On the weekend I was watching some episodes of ‘Til Debt Do Us Part on the Slice network’s website. There was an ad for TD Canada Trust. The ad offers customers up to $250 to open a new chequing account. If you’re curious, here’s the website.
$250 is a lot of “free” money. But there are a lot of terms, conditions, and potential costs associated with getting the bonus. As some of you have probably figured out, I enjoy a challenge. I haven’t written much about my banking arrangements. I will in the future. Suffice it to say for now that I eschew banks and embrace credit unions. Still, I’ll kiss a pig for $250.
This is a brief synopsis of the requirements for me to get the money:
- I’ll need to open TD’s most expensive chequing package before July 20th. This account features a mind-bending service fee of $30 a month. There’s an option to open a lower cost account but the bonus is smaller ($100).
- To waive this $30 monthly fee, I’ll need to keep a balance of $5000. $5000 is a lot of capital to tie up. I compared the return on $5000 in a high-interest savings account with the return on putting the $5000 in a TD chequing account ($250 bonus). I assumed the time period would be 6 months (I could start the account, earn the bonus, and pull out my money within 6 months). The highest risk-free return for a high-interest savings account at a CDIC-insured institution that I’m aware of is 2% (Canadian Direct Financial). Six months in this account would earn me $50 on $5000. The net present value of the “TD Bonus” option is, therefore, $200 (assuming no other fees or additional time). The TD bonus plan represents an annualized risk-free return of 10% - this rate is near-impossible to achieve. $200 extra dollars sounds pretty good to me.
- Before August 31st, I’ll need to change my direct deposit to my new TD account. Luckily, this is easy for me. On the other hand, if you live paycheque-to-paycheque or have a ton of automatic payments, this can be problematic.
- Finally, I’ll need to “Complete two Bill Payments (via Pre-Authorized Debit or EasyWeb – includes Mobile App) OR sign up for a new Pre-Authorized Transfer Service” before August 31st. I’ll opt for two EasyWeb bill payments, since they’ll be free under this plan and I can do two separate payments on a single credit card.
- I’ll need to keep the account open until at least September 28th (when the bonus will be paid).
I still had quite a few questions that I needed resolved before I could dive in, so I gave TD a call. Here’s a list of the questions and the answers that I got (note that these may not be applicable to your situation):
Q1: I don’t have a Canadian chequing account with TD. I do have an American account and credit card products. Can I qualify for the new chequing account bonus?
Q2: To avoid the $30 monthly fee, I intend to deposit the $5000 immediately. If I bring a cheque to the bank to deposit when I set up the account, will I be able to avoid the fee for the first month?
- I’ll need to check with the Financial Services Rep when I meet to setup the account. If not, then I should set up the account near the end of the month (e.g. right now) and deposit the $5,000 immediately. The fee for the current month (May) will be pro-rated based on the number of days. If I setup the account on the 23rd, the fee will be less than $10. If I deposit the $5000 and keep this as the minimum balance then I won’t pay any fees in subsequent months.
Q3: If I’ve earned the bonus, is there any minimum wait before I can close the account without added costs?
- Yes, there’s a minimum amount of time I must wait before I can close without a fee, but I’ll need to wait that long to collect the bonus, anyway (if I open it in May). The bonus won’t be paid out until September 28th; I need to start the account by July 20th, and do the direct deposit/bill payments by August 31st. Thus I’ll need to keep the account open for 4 months and change if I open it this week. As for closure fees: I can close the account within 14 days without cost (couldn’t earn the bonus); if I close the account within 3 months, but after 14 days, there’s an early closing fee of $15; after three months there is no fee to close an account. Thus if I open the account in May, and wait long enough to collect the bonus (September 28th) there will be no fee for closing the account.
Q4: I have credit products with TD. I see that I can get a “free” premium Visa and “free” small safety deposit box with the account – am I obliged to get this card or a box to get the bonus?
- No. These are simply offers associated with the account; they aren’t automatically provided and they are not required.
My research revealed that I may incur a minor cost – the pro rated service fee for the first month. That means I’ll need to pay $10 or so, and will need to deposit a bit more than $5000 to ensure my balance stays above $5,000. Other costs include the stamps and paper required to change my direct deposit arrangement. As discussed, there’s also an opportunity cost associated with tying up $5,000 in a non-interest bearing chequing account (although for less than the 6 months that I originally assumed!). I’ll also need to put in some time, such as the fifteen minutes I spent on the phone with TD on Sunday. To me, $180+ for three hours of logistics (since the capital opportunity cost and other expenses are already deducted from that figure) is worth it. Is $60 an hour worth it to you? It is to me.
Today I’m going to walk to the local branch of TD. It’s not my modus operandi to bank at banks, or to have accounts with high minimums and huge service fees. In this instance, I’ll definitely make an exception. I’ll keep you posted.