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Banks with a Clawback Clause (Similar to HSBC Canada)
May 22, 2023
2:28 pm
dickyran333
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I opened an HSBC Advance Checking account and HRSA in Nov 2022 to avail their Welcome Bonus of $400 and to get promotional interest rate of 4.90% for 4 months. I fulfilled their requirements of pre-authorized debits and bill payments and I was told that they would pay $400 bonus in June.

However, I recently read about their clawback clause that states that if the Advance Chequing Account doesn't remain open in good standing for at least one (1) year after the end of the month during which the Advance Welcome Offer is received, then I'll be obligated to repay the full amount of the Advance Welcome Offer to HSBC.

I was not aware of this clawback clause, otherwise I wouldn't have opened the HSBC accounts. If it was mentioned here on the forum, I failed to check it out.

After their promotional interest rate period expired, I had moved my balance to Tangerine Bank leaving only $5,000 at HSBC to avoid their monthly service fees. Also, HSBC's current HRSA interest rate is mere 1.15% and I don't remember getting any other promotional interest rate offer from them for the existing customers.

I have no desire to keep this account open until June 2024 with $5000 lying there. I guess I have 2 options:
a) Open a CAD $5,000 1-year GIC at 3.50%, or a USD 5000 1-year GIC at 4.00%. I then don't have to keep $5,000 in their Advance Chequing Account to avoid monthly service fee of $25.
b) Just accept it was a mistake to open the HSBC accounts and close them immediately and move on, even if that means let go $400 Welcome Bonus next month.

Any suggestions?

More importantly, I'd like to know if there are other banks that also have a clawback clause on their new account opening offers.

May 22, 2023
3:24 pm
Norman1
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Yes, RBC Royal Bank does in its Get the new iPad when you switch to RBC offer.

Open an eligible RBC bank account ($16.95/month RBC Signature No Limit Banking account or $30/month RBC VIP Banking account) by July 31, 2023. Set up two of the following by January 9, 2024:

  1. Your payroll or pension as a direct deposit
  2. Two pre-authorized monthly payments (PAPs)
  3. Two bill payments to a service provider

$599.99+taxes clawback for the iPad if account closed or those direct deposits or payments stopped before November 2024, next year:

3.h. If you received the Reward and then downgraded, changed or closed your Eligible Personal Banking Account or undid any of the Qualifying Criteria you performed to receive the Reward (for example, cancelled a payroll/pension deposit or pre-authorized payment) at any time prior to October 31, 2024, we reserve the right to debit your Eligible Personal Banking Account or any of your accounts with us for the value of the Reward [$599.99] you selected, as described in the table below, plus applicable taxes, even if this places your account into overdraft or causes you to exceed your account’s credit limit, as relevant. If your Eligible Personal Banking Account is closed and you do not have any other account with us at that time, we will send you an invoice for the value of the Reward you selected, as described in the table below plus applicable taxes, which you agree to pay within 30 days from the date of receipt, which shall be deemed to be 5 business days from its postmark date.

May 22, 2023
4:13 pm
HermanH
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dickyran333 said
Any suggestions?

More importantly, I'd like to know if there are other banks that also have a clawback clause on their new account opening offers.  

Be really REALLY careful about their clauses. I was also caught in the same predicament. One of their clauses said that I had to keep the account open for 6 MONTHS after the payment of a bonus. I can't remember which one, but it was there. If I had dropped below a deposit level or closed the account, the bonus would have been clawed back. Overall, I made nothing and lost nothing over the time period, but I had expected to be ahead. Be CAREFUL. Re-read the entire agreement and clauses to be certain you don't accidentally disqualify yourself.

I have learned my lesson with HSBC. I won't put up with their childish BS. I closed my accounts ASAP. They tried to get me to keep things open, but I told them about their idiotic and childish tricks and wanted them to know how much I despised them. I refused to even keep an empty account with them.

May 22, 2023
5:20 pm
mordko
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HermanH said

I won't put up with their childish BS. I closed my accounts ASAP. They tried to get me to keep things open, but I told them about their idiotic and childish tricks and wanted them to know how much I despised them. I refused to even keep an empty account with them.  

Have to say… Requirements to stick with new accounts after getting the bonus seem completely reasonable and it is the reaction that is childish. Banks are not charities.

May 22, 2023
8:58 pm
Loonie
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I would say that antics like this are pretty common among the banks, especially the bigger ones. And it can come in various forms - must keep account open for X period, must keep minimum amount in account, both of the above, limits on withdrawals , complicated lists of deposits you must make, etc.
Chequing accounts are the most problematic as they always have exorbitant monthly fees.

