108 articles Comparison

3.00% in a savings account is becoming more rare

There have only been a couple of savings account interest rate changes on our comparison chart over the past month. Neo Financial decreased its regular savings account interest rate from 3.00% to 2.50%, while Wealth One Bank of Canada actually increased its regular savings account and TFSA interest rate from 3.00% to 3.10%.

That still leaves PC Financial at the top of our chart for a regular savings account at 3.50%, while Wealth One Bank of Canada is the TFSA leader at 3.10%. All other non-promo rates are below 3.00%.

This has led to an increased number of discussions in our forum about what promotions are available.

Promos and longer-term GICs are looking more enticing

One of the