Canadian High Interest Savings Bank Accounts

Brad,

One of the reasons perhaps the UK savings rates are higher than in Canada is because the UK banks are, for the most part, facing a much greater liquidity crisis and the need for capital. It's cheaper for them to entice depositors and lose money on the deposits to raise capital to lend than to go to the credit markets (which are pretty much frozen) or to central banks or various other sources.

Also, consider that, the rate of inflation in the UK is higher and also that their central bank lending rate is higher than ours. Plus, the currency may play a role. You're dealing in British pounds and the British pound has been extremely weak of late.

Having said all that, even if the Bank of Canada lowers prime to 0%, I don't see deposit rates going below 1% for high-interest savings accounts from the likes if ING, HSBC, PC Financial, Citizens Bank, Canadian Tire, Canadian Direct Financial, etc. The Bank of Canada's prime rate is 0.5% so if they went to zero and the banks matched it fully, they'd go down to 1.25% (generally speaking). Allowing for an extra decrease they may not have passed on to us previously, they could go down to 1% but going further than that, I just don't see it.

Cheers,
Doug