Canadian High Interest Savings Bank Accounts

With the Bank of Canada raising their key rate by .25% today, why have none of the banks raised the interest rates that they pay on their accounts? They were quick to lower these rates to practically nothing when the BOC reduced its rate. Shouldn't they be raising their rayes as quickly as well?:frown:

Keep in mind, the banks will only raise rates when their cost of funds increases. Right now, the credit markets are pretty good thanks to a flight to quality and safety. U.S. treasuries and bonds, despite paying 0% interest, were oversubscribed in a recent issues. Corporate debt and money markets, where banks raise capital for loans and mortgages, have been very fluid right now. So, when the credit markets seized up, the banks were lowering rates to increase the spread between what they pay on deposits and what they lend at but now that the credit markets are fluid, they don't need need money from depositors and will likely leave rates where they are.

Bottom line: They may increase rates as the credit markets tighten but don't expect an increase every time the Bank of Canada increases prime.

Cheers,
Doug

Patience is the key word.

All banks increased their prime rate to 2.5%. Mortgage rates are also on the rise. Saving rates should eventually follow. TD already increased theirs to 0.85%. ING also increased their GICs.

rbc increased my unsecured credit line rate by 0.25% about three or four milliseconds after the boc announced it was hiking its rate by 0.25%. wonder how many millions in profit rbc gave up over that three or four millisecond delay. heads are rolling in the rbc tower today let me tell ya…

they didn't increase my credit line rate until the boc rate went up.

The answer boils down to simply supply and demand. There's an abundance of cash sitting on the sidelines and the vast majority of it in safe instruments like GICs. Therefore, the banks and credit unions don't need to raise rates to attract deposits. It's unfortunate for savers but there's really not much you can do until one of two things happens – demand picks up dramatically thereby increasing the need for more lending or supply goes down and the amount of capital available goes elsewhere (i.e., the money market, equities, etc.)

Cheers,
Doug

why still no increase?
boc has now raised prime 0.50 basis points,and im still getting 2.1% on my money:frown:

You're getting more than most people. Banks are businesses out there to make profits. People's Trust already is the most competitive on the market, so from that point of view, why would it raise its rate?

It's been explained time and time again, there is no direct relationship between the BoC's overnight rate and savings account.

well most banks' rates have gone up. look at the chart
Peoples trust is at 2.1 well banks like PC,ICICI,canadian tire and ING are not that far behind them. all the banks that had a 2% rate b4 the rate hike, have stayed the same:cry::cry::cry::cry::cry::cry::cry::cry::yell::yell::yell::yell::yell::yell:

well most banks' rates have gone up. look at the chart
Peoples trust is at 2.1 well banks like PC,ICICI,canadian tire and ING are not that far behind them. all the banks that had a 2% rate b4 the rate hike, have stayed the same

People's is still the most competitive, hence there's no real motivation on their part to increase it, for now.

Frankly I'm getting sick of people whining over the interest rates. This country has just been through a recession and a lot of people had a tough time. If the most relevant thing you can find about your life to complain about is the interest your savings account pays, then you shouldn't be complaining at all to begin with.