Personal Finance

hopping around bank promos

  • Last Updated:
  • Dec 6th, 2018 5:49 pm
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[OP]
Newbie
Feb 3, 2016
11 posts
2 upvotes
North York, ON

hopping around bank promos

Hey guys,

I'm a young professional looking to get into investing,
I want to start with something low profile and low risk and then get into something higher risk/reward when I am more comfortable/knowledgeable.

I have seen some people mention here that they hop around different bank promos and i'm just wondering what the actual process is like,

I imagine you would have to set up accounts with all the different banks and you just move your money over to the one with the highest promotional rate..
but, is this only for GICs? How does this work with banks who are offering promotional rates for their savings account?
I would think once you set up new savings account and run the course with the promotional rates, future promos on these savings account would not apply to you as you are not a new customer.

If someone can clarify the strategy and offer some insight, that would be great!

Thank you
40 replies
Penalty Box
Dec 27, 2013
7718 posts
3574 upvotes
Toronto
yeah truly a future proof strategy hoping around with your $5,000.00 to make an extra .25% on your money for that promo... That's what these guys do bro. Don't get sucked into the allure of promo chasing. The only ones doing it are the ones with $10,000 thinking they are smart.

real money has better things to do.

but really - and I'm going to be candid with you. If you need help understanding how to take advantage of a promotional offer, then just stick to a mutual fund.. You will have way more success. just go into any 1 of the big 5, sit with an advisor, and tell them you want to invest and start small.

how much moeny u have left over per month? $500 a month? throw that into your TFSA into a growth portfolio and let it ride.
Deal Addict
Nov 25, 2014
1724 posts
926 upvotes
Newton Brook, ON
I wouldn't consider rate chasing "investing", but the above reply is a little too one-sided and presumptuous. For one, the spread can be more like 1% to 1.5%. But, even 0.25% on 5k to 10k for 5 to 15 minutes of work (I'll let you do the math) is hardly a waste of time.

The other point is that it's not all or nothing. Most people have or should have both short and long term savings, which should probably not be 0% cash. In any case I wouldn't recommend to an obviously ignorant beginner to immediately throw everything into a "growth portfolio", because bad investor behavior is very common and far more detrimental than the 2% to 5% opportunity cost between cash and investments. It would be better to earn as much as you can with cash while you learn to become more comfortable with actually investing.

To answer the question here, the promos are usually based on whether your cash is already with the bank, more than whether you're a new customer. This works for rate chasers because once a promo ends, they move their money out.
You need someone with an umbrella not a fork
Member
Jan 4, 2017
305 posts
140 upvotes
As you can see you'll get a nice variety of opinions here. :)

Personally, I don't say no to a good promo if it's worth my time. I also agree that chasing promos is NOT investing, but it has its time and place, should you have the inclination to do that. The due diligence entails making sure you fully understand the terms and conditions as they vary and can sometimes be a deal breaker, the amount of work normally entails just filling out an online application and depositing the funds + tracking the account in a spreadsheet or some place. In the case of bank account and credit card promos, the last part is important so you can close the account at the end and avoid any potential inactivity or other fees.

There are promos offered on investment accounts, but they are usually not within reach with small amounts. I have seen as high as $1200 welcome bonus on those ones.

Putting aside the promo stuff, if you're interested in actual investing, I highly recommend reading threads by RFD members Rodbarc and Germack. Both completely different, but loads of valuable insights and information to soak up there. Most would probably agree that the temperament and discipline to stick to the plan over a long period of time is one of the most important parts. That is, after deciding on a sound plan that works for you in the first place of course. :)
Deal Addict
User avatar
Feb 14, 2002
1451 posts
286 upvotes
Toronto
The bank promos should be for your petty cash - the money you have sitting around to pay bills and withdraw cash from. Some people think it's worth a few minutes to shuffle the cash around. Sure, the return might only be a hundred bucks here and there, but that's not bad for a few minutes of work, is it?
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Deal Addict
Dec 16, 2017
1379 posts
520 upvotes
Raincouver
saying what, bank's promo, credit card promo, welcome bonus all that kind require minimal to 0 effort during your free time (no money making time so no opportunity cost per se)

as @quanta stated, it's not a bad thing at all. The bad thing is some of naysayer keeps interfering w/ your money hahah

