Savers Roundup April 2018: Wealthsimple savings account, Scotiabank promo fine print, and automated tax filing

Ideal Savings: short-lived stint at the top

On March 15, 2018, Ideal Savings made its 2.50% savings account promo somewhat permanent, guaranteeing its savings account interest rate until the end of 2018. That made it the Canadian leader for both its regular savings and TFSA interest rates… but for just less than 1 month! On April 13, Ideal Savings then lowered both its savings account and TFSA interest rates to 2.00%. Accounts that had been opened by April 13, 2018 will continue to receive 2.50% until the end December 31, 2018. This was somewhat reminiscent of when Ideal Savings first opened at the end of 2016 with a rate that dropped by 0.75% in less than 1 month. It’s getting hard to keep up with all their rate changes, but those who got in at the right time are enjoying a great rate.

EQ Bank is back to being the regular savings account leader on our comparison chart at 2.30%. Alterna Bank and Hubert Financial are tied for the TFSA lead at 2.10%.

Wealthsimple launches a savings account

Online investment management service Wealthsimple recently launched a high interest savings account in partnership with EQ Bank, offering a 1.70% interest rate. For those who have more than $100,000 to put in the savings account, Wealthsimple will automatically split the deposits between different CDIC members to insure up to $900,000. You can of course get a better interest rate at most of the financial institutions on our comparison chart, including directly with EQ Bank, but the Wealthsimple account provides some additional convenience for customers who use its investment services.

GIC competition continues

While savings account interest rates continue to remain flat for the time being, it’s currently a race to the top for GICs. The current leaders on our GIC comparison chart for non-redeemable rates are:

  • 5-year GIC: Motive Financial at 3.30%
  • 4-year GIC: Hubert Financial at 3.25%
  • 3-year GIC: Oaken Financial at 3.15%
  • 2-year GIC: Oaken Financial at 3.10%
  • 1-year GIC: Oaken Financial at 2.75%

Some promotions offer even higher rates, including a 3.50% 5-year GIC at Meridian Credit Union on new money only and an Ontario-only 4.00% 5-year GIC at Ganaraska Credit Union that we mentioned last month.

Scotiabank Momentum PLUS Savings Account promo: read the details very carefully

Scotiabank is currently advertising up to a 2.65% interest rate on net new deposits if you leave the money in a Scotiabank Momentum PLUS Savings Account for up to 360 days. But it’s much more accurate to say it’s up to 1.80% on net new deposits, and an additional 0.85% during the period before June 29, 2018. Over the entire period, the maximum rate is closer to 2.0% or lower. Once you read the promotion details carefully, you might consider a savings account with a higher regular rate or a cashable GIC from elsewhere.

Tangerine’s creative and never-ending promos

Scotiabank-owned Tangerine Bank’s latest promotion is even more targeted than usual. Some savers have received a phone call from Tangerine’s marketing department offering 2.75% for 270 days — essentially 9 months — on the entire balance.

Tax time: tax on interest and automated filing

It’s tax time again; remember that non-registered and non-TFSA savings interest and GICs are taxed as income, whereas eligible dividends and capital gains receive some tax breaks. One forum member feels that this punishes savers, although their call for an alliance to represent the interests of savings investors was met with crickets!

New this year from the CRA is an automated “File my Return” service for low- and fixed-income Canadians. Others with simple returns might also be interested in the “Auto-fill my return” feature available in many tax return software products that automatically reads tax information such as on a T4 that has been submitted to the CRA.

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