They are entitled to put these conditions on their offers, but when they make it difficult to understand what you're getting into, hide it in lengthy fine print etc., that's not playing fair.

If it involves a chequing account, I don't even look at it. If only a savings account, I usually can't be bothered to read it all and avoid. That said, CIBC and RBC had some good savings offers in recent years and I accepted them.
You're lucky that you found out about it before losing $400!

May 23, 2023
3:44 am
savemoresaveoften
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All new account promo will have similar type of clawback / restriction.

I did the HSBC promo couple of years ago. I did exactly as the OP suggested, which is just park the min. $5k into a GIC (just pick a term long enuf to cover the 1y horizon.) This way you dont have to worry about early withdrawal triggering clawback etc. After that I switched the account into one of the no fee ones (was going to close it completely but the rep on the phone tried to keep me and offered me a no fee alternative)

May 23, 2023
7:58 am
RetirEd
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I never accept any account with monthly fees unless the minimum balance to avoid them is reasonable. Over the last year, those minimum balances have risen from a typical $1K to some at $5K!

When Coast Capital gave us those 4% 33-month GICs which were extended about 2.3% (depending on timing) I bought a bunch. They also gave a direct-deposit bonus and only required it be kept open for a few months - three I think it was. But even better was their no-fee account and grandfathered paper statements. That's why I still keep a bit of cash there.
RetirEd

RetirEd

May 23, 2023
8:00 am
HermanH
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Loonie said
They are entitled to put these conditions on their offers, but when they make it difficult to understand what you're getting into, hide it in lengthy fine print etc., that's not playing fair.

Certainly. I thought that I had read the terms, but missed/misinterpreted one and got caught. I also did not think that their rates would drop from something like 2.5% to 0.2%

I broke even and won't fall victim to such gimmicks in the future.

savemoresaveoften said
All new account promo will have similar type of clawback / restriction.

I do wonder to what lengths a bank will go to recover the promotion. If all the money is withdrawn and the account closed, what recourse do they have, except to file a civil suit? Will they simply trash your credit rating and leave it at that? Anyone have experience with any promotion recovery efforts?

May 23, 2023
8:28 am
AltaRed
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Perhaps the bank would issue an invoice per the RBC link, and if not paid, would pursue the outstanding debt via collection agency. In any case, it would/should be a credit score hit just like missing a debt payment.

I agree with Mordko that FIs are not charities, so don't expect them to just give up. That said, Loonie's point about promos with highly obscure terms and conditions doesn't bode well for the FI itself. I would avoid that stuff entirely. Either I want a long(er) term relationship on its own merits, or I don't bother in the first place.

May 23, 2023
8:58 am
Bill
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Agree with mordko too, anybody wants to give me $400 for opening an account, I'm going to read every word of fine print carefully. Actually I generally wouldn't even pay attention as I don't believe there are free lunches of that magnitude.

May 27, 2023
3:15 pm
dickyran333
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Thanks all for your comments. I appreciate.

Like HermanH, I decided to close my HSBC account without waiting to receive their $400 welcome bonus. Since I didn't see such a clawback clause when I opened my Tangerine and Simplii accounts, I never thought of such a clause from a bank. But as Loonie mentioned this might be more common with bigger banks.

I'm not annoyed at HSBC. They have all the right to have such a clause and it may not be unreasonable from their perspective. But if I had known this clause before, I wouldn't have opened the account. So I just decided to correct my mistake now.

I could have opened a 1-year GIC/TD at their current rate of 4.75% (not a bad deal at all). It would have made more financial sense but I decided against it.

I'll be mindful henceforth.

May 27, 2023
4:16 pm
Doug
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dickyran333 said
I opened an HSBC Advance Checking account and HRSA in Nov 2022 to avail their Welcome Bonus of $400 and to get promotional interest rate of 4.90% for 4 months. I fulfilled their requirements of pre-authorized debits and bill payments and I was told that they would pay $400 bonus in June.

However, I recently read about their clawback clause that states that if the Advance Chequing Account doesn't remain open in good standing for at least one (1) year after the end of the month during which the Advance Welcome Offer is received, then I'll be obligated to repay the full amount of the Advance Welcome Offer to HSBC.

I was not aware of this clawback clause, otherwise I wouldn't have opened the HSBC accounts. If it was mentioned here on the forum, I failed to check it out.

