7 Things to Watch for With Canadian Bank Sign-Up Bonuses

Imagine that you’re scrolling online and see an advertisement for a sign-up promotion for one of the biggest banks in Canada. It’s probably tempting too. A sign-up bonus is a reward, often in the form of cash, points or a gift card, that a financial institution gives to customers who open an eligible account and meet certain requirements.

The appeal of getting an incentive just for switching banking institutions can seem like a no-brainer. While there are definite benefits, there are also a few key considerations as well. Sign-up bonuses are rarely as straightforward as they seem.

So, what’s behind the headlines? Typically, if you dig a little deeper, you’ll find conditions, time limits, and costs that can affect the value of the offer. As you weigh the benefit of a sign-up bonus versus the hassle of switching to a new bank, be sure to take note of the following factors.

1. Minimum Balance Requirements

One of the first things to look at is the minimum balance you need to maintain in order to qualify for the full sign-up bonus. For example, your bank may offer a cash bonus when you keep an end-of-day balance of $10,000 for 90 days. This offer is on the high end, though. Many banks have required balances starting at $3,000.

If your account balance dips below the required threshold during the qualifying period, then you might forfeit some (or all) of the sign-up bonus.

Minimum balance sign-up offers tend to make the most sense for those who already have a healthy cash buffer in their chequing account. Especially for someone with no plans to use that money in the near-future. The offer becomes far less appealing, though, if meeting the balance requirement forces you to move funds out of your investments or emergency savings in order to qualify.

2. Monthly Fees and Waiver Conditions

Another key detail to pay attention to is the monthly fee attached to the account that offers the sign-up incentive. Many bonus-eligible accounts come with higher monthly fees. Especially for those that include unlimited transactions or other perks. While fee waivers are available for many offers, the charges will begin to accrue again after the promotional period.

Sometimes, minimum balance requirements also apply if you want to avoid paying banking fees. In fact, many Canadian chequing accounts tie monthly waivers to maintaining a minimum daily balance. For example, your bank may charge a monthly fee of $18 unless you keep a minimum balance of $4,000 in the account.

Over time, this is where a sign-up bonus can lose its value. A bonus upfront earning can get offset in the long run if you’re paying a high monthly account fee.

Tip: Before switching banks, it’s worth reviewing not only the promotional offer, but also the long-term cost of keeping the account open once the bonus period ends. If you plan to hold a large amount in the account anyway, then the promotion makes sense. If not, you could be better off maintaining your current account setup.

3. Transaction and Activity Requirements

You may want to open a new account without using it in order to receive the bonus, but, unfortunately, most offers don’t work that way. In order to qualify for the sign-up benefits, banks often expect you to actively use the account within a set period. The goal is to encourage customers to make the new institution their primary one. At least temporarily.

Common requirements for sign-up bonuses may include:

• Setting up recurring direct deposits, such as one for payroll or government benefits
• Completing a minimum number of debit card transactions
• Making bill payments using pre-authorized payments
• Transferring funds between linked accounts
• Active account status for a specific number of days (or months)

These conditions usually come with a strict timeline, requiring the activity to take place within a set time period after opening the account. Be sure to take note of which requirements are easy to meet versus those that may disrupt your financial habits.

4. Bonus Payout Timing

You may see the value in a new account promotion, but it’s natural to wonder, “How long does it take to receive a bank sign-up bonus?” The answer is, unfortunately, not straightforward. It ultimately depends on the bank.

Most sign-up bonuses will hit your account within several weeks or months, but be sure to read the fine print to get a better idea of what to expect. If you are relying on the bonus funds for a specific savings goal, then the timing of the payout matters. Be sure you note the details of your applicable promotion.

5. Eligibility Rules and Fine Print Restrictions

One of the reasons why people miss out on a sign-up bonus is because they assume that they automatically qualify. Except, in some cases, they may not.

Many sign-up offers include restrictions like the following:

• Only new accounts with no previous customers allowed (within a certain timeframe)
• One bonus per household or social insurance number (SIN)
• Specific account types and banking packages only

Remember, opening multiple accounts or switching banks frequently won’t necessarily result in a greater number of payouts. To ensure you qualify, check your records for past accounts and bonus offers you received before you apply for a new one.

6. Opportunity Cost

Before you make the decision to open a new account, it’s equally important to consider what your money could be doing elsewhere. When a sign-up bonus requires you to hold a large balance in a chequing account, for instance, that cash will likely earn little, if any, interest. By keeping those funds idle, you are losing out on the return you could earn in a high-interest savings account, TFSA, or even a short-term GIC.

It’s the opportunity cost that makes headline bonuses appear more generous than they truly are. That said, these offers still make sense if the funds in your new account would come from an emergency fund that would otherwise remain untouched.

7. How Switching Banks Can Affect Your Finances

Sign-up bonuses often focus on the rewards, but don’t forget to think about the logistics. Changing financial institutions means disturbing your day-to-day banking flow. If you miss something, it can cause problems leading to skipped or delayed bill payments, payroll deposits that arrive late or broken automatic transfers.

There is also the time commitment to consider. Changing direct deposit details and resetting pre-authorized payments takes effort. Mistakes can cost you money in NSF fees or interest charges on late payments.

For smaller sign-up bonuses, frequently switching may not be worth the hassle. But, if you do decide a promotional benefit is valuable, try keeping both accounts open temporarily, maintaining a small buffer and confirming each deposit and payment is working correctly. It can help to ensure a smoother transition.

For more information on how to transfer money from one bank to another, check out FinlyWealth’s guide.

Final Thoughts: Are Bank Sign-Up Bonuses Worth It?

Promotional bonuses are great, but they are only beneficial if the requirements align with how you already manage your money. A large bonus can lose its appeal once you factor in minimum balance rules, monthly charges, activity requirements, and the time involved in switching banks.

Before you open a new account, look beyond the sign-up tagline, considering the true cost and effort that switching requires. In many cases, the best sign-up bonus is the one that you can earn without disrupting your financial habits or tying up the money you need elsewhere.