Are New Bank Account Promotions Worth It?

At Frugal Flyer, we are often focused on maximizing credit card bonuses. There are a plethora of options in Canada, meaning that there is always a new card to be working towards a bonus on. However, as opportunists, new bank account promotions also allow us to increase our income with minimal effort.

Bank promotions can be highly lucrative when the right offer comes around. Let’s look at how you can identify a strong bank account bonus promotion, in addition to the best new bank account offers in Canada to take advantage of right now.

What are Bank Account Sign-Up Bonuses

Bank account sign-up bonuses are a method of customer acquisition for these financial institutions. In exchange for a monetary or merchandise offer, customers are invited to sign up for the bank’s services. With these offers, banks are hoping that the new customers will remain with them for an extended period of time so they can earn back the initial cost of customer acquisition through the up-front cash bonuses or merchandise offered.

When it comes to signing up for a bank account promotion, it is imperative to understand the terms and conditions to determine:

• If there are any fees associated with the account (e.g. monthly fees)
• If there is a required amount of time the account must remain open (even after receiving the bonus)
• What is required to earn the new account bonus (e.g. recurring direct deposit, eligible bill payments)

As with credit cards, understanding the terms of the offer will go a long way in ensuring that you can meet the requirements within the timeline required.

What Makes a Great Bank Account Promotion

While it is typical for most financial institutions to offer promotions for signing up for their banking products, a frugal and intelligent consumer needs to be able to determine the great offers from the okay-at-best or downright terrible offers.

There are a few things that you want to look for when you are considering signing up for a bank account promotion:

• How easy is it to fulfill the terms of the offer? Is it something that can be done in a few transactions, or will it take a full year of effort?
• Are there any fees associated with this account type? Some bank accounts have no fees, whereas others will have fees upwards of $30/month that can seriously cut into the welcome bonus.
• Are there any expectations to keep the account open for a set period of time? If you close the account, will the bonus be clawed back?
• What have others’ experiences been with this offer? I recommend referencing the relevant thread on RedFlagDeals to learn about what other new customers have experienced.

Historical Best Bank Account Promotions in Canada

Two of the most recent and notable promotions were first brought to the masses’ attention via RedFlagDeals; Reed and I were both able to take advantage of these promotions.

Both of these offers are what I would consider the perfect offer, so it is worth understanding these promotions so you know what you want to look for when it comes to future bank account promotions.

Innovation Credit Union – $300 Bonus

First posted on RedFlag Deals in November 2020, Innovation Credit Union had advertised a stellar new account promotion for $300 cash. To receive the new account offer, individuals had to:

• Open a no-fee banking savings account
• Deposit $5 for your member share (required for membership as part of a credit union)
• Complete one direct deposit within 90 days of at least $100 OR complete one pre-authorized bill payment of $50 or more (e.g. a phone or internet bill)

These terms were very easy to fulfill with minimal effort and as the account has no monthly fees, there was no risk of fees cutting into the potential profit from this offer. Innovation Credit Union was relatively quick with paying out the offer, with some members needing to call in and ask for the bonus to be manually applied.

Coast Capital Savings – $500 Bonus

First posted on RedFlagDeals in September 2019, Coast Capital Savings had advertised a new account promotion for $500. To receive the new account offer, individuals had to:

• Open a chequing account (no fee)
• Deposit $5 for your member equity share (required for membership as part of a credit union)
• Complete one direct deposit into your account within the first 90 days OR two pre-authorized debits (PADs) over $50 in the first 90 days.

Combining the fact that there are no monthly fees for the chequing account, coupled with the insanely high sign-up bonus, this offer almost felt too good to be true.

Once I met the terms of the offer, I did have to call in to have them manually apply this cash bonus to my account, but they were able to do it quickly over the phone. In short, this was the best bank account sign-up promotion I have yet to take advantage of in Canada.

Shortly after this promotion was made available, Coast Capital moved the offer to be for British Columbia residents only due to the volume of sign-ups (aka the ‘RFD effect’). This re-instates the importance of taking advantage of offers when they are available.  If you wait, you might miss out.

