Year: 2018

Savers Roundup December 2018: 2.30%+ rates are the norm; multi-year GIC strategies; 2019 TFSA contribution limit

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Bridgewater, Motive, Oaken, Wealth One play catch-up; Hubert Financial rate decrease

On December 5th, Hubert Financial somewhat surprisingly decreased its regular savings account interest rate from 2.50% to 2.30%, which is even lower than its 2.35% rate from August. Its TFSA (and RRSP and RRIF) interest rate remains at 2.50%.

The rest of the rate changes have been positive, mostly from financial institutions playing rate catch up after the flurry of increases over the past few months. Bridgewater Bank increased its regular savings account interest rate to 2.50%; it had been at 1.75% since January 2016. Oaken Financial made a similarly large jump to its regular savings account interest rate, from 1.50% to 2.30%. Also seeing an increase was Wealth One Bank of Canada’s TFSA to 2.30%, matching its regular savings account rate; and Motive Financial’s TFSA to 2.40%, which had been at 1.80% since October 2015.

Motive Financial remains the regular savings leader at 2.80%, and Ideal Savings remains the TFSA leader at 2.76% on our comparison chart.

For a bit more insight into Motive Financial, see this detailed review of the account opening process by forum member Alexandre, who chronicled the 15-day process from application submission to account creation.

Promotions and multi-year GIC strategies

2019 TFSA contribution limit

As 2018 comes to an end, you might be starting to calculate taxes and rounding out charitable donations, as well as looking ahead to 2019’s TFSA contribution limit. The 2019 limit will officially increase another $500 to $6,000, making a cumulative total of $63,500 for those who were at least 18 years old when the TFSA was introduced in 2009.

Remember that any amount withdrawn from your TFSA is re-added to your outstanding contribution room the next calendar year. If you’re considering transferring existing TFSA funds between financial institutions, this makes the end of 2018 a good time to withdraw money to be re-deposited in January, so that you don’t have to go through the administrative process of a direct transfer, which might include transfer out fees.

Savers Roundup November 2018: Motive Financial wakes up (2.80%); Zag Bank shuts down; Simplii Financial’s new cash back credit card

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Motive Financial introduces 2.80% savings account

This month, Motive Financial quietly introduced new savings and chequing accounts. The Motive Savvy Savings Account currently has a market-leading 2.80% interest rate, topping the Ideal Savings 2.76% rate. The Motive Savvy Savings Account has only 2 free external transactions per month, then charges $5 per transaction. However, transfers between internal accounts are free, so you can pair it with a Motive chequing account and not have to worry about the transaction limit.

The new Motive Cha-Ching Chequing Account looks to be the same as the existing no-fee chequing account that Motive offers, except that it now has unlimited Interac e-Transfers.

It is a bit odd that Motive introduced these new account types rather than modifying its existing accounts. The Motive Savings Account has been stuck at 1.50% since July 17, 2015, and its TFSA is still sitting at 1.80%, even though the Bank of Canada’s key interest rate has gone up 5 times starting in 2017. But the bottom line is that these new accounts are attractive in rate and features!

Savings account interest rate increases and competition

On October 24, 2018, the Bank of Canada raised its key interest rate by 0.25% to 1.75%, and signaled that more hikes are expected. In response, many financial institutions increased their regular savings and TFSA interest rates, including MAXA Financial (to 2.45%), Outlook Financial (to 2.40%), Achieva Financial (to 2.40%), Implicity Financial (to 2.40%), Hubert Financial (to 2.50%), AcceleRate Financial (to 2.40%), and Peoples Trust (regular savings account to 1.65%).

In the case of Achieva Financial, it had initially increased its rates from 2.15% to 2.30%, then to 2.40% a few hours later that same day. Implicity Financial did something similar, initially increasing its rates from 2.15% to 2.35%, then to 2.40% the next day. Looks like healthy competition worked in favour of Canadian savers!

The savers account leader is currently Motive Financial at 2.80%, followed by Ideal Savings at 2.76%, Hubert Financial at 2.50%, MAXA Financial at 2.45%, and a 4-way tie at 2.40%. The leaders are the same on the TFSA side except for Motive Financial, which is not amongst the top rates.

Get 3.00%+ savings account interest rates with promotions

There are quite a few current savings account promos that will get you 3.00% or higher. Here are some of the newest ones:

GIC options: Tangerine Bank and Simplii Financial become competitive

Tangerine Bank and Simplii Financial have kept most of their rate changes in lock-step over the years, including their currently uncompetitive standard 1.25% savings account interest rate and their penchant for promotional rates for new accounts and new deposits.

At the beginning of November, Tangerine Bank increased its GIC rates to be close to the top of our GIC comparison chart, including the highest nationally-available, non-promotional 1-year GIC rate at 3.10%. A couple of days later, Simplii Financial increased its GIC rates across the board by up to 0.40%, matching Tangerine’s rates.

