By Keph Senett on October 18, 2024
Estimated reading time: 8 minutes

Should you get that promo rate? Check out the fine print first

By Keph Senett on October 18, 2024
Estimated reading time: 8 minutes

If you’re tempted to open a new bank account because you saw a great promotional offer, make sure you know the answer to these five questions first.

Two young women look at a bank promo offer on a phone

Image by Freepik

Some banks entice Canadians to open new accounts with the offer of a high but short-lived promotional interest rate. A generous interest rate might catch your eye, but there are a few things you should ask yourself before you sign up for a new chequing or savings account.

Should you switch bank accounts for a promo offer?

Not everybody loves promo rates. In fact, a recent EQ Bank survey showed that more than half of Canadians (57%) prefer banks that give all customers the chance to earn a higher interest rate for their loyalty or engagement, with another quarter (25%) preferring banks that offer the same rate to all customers. Only a very small proportion (5%) prefer banks that offer promotions exclusive to a few customers even when it means they may not be included.

That said, if you’ve caught a banking ad promising an extraordinary interest rate, it’s natural to feel tempted, but there are a few pitfalls to be aware of. Often, to get that high rate, you must meet certain conditions—and after a certain time period, your rate reverts down to a less favourable one. But are these temporary rates worth the trouble? Below are the questions you should ask before you make the switch to open a new account.

1. What is the interest rate after the promotion ends?

Once a promotion ends, the account reverts to paying out the bank’s regular interest rate. Check the fine print to see how much that will be. Most regular chequing and savings accounts pay low interest—if any at all.

2. How long does the promotional rate last?

Promotional interest rates, while attractive, usually only last for the first few months after you open the account. With a large enough deposit, you might be able to squeeze some profit out of a promo rate, but will you keep the account when the promo rate ends? Furthermore, not all banks allow you to close an account online or over the phone—ask yourself if the promo is worth the hassle of visiting a branch to close your account.

3. What conditions do you have to meet to open the account?

The next step is to make sure you understand the terms and conditions on the account. To qualify for a promotional rate, you may have to be a first-time customer, bring new funds or make a minimum deposit. Beyond the promotional period, you might need to maintain a certain balance in the account to avoid paying monthly account fees. Each financial institution has different conditions, so read the T&Cs carefully. If you have questions, call the bank’s customer support.

4. Is the interest rate tiered?

Some banks in Canada offer premium rates to clients who make larger deposits, and lower rates to those with smaller amounts. Make sure you know what interest rate you’re getting.

5. What are the fees?

Many Canadian banks charge a fee for everyday transactions like withdrawals, e-transfers or paying bills through the account. Paying fees on your account could offset any gains made through your promo rate.

EQ Bank Notice Savings Account

go to site

Monthly fee: $0
Interest rates: 3.50% for 10-day notice, 3.65% for 30-day notice. Read full details on the EQ Bank website.
Minimum balance: n/a
Eligible for CDIC coverage: Yes

go to site

High rates that last: EQ Bank’s high-interest accounts

If you’re interested in high rates without the hassle, EQ Bank has you covered. It offers a variety of accounts to meet your spending and savings goals, and it has no temporary promotional rates or tiered rates. EQ Bank’s interest rates are some of the highest in Canada—its Notice Savings Account, for example, pays up to seven times more interest than other banks (details below). Plus, you won’t have to pay fees to use its services, keep a minimum balance or visit a branch to manage your account. Let’s take a closer look. (Note: The EQ Bank Notice Savings Account is not yet available in Quebec.)

EQ Bank offers up to 7x more interest than with other banks (tap to open)

Based on research conducted by Equitable Bank comparing base interest rates of savings accounts offered by Canada’s “Big 5” banks, Tangerine Bank, and Simplii Financial and the EQ Bank Notice Savings Account at 4.25% interest per annum. Research is based on savings account interest rates taken from public websites as at August 28, 2024. Promotions and rate premiums are excluded. Interest calculated daily on the total closing balance and paid monthly. Most savings accounts in Canada allow the account holder to access funds in the account at any time, whereas the EQ Bank Notice Savings Account at 4.25% interest per annum requires 30 days advance notice.