@daivey every penny counts..... the people w/ $10k thinking they're smart, yes they're indeed smarter than a lot of people paying every single penny out of their pocket w/o a single preventative measure. I don't make 6 figure income but I live pretty well as I know how to apply the theory of scarcity and efficiency
Newbie
Oct 21, 2018
99 posts
17 upvotes
The key thing to understand is that retail investors
Are not investors. You are not adding any value.
You return will be close to zero after taxes and inflation. Buy a couple vanguard index funds and the rest in gic's. Worry about taxes, risk, and mers.
Personal finance industry is corrupt because consumer is stupid and government has not intervened.
Jr. Member
User avatar
May 31, 2018
122 posts
172 upvotes
Saskatchewan
I’m kinda curious what “real money” is?
Deal Addict
Dec 22, 2008
1971 posts
766 upvotes
Victoria
Good advice here - for me, I just put my liquid cash in an EQ account and leave it. Rest goes into ETF’s and I don’t worry about it.
Moderator
User avatar
May 8, 2009
7417 posts
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daivey wrote:
Nov 29th, 2018 11:28 pm
yeah truly a future proof strategy hoping around with your $5,000.00 to make an extra .25% on your money for that promo... That's what these guys do bro. Don't get sucked into the allure of promo chasing. The only ones doing it are the ones with $10,000 thinking they are smart.

real money has better things to do.

but really - and I'm going to be candid with you. If you need help understanding how to take advantage of a promotional offer, then just stick to a mutual fund.. You will have way more success. just go into any 1 of the big 5, sit with an advisor, and tell them you want to invest and start small.

how much moeny u have left over per month? $500 a month? throw that into your TFSA into a growth portfolio and let it ride.
FarmerHarv wrote:
Dec 1st, 2018 5:29 pm
I’m kinda curious what “real money” is?
Afaik @daivey is referring to balances above $5k, thresholds that are worth parking in indexed funds.
dekvitaly wrote:
Dec 1st, 2018 4:58 pm
saying what, bank's promo, credit card promo, welcome bonus all that kind require minimal to 0 effort during your free time (no money making time so no opportunity cost per se)

as @quanta stated, it's not a bad thing at all. The bad thing is some of naysayer keeps interfering w/ your money hahah

@daivey every penny counts..... the people w/ $10k thinking they're smart, yes they're indeed smarter than a lot of people paying every single penny out of their pocket w/o a single preventative measure. I don't make 6 figure income but I live pretty well as I know how to apply the theory of scarcity and efficiency
-1 to no opportunity cost. Many of these FI's troll you into their branches, or get you to snail-mail forms and cheques.

But, welcome bonuses (WB's) can certainly reward you for your time. Pick and choose which ones work for you.
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May 8, 2009
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dekvitaly wrote:
Dec 1st, 2018 6:40 pm
@titaniumtux usually big 4 branches won't be too far and open late. Single boy life is so easy that way
You still have to put a dollar figure to your time. Your opportunity cost is low if you don't have more important or higher paying activities taking up your time.
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Deal Addict
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Jan 4, 2009
3596 posts
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daivey wrote:
Nov 29th, 2018 11:28 pm
Don't get sucked into the allure of promo chasing. The only ones doing it are the ones with $10,000 thinking they are smart.
And to think, you're in the penalty box with such sound advice!
Penalty Box
Dec 27, 2013
7718 posts
3574 upvotes
Toronto
have you guys heard of the term penny wise, pound foolish?

yeah, I'm sorry, chasing promos for <$10,000 is not worth your time.... As for "do the math" have you? Most of the promos run for 2 to 4 months at the most. Can you do math? 1% promo rate on base rate...... that's annualized.. Over 3 months that's how much??? on $10,000??? It's basically $25 extra....WOW you are going to get rich doing that guys.

and to the point of opportunity cost.. EXACTLY... so now bank XyZAbc has your info now too... Great!! what about the time to open an account? Maybe call in? Time to read the terms and conditions?

Sure, if you have like $500,000 an extra 1% is great for 3 months. But even $100,000 an extra promo rate of 1% for 3 months is again ONLY $250... WOW OMG life changing.... WAIT WAIT did you guys forget something ? ? I think you did.... it's called taxes.....So if you're an average person making $60,000 a year, and you get another $250 in interest for the year, you're only pocketing $$180? WOW Sweet deal!!

Money is money, sure I agree, I want a free $250 too... but it's not free. I have to go open another account. I need to read the promo details. I need to meet with another advisor, OR if I open it online, depending on the bank, I have to go to a branch and verify my identity. Now they have my identity and my info.. Sure, not a big deal..

no such thing as a free lunch guys.

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