Some of the newest GIC promos include the following:

Goodbye Zag Bank

Zag Bank, a virtual bank owned by Desjardins, had not offered competitive rates for quite a while. It recently announced that it is shutting down, mostly before the end of 2018. A silver lining is that it paid out a $25 goodwill bonus to existing customers.

Hello federal credit union Coast Capital Savings

Coast Capital Savings, formerly a BC credit union, became a federal credit union (although not available in Quebec yet) on November 1, 2018. Its launch promos include 2.70% for a convertible 16-month GIC, and a 2.00%/3.00%/4.00% 3-year escalator GIC.

Simplii Financial’s new no-fee cash back credit card

Simplii Financial has come out with a no-fee cash back credit card that is only available to current Simplii Financial clients for now. In short, it is a Visa without an annual fee and offers 4% back at restaurants; 1.5% at gas, grocery stores, and recurring payments; and 0.5% on everything else. You can get 10% cash back (up to $50 back) on your first 4 months of spending at restaurants. Forum member “User230” has done a comparison of the new Simplii credit card against several other cards.

One comparable current credit card offer is for the Scotiabank Momentum Visa Infinite, which has a $99 annual fee waived for the first year, gives 4% back at gas and grocery purchases, 2% back at drug stores and recurring bill payments, and 1% back on everything else. You can get 10% back on all purchases (up to $200 back) for the first 3 months.

Savers Roundup October 2018: Ideal Savings 2.76% savings account; read the Scotiabank promo details carefully

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Ideal Savings rockets to the top

We have a new high interest savings account interest rate leader, and it’s not even close. Ideal Savings has now increased both its regular savings and TFSA interest rates from 2.00% to 2.76%. That’s more than double the lowest rate on our comparison chart and 0.41% more than the second highest rate. There are some savings accounts that don’t even pay 0.41%!

More rate increases: AcceleRate Financial and Wealth One Bank of Canada

On October 4, AcceleRate Financial increased its regular savings and TFSA interest rates from 2.25% to 2.35%.

Wealth One Bank of Canada had a promotional rate of 2.50% that ended on September 30, but its regular rate is now 2.30%, which is technically an increase over its previous 2.00% rate. Note that their TFSA lags a bit, with a 1.65% interest rate.

The top 5 for regular savings accounts is thus:

  • Ideal Savings: 2.76%
  • Accelerate Financial and Hubert Financial: 2.35%
  • EQ Bank and Wealth One Bank of Canada: 2.30%

The top 5 for TFSAs is as follows:

  • Ideal Savings: 2.76%
  • Accelerate Financial and Hubert Financial: 2.35%
  • MAXA Financial: 2.25%
  • Achieva Financial, Implicity Financial, and Outlook Financial: 2.15%

Be careful with the Scotiabank MomentumPLUS Savings Account promotion

Scotiabank currently has a savings account promotion that is advertised as “up to 3.00%”, but read the promotion details carefully: it amounts to 3.00% interest for only a portion of the term; average interest is always less than 3.00%. Is this misleading? Our forum members are clear in breaking down the actual terms of the promotion.

Oaken Financial takes back GIC leads

While we’ve seen a few GIC rate pullbacks recently, Oaken Financial has raced back to the top for national, non-promo rates in all but the 1-year GIC, where EQ Bank leads with a 2.91% rate (over Oaken’s 2.90% rate). Oaken Financial’s chart-topping rates currently sit at:

  • 2-year: 3.30%
  • 3-year: 3.35%
  • 4-year: 3.40%
  • 5-year: 3.60%

Current promotional rates

As always, there is no shortage of promotional rates; new ones this month include:

Other news

In Toronto at the beginning of November? Check out the Canadian Personal Finance Conference, happening November 4-5.

Savers Roundup September 2018: Savings and GIC promos galore!

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More incentive to sign up with Hubert Financial

There have been no changes to regular savings or TFSA interest rates recently — especially with the Bank of Canada holding its key interest rate steady this month — but the current Canadian leader Hubert Financial (2.35%) is running a promotion for new sign-ups that gets the new customer $25 and, if they were referred by someone, $25 for the referrer as well.

GIC rates current snapshot

We haven’t seen much movement in GIC rates over the past month other than a few Motive Financial fluctuations and increases across the board from AcceleRate Financial. The current leaders are:

  • 1-year GIC: 2.85% at AcceleRate Financial and Hubert Financial
  • 2-year GIC: 3.10% at Oaken Financial
  • 3-year GIC: 3.25% at EQ Bank and Oaken Financial
  • 4-year GIC: 3.33% at Wealth One Bank of Canada
  • 5-year GIC: 3.52% at EQ Bank

Promotions are everywhere

Our promotions page is always full of deals, but financial institutions have been especially busy rolling out new promotions, most of which beat the highest standard savings account and GIC rates, over the past few weeks. If you’re in the market for a new bank or you don’t mind transferring your money around, here is some of what we’ve been tracking lately.