EQ Bank Personal Account

If you’re looking for a chequing-style account that you can use daily and use to save while also earning interest, consider EQ Bank’s Personal Account. You’ll earn 2.25% interest, or you can bump that up to 4.00% if you direct deposit your paycheques. There are no fees or minimum balance requirements, and account holders get unlimited transactions (yes, really).

You can also take advantage of the EQ Bank Card with this account. You can use it to withdraw from any ATM in Canada, and EQ will reimburse the fees. Plus, when you use this card, you’ll pay no foreign transaction fees for purchases made in currencies other than Canadian dollars. And, last but not least, you’ll earn 0.5% cash back when you use this card. And that’s not a promotion—that’s the everyday return.

For the EQ Bank Card, interest is paid into the linked Personal Account and cash back is paid into the Card, both paid out monthly. (See the EQ Bank Card Agreement for details on earning cash back and other terms and conditions that apply to the EQ Bank Card.)

EQ Bank Joint Account

If you want to share all the benefits of the Personal Account with up to three people, check out the EQ Bank Joint Account. It’s got the same high interest rates with no fees on everyday banking. Joint accounts are a great way to manage money between spouses, roommates, family or even friends when you share finances. Having the same goal, such as saving up for a trip or even paying rent, is a breeze when there’s a single account between you.

EQ Bank Notice Savings Account

If you’re looking for a safe, high-interest account and you’re comfortable planning your withdrawals in advance, the EQ Bank Notice Savings Account might be just the thing.

Here’s how it works: You deposit your funds into your EQ Bank Notice Savings Account and agree to give the bank notice (hence the name) before making a withdrawal. There are two different Notice Savings Accounts: With 10 days’ notice, you’ll earn 4.00% on your deposits, and with 30 days’ notice, you’ll earn 4.25%. There are no fees, minimum deposits or balance requirements, and you can make as many withdrawals as you want—a bonus is that you continue earning that high interest through the withdrawal period, too.

EQ Bank US Dollar Account

If you need an account for U.S. dollars, EQ Bank’s US Dollar Account may be a good option. It has highly competitive exchange rates and no monthly fees, and it offers an extraordinary 3.00% interest rate. (Foreign currency transactions will be subject to the Mastercard Currency Conversion rate. EQ Bank does not charge any additional FX fee or markup.)

If you’re looking for ways to get more out of your money, promotional interest rates can be tempting—but don’t forget to weigh your options. Accounts with lasting high rates, plus other benefits and no fees, might offer a better alternative.

Interest on the EQ Bank Notice Savings Account, US Dollar Account, Personal Account and Joint Account is calculated daily on the total closing balance and paid monthly. Rates are per annum and subject to change without notice. For the Personal Account, Joint Account and EQ Bank Card, the current base interest rate is 2.25% (the “Base Rate”). Customers who add and maintain qualifying recurring direct deposits of at least $2,000/month to a Personal Account or Joint Account are eligible to earn a bonus interest rate of 4.00% (the Base Rate plus an additional 1.75%) for the eligible accounts (the Personal Account, Joint Account, and the EQ Bank Card balance). Conditions apply. Please review the EQ Bank Bonus Interest Offer Terms and Conditions for details.

About the survey

These are the findings of a survey conducted by EQ Bank from April 24 to 26, 2024, among a representative sample of 1,504 online Canadians who are members of the Angus Reid Forum. The survey was conducted in English and French. For comparison purposes only, a probability sample of this size would carry a margin of error of +/-2.5 percentage points, 19 times out of 20.

More about savings:

This article is sponsored.

This is a paid post that is informative but also may feature a client’s product or service. These posts are written, edited and produced by MoneySense with assigned freelancers and approved by the client.

Newsletter