Historical Best Bank Account Promotions in the United States

While we are a Canadian-based blog and often focus on offers available for Canadians, it is important to be aware that bank account bonuses in the United States are not out of reach depending on the financial institution.

When it comes to US-based bank account promotions, Doctor of Credit has a regularly updated “Best Bank Account Bonuses” page that I would recommend referring to. Note that as a Canadian, even with an individual tax identification number (ITIN), there are many offers you will not be eligible for. Many US-based banks will only accept a social security number (SSN) for new account sign-ups.

Capital One 360 Chequing Account – $400 Bonus

First posted on Doctor of Credit in November 2020, Capital One launched a promotion for their 360 chequing account in which new account holders could earn $400 USD. All that was required to earn the offer was two eligible recurring direct deposits totaling $1000 or more in the first 60 days.

If you want to better understand the steps that Canadians had to follow to get this offer, check out our previous blog post on the Capital One 360 Checking Account $400 cash bonus promotion.

When are Bank Account Offers Not Worth It

Simply because a bank account is offering cash for signing up for one of their accounts does not mean that it is worth it. Many offers often come with difficult-to-meet terms, high fees, or additional complexities that consumers need to be aware of.

For example, let’s take a look at RBC’s current new bank account offer which gives clients up to a $300 cash bonus for opening a RBC Signature No Limit or RBC VIP Banking account.

The requirements to earn the bonus are reasonable, in which the account holder only needs to complete two of the following: change your payroll deposit to the new account, two pre-authorized monthly payments, or two bill payments to a service provider by May 31, 2022.

Where the offer falls short are the astronomical monthly fees. Looking at the RBC VIP Banking account, the monthly account fee of $30 would add up to a $360 annual fee (since the account needs to remain open for 12 consecutive months to meet the requirements of the offer). This means that after the $300 welcome bonus, you are in reality losing money on this new account offer.

The monthly fees can be lowered if you hold multiple RBC products, such as a credit card, investment account, residential mortgage, or small business account. 

For the VIP Banking account, you can lower the monthly fees to $18.05/month if you hold three of these products. However, since you are required to keep the account open for 12 months, that monthly fee totals $216.60 for the year. All of a sudden, you are earning $83.40 for a year of holding the account which is not worth it. When it comes to accounts with other financial institutions, you may find that some will waive the monthly fee if you hold a minimum balance in your account.

For the juice to be worth the squeeze, I would want to be earning a minimum of $200 net from a single promotion with minimal effort required. Obviously, the higher the value of the new account bonus, the more effort I am willing to put in.

Finding the Best New Bank Account Offers in Canada

When it comes to finding the best new bank account offers in Canada, I recommend checking our bank account comparison tool or our rebates page for the most up-to-date new account offers.

One current noteworthy bank account promotion is the BMO Performance Chequing Account which offers a bonus of up to $600 + $100 cash back from Frugal Flyer.

Customers who open a new BMO Performance Chequing account by July 2, 2024 can:

• Earn $350: Open a Performance chequing account, make a deposit, and complete 2 of the 3 requirements listed below, for two consecutive months:
  • Set up a recurring direct deposit
  • Make two bill payments of at least $50 to different billers
  • Set up two pre-authorized debits of at least $50 from different billers
• Earn $50: Invite a family member as part of a BMO Family Bundle and earn when they open their account
• Earn $200: Deposit a total $10,000 or more into a Savings Amplifier Account by July 2, 2024; and maintain a daily closing balance of $10,000 or more at all times until September 30, 2024.
• Receive a 5.5% promotional interest rate when you add a Savings Amplifier Account

If you are interested in the BMO Performance Chequing account offer, you can sign-up here. Please note that existing clients are not eligible for this offer.

Learn More: BMO Bank Account Cash Back Rebates

Conclusion

Before you sign up for any new bank account offers, do your due diligence and double-check all terms and conditions to understand if there are any restrictions, timelines, or fees to be aware of. There are some absolute gems of offers out there, such as the previously seen Innovation Credit Union and Coast Capital Savings offers, but they are few and far between.

I recommend taking advantage of the strong new account offers when they pop up to earn a good chunk of cash for very little work. While the earnings may pale in comparison to what can be earned from credit cards, supplemental income through other methods is always nice to have.