Savers Roundup March 2023: Rate hike pause in Canada; US bank failures

After saying in January that it was going to “pause and assess”, the Bank of Canada followed through with its first interest rate pause (on March 8) since it started increasing rates in March 2022. This signaled a divergence from the interest rate policy in the US. One of the effects has been a sizeable strengthening of the US dollar against the Canadian dollar.

The dramatic collapse of the 16th largest bank in the US just a few days ago has caught the attention of many, and has affected Canadian firms both directly and indirectly. A main contributor to Silicon Valley Bank’s failure was the rapid increase in interest rates. There is much debate over how this will affect further central bank interest rate decisions.

It’s worth noting that deposit insurance in the US is $250,000 USD per depositor, per insured bank, for each account ownership category (versus $100,000 CAD in Canada). US regulators announced over the weekend that all deposits at Silicon Valley Bank, even those above the insurance limit, would be made whole.

Motive Financial is back in the lead

In the less dramatic land of savings accounts, Motive Financial has the highest interest rate of any savings account on our chart. Motive Financial doesn’t change its savings account rates as much as its competitors, but decided to bring its regular savings account interest rate up from 3.00% to 3.80% on February 14. Its TFSA usually offers the same rate, but has so far remained at 3.00%. Ideal Savings remains the TFSA interest rate leader after increasing its rate from 3.60% to 3.75% (and curiously leaving its regular savings account interest rate at 1.01%).

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