After their promotional interest rate period expired, I had moved my balance to Tangerine Bank leaving only $5,000 at HSBC to avoid their monthly service fees. Also, HSBC's current HRSA interest rate is mere 1.15% and I don't remember getting any other promotional interest rate offer from them for the existing customers.

I have no desire to keep this account open until June 2024 with $5000 lying there. I guess I have 2 options:
a) Open a CAD $5,000 1-year GIC at 3.50%, or a USD 5000 1-year GIC at 4.00%. I then don't have to keep $5,000 in their Advance Chequing Account to avoid monthly service fee of $25.
b) Just accept it was a mistake to open the HSBC accounts and close them immediately and move on, even if that means let go $400 Welcome Bonus next month.

Any suggestions?

More importantly, I'd like to know if there are other banks that also have a clawback clause on their new account opening offers.  

If you don't mind going through the process to open an HSBC InvestDirect account, you could stash whatever the minimum is to avoid annual administration fees ($15-25,000) in an ISA paying between 3.8-4.25% (series A). Alternatively, you could open an HSBC Mutual Funds account and park your $5,000 in an HSBC Money Market Fund or HSBC Mortgage Fund, both of which likely offer premium distribution current yields at the moment. Note their registered mutual fund accounts include a $15.00 per year annual trustee fee. 🙂

With the HSBC InvestDirect or HSBC Mutual Funds route, you may be able to qualify for a transfer fee rebate when you transfer out to your other brokerage firm. Alternatively, 3.50% is not a bad yield on $5,000, which works out to be $175.00 per year versus $217.50 in a Scotiabank Series A ISA paying 4.35%, meaning a difference of a mere $42.50. $42.50 to make $400.00, tax-free, seems reasonable. Also, that assumes Scotiabank's ISA rate doesn't go down at all in the next twelve months. 🙂

Footnote: RBC Royal Bank is likely to close its purchase of HSBC Canada in the next year or so anyway, though it may also be twelve months from today. When they do, it's quite possible they simply transfer the deposits and mortgages to the new entities, and don't worry about any historically paid transfer bonuses and so you may not have to worry about that clawback potential. That said, the acquisition is unlikely to close much before next March anyway.

Cheers,
Doug

May 27, 2023
6:31 pm
dickyran333
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Thanks Doug, I appreciate your suggestions. But I see that you have responded to my original post. Did you miss my previous post (#11)?

In the original post, I had mentioned HSBC's 1-year GIC at 3.50%. it was based on the rates they provide on their Today's Rates page. But I later realized that they also have 1-year GIC at 4.75% until May 31st, which seems to be a far better option than some of those you mentioned. But I still decided to close my HSBC account and let go $400.

May 28, 2023
11:27 am
Doug
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dickyran333 said
Thanks Doug, I appreciate your suggestions. But I see that you have responded to my original post. Did you miss my previous post (#11)?

In the original post, I had mentioned HSBC's 1-year GIC at 3.50%. it was based on the rates they provide on their Today's Rates page. But I later realized that they also have 1-year GIC at 4.75% until May 31st, which seems to be a far better option than some of those you mentioned. But I still decided to close my HSBC account and let go $400.  

Oh, wow, how come? 4.75% does indeed seem like a far better option. I'm surprised you gave back the $400. I agree they have generally crappy products, but honestly, I would've just stuck with $5,000.01 in a 4.75% GIC in that case.

May 28, 2023
7:03 pm
savemoresaveoften
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Doug said

Oh, wow, how come? 4.75% does indeed seem like a far better option. I'm surprised you gave back the $400. I agree they have generally crappy products, but honestly, I would've just stuck with $5,000.01 in a 4.75% GIC in that case.  

+1. Why not think of it as a $5000 1y GIC earning 4.75% interest which is $237.5 + $400. Now the 1y GIC rate is really 12.75%. Thats an unbeatable rate even compare to GIC brokers ! 🙂

May 29, 2023
9:55 am
dickyran333
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I agree with both of you Doug and savemoresaveoften. I did similar calculations and was well aware that a $400 bonus within a month and interest at 4.75% after a year is an unbeatable offer. But for me this was a decision based on some "other" criterion. Maybe I didn't like the clawback concept in principle. I think of it as penalizing myself for failing to do proper DD up-front.

May 29, 2023
10:25 am
HermanH
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I did similar calculations for different amounts and came to the conclusion that I broke even. Not ahead or behind. I was talked into opening a Premier account with 100K min. I agree that the $5K would have been much more acceptable for 1-yr.

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