Savings accounts:

GICs:

More reading

Wise (formerly TransferWise) vs OFX comparison: CAD to USD transfers

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United Nations flags

At my job at a web development company, we frequently need to make currency exchange transfers to pay contractors and accept payments from international clients. This most often involves transfers in both directions between Canada (CAD) and the United States of America (USD), but sometimes between Canada and Europe (EUR) and between Canada and Australia (AUD) as well. At the beginning, we used our bank (RBC Royal Bank of Canada) but quickly discovered that we were losing a lot of money on currency exchange and wire transfer fees even after we were put in touch with their preferred rate currency exchange business solution. If you need to transfer currency internationally or even between 2 different currency accounts in Canada, it is a no-brainer to consider using a company or service other than your bank. We use a combination of Wise (formerly TransferWise) and OFX (formerly CanadianForex). What I’ve learned in using Wise and OFX can apply to both business and personal transactions.

Wise advertises that they provide you with the mid-market rate, which is true. But they charge you a percentage fee on top. OFX, on the other hand, gives you a rate worse than the mid-market rate (but still much better than you’d get at a bank), and charges a $15 flat fee for smaller transfer amounts (below $10,000 Canadian dollars) and no fees for amounts above $10,000 CAD. (September 16 update: OFX has given me this referral link that waives the $15 fee for new accounts.)

Generally, I have found OFX to be cheaper except for transfers of only a few hundred dollars, where the $15 flat fee is a larger percentage. In terms of pure dollars, OFX is the clear winner for me for larger transfers: for example, for a recent transfer of $23,000 USD to CAD, OFX provided a rate of 1.3109 and no fees, for a total amount received of $30,150.70 CAD. Wise provided a much better rate at 1.3159, but charged fees of $138.17 USD, for a total amount received of $30,083.88.

(It’s important to note, though, that when I first looked into OFX, I had to call them to get the preferred rate that’s currently on my account. This is probably not difficult to get from them, but it does require you to call them. On the other hand, Wise offers the same rate for everybody.)

But the story is not that simple once you dig into the details. First of all, you need to consider whether you’re sending money or receiving money.

If you’re receiving money, do you have a USD bank account in Canada or just a CAD account? It can be convenient to have a USD bank account in Canada to deposit cheques, receive wire transfers, transfer money to CAD at a time that’s right for you, or maybe not even transfer all of the money back to CAD if you need to then pay out some of that money in USD again (thus saving transfer costs x 2). But cheques are slow and require your time to receive and deposit them, and sometimes inconvenient for clients to produce (and mail to you!). If you receive a wire transfer, there is a fee to receive it ($17 at RBC), a fee for your client to send it, and sometimes an additional fee that gets charge in transit — for some transfers I notice that we’ve lost another $18.50 by the time it arrives in our account.

Having a US dollar account in the USA can save you and your clients money. But it also requires setup and additional management. Wise has a killer feature for receiving payments: the borderless account. The borderless account gives you account numbers within Australia, England, Europe, and the USA so that clients can send money to an account local to their country or within the EU. This is incredibly convenient and helps you receive the money much faster, with a much lower or no transaction cost for your clients. I have found the borderless account to be very useful and easy to set up. Although I still default to using OFX to transfer incoming money from USD to CAD, the convenience of Wise sometimes wins out.

For sending money (from a CAD account to contractors’ international accounts), OFX is the winner in my case, although Wise might soon become more competitive. The main issue is that Wise has more limited and costly options for getting the money to them. Wise is currently only a bill payment option for the Bank of Montreal, National Bank of Canada, Central 1 credit unions, and Tangerine Bank. Wise does not support pre-authorized debits for business accounts, whereas OFX does. This means that with OFX you can incur minimal or no additional fees (on top of their exchange rate spread) to send the money. Wise charges quite a meaningful additional fee for sending money using a debit card or a credit card. I actually found Wise’s fees for funding a payment with a credit card to be cheaper than with a debit card, but then I was hit with a surprise cash advance and interest fee on our Scotiabank credit card (which they later did a one-time refund for). Wise claims that the additional Scotiabank charges were the result of a mis-classification of the transaction on the part of Scotiabank that does not happen with all credit cards, although I have not verified this.

In general, I am quite pleased with both Wise and OFX. I can fully recommend them as being convenient, reliable, and much cheaper than using my bank for transfers between Canadian dollars and at least US dollars, Euros, and Australian dollars. There are several factors to consider beyond the rates and fees that Wise and OFX charge, thus it could be worth it for you to be a customer of both of them!