Canadian High Interest Savings Bank Accounts

Haven't seen this mentioned here … but PC Financial is offering 3.75% daily interest on all new deposits (into old or newly opened accounts) from Sept 1 to Nov 30th. They pay the "bonus" interest into your account in early December. "Bonus" here refers to the difference between 3.75 and their normal daily rate (eg. 3.75 – 3.05 = 0.70 would be the rate applied in their Interest Plus Account to compute the bonus interest). It's not going to make you a millionaire, but it may give you a little extra cash for Christmas !

On further review … I see it was mentioned here by Mike in early September but had rolled off the most recent list … oh well, consider it a timely reminder !

Not a financial advisor but maybe I can share my thoughts.

It might make sense but it might also be worth considering whether over the long term it's better to work with high-interest accounts or CSBs. I'm honestly not sure what the answer to that question is – recently I'm pretty sure it's been possible to find savings accounts with higher interest rates, but I also haven't had any CSBs myself for the last couple of years.

As far as short-term potential in savings accounts goes, there are lots of other options available too. At ING, for example, right now you can get 6% interest on up to $5000 until January 1 (there's another thread on that one here on this site). Most of the high-interest accounts are hovering around 3% now, which is down from where they were a year ago but still above the 2% figure for CSBs that you give. (I hadn't heard they'd dropped that low but it's believable.) There are other promotions available that aren't bad too.

But bank account interest rates fluctuate more quickly. If more economic trouble causes the banks to lower their rates further, I don't think it's completely inconceivable that we could see high-interest savings account interest rates fall well below 3%, at which point I'm not sure how much you would be benefiting. I can't find historical rates for PC Financial, but at ING, which I know publishes them online, their savings account was down to 2.25% interest a few years ago.

Anyways, the bottom line is that it might make sense but it probably depends on what you think is best for your money beyond this fall, as well as how much time you want to spend investigating deals and moving your money around. Just 8 weeks of the extra interest might net you enough money to go out for an extra lunch somewhere.

Dave
http://theshoelessinvestor.blogspot.com