Canadian High Interest Savings Bank Accounts

Its been awhile since much has been posted on this entity. It seems like there were some initial problems, but how is it working for those with accounts now? Has anyone opened one recently with good experience? Thanks,

no problems here… transfers are posted within 24h, interest is being credited monthly (still at 2% which is near the top of the industry heap), online chat function with Ally works and is actually quite effective… nothing bad to say about them (yet)…

I bank with AcceleRate Financial,why not get the 0.20% more? I have been with CDF,PT and now AF, all these banks offer the same service.I am not going to say one is better then the other, they are not,so go with the highest rate…
But I am going to do the end of the switcheroo with my TFSA from CTF 2.5%
To PT 3% 15,000 in 2011

It's fully normal for institutions to pay a premium when they need capital. ING did it for a while when they first opened, then again when they had to cover European losses in 2008. As with buying insurance, you can't count on any institution to keep being the best deal – and their transfer fees make it harder for you to move about.

I look for the best rates for months before money matures out of deposits, and try to get the best return I can for as long as possible. At times a weaker rate will be better if for a longer term – when rates are expected to fall. 1-to-5-year offered rates will tell you what the banks are thinking.

In 2008, seeing the financial problems coming (by February Europe was firing people like crazy, mortgages were tanking and energy prices were killing auto sales – don't say you weren't warned!) I faced 4.65-4.75% 5-years and some promotional 12 to 18 month 5-5.25% terms. I put half my free cash in each, as a hedge against the meltdown turning into rampant inflation, and as it turned out the 4.75% stuff is doing me good in an environment where we probably will not see better returns of the next two and a half years. The 5.25% stuff rolled over in 18 months at 3.5% until Ally needed to puff up cash and offered 4% for five years.

But that short-term deposit did pay well and early in the cycle (better compounding) and offered me a chance to reinvest if inflation went crazy. Including stuff with other maturity cycles, my current full-portfolio return is just 3.9%. But that's fine for me because I'm retired and can't handle risk; my taxable income is fairly low and as always I carry zero debt.

A word of warning on "Escalator" deposits: they can be worth it but they are often misleadingly marketed by the "average interest rate," which is meaningless. The lower early interest rate means less compounding. To evaluate them, you must calculate the actual amount of interest earned in every year; the longer term with a fixed rate is almost (but not always) going to yield more money, particularly if compounded. Many escalator offer the chance to reinvest at anniversary dates, but in that case you have already suffered the low-rate portion AND you won't be able to shop for the best rate at re-investment time, as you will be restricted to that institution's products (and often only specific ones).

I've really liked dealing with ING but they don't need cash right now, and are not offering much of a rate. The TFSA/TF-GIC issue is a pain – nobody's offering good long-term rates, and the savings deposits will ALWAYS crash after new year. They all do it, so they'll get away with it. On the other hand, it's only been a few years, so nobody has much cash in them yet. Go to the highest rate, but remember that for only $15K even a $25 transfer fee will eat into your interest differential – on a year's $5K contribution, even a 1% increase in interest rate is only $50.

RetirEd