. It is a pain. They know this. That $300 bonus to get you in the door leads to years of fees and interest payments from you.

I do not say this to be cynical – just realistic. The promotions are real, the money is real, but they are not giving it away out of kindness.

Types of Promos You Will See

Cash Bonuses

The most straightforward. Open account, meet requirements, get money. I have gotten three of these over the past few years. One was $300 from TD, another $250 from Scotiabank.

The catch? Usually need to set up direct deposit of a certain amount. Like $500/month minimum for 3 months. If you have a regular paycheck, easy. If not, can be tricky.

Also watch the fine print. One promo I almost signed up for required the account stay open for 6 months – close it early and they clawed back the bonus. Sneaky.

Higher Interest Rates

These pop up on savings accounts and GICs constantly. Get 4.5% for the first 5 months! type deals.

I fell for one of these once without reading carefully. The rate was great… then dropped to 0.5% after the promo period. Had to set a calendar reminder to move my money when the rate tanked. Worked out, but required me to actually pay attention.

Fee Waivers

Monthly account fees are annoyingly common in Canada. Like $15-30/month for a checking account? Come on.

Banks will waive these for new customers, usually for a year. Great deal! But then year two hits and suddenly you are paying $16.95/month unless you keep some ridiculous minimum balance or do direct deposit.

I have gotten fee waivers extended by literally asking. Called the bank, said I was thinking of leaving because of fees, and they extended the waiver another year. Worth a shot.

Rewards Points

Credit card sign-up bonuses mostly. Get 50,000 Aeroplan points when you spend $3,000 in the first 3 months!

These can be legitimately great if you were going to spend that money anyway. I timed one with buying new furniture. Got the points, paid off the card immediately, free flights later. But spending extra just to hit a bonus threshold? That is a losing game.

Referral Bonuses

Refer a friend, you both get $50 or whatever. These are usually legit and easy. My wife and I have referred each other to different banks a few times. Free money is free money.

Things That Have Bitten Me

Let me save you some headaches:

The minimum balance trap. One account needed $5,000 sitting there to waive fees. That is $5,000 not earning real interest somewhere else. Did the math – the free account was costing me like $200/year in opportunity cost.

Promo rates expiring. Already mentioned this but seriously, put it in your calendar. Set a reminder for a week before the promo ends so you have time to move money around.

Complicated requirements. Had one that needed X number of bill payments AND direct deposit AND debit purchases. Missed one requirement by accident, no bonus. Read every detail.

Taxes. Yeah, bonuses over a certain amount can be considered taxable income. Got a T5 slip for a $400 bonus once. Was not a huge deal but was not expecting it.

The Banks That Usually Have Good Promos

I am not going to say one bank is best because it changes constantly. But in my experience:

The Big Five (TD, RBC, Scotiabank, BMO, CIBC) all run promotions regularly. Usually best in spring and fall for some reason.

Tangerine and Simplii (online banks) often have solid sign-up bonuses with fewer hoops to jump through. No minimum balances usually.

Smaller credit unions sometimes have promotions too, though less flashy. Worth checking if you are near one.

Is It Worth Chasing These?

Honestly? Sometimes yes, sometimes no.

If you are already going to open an account, absolutely time it with a promotion. Free money.

If you are happy with your current bank and the promo requires a bunch of effort? Probably not worth the $200 or whatever.

I know people who make a hobby of this – opening accounts, getting bonuses, closing before fees kick in, repeat. They call it churning. It works but it is basically a part-time job. I have got better things to do personally.

What I Do Now

I have got a main chequing account and a couple savings accounts. When a really good promo comes along that does not require too much hassle, I will grab it. Maybe once a year or so.

But I have stopped chasing every offer. The time spent managing multiple accounts and remembering deadlines was not worth an extra $200 here or there. Your mileage may vary.

Just go in with eyes open. Banks are not charities. If they are giving you money, they expect to make it back somehow. As long as you understand that, you can often come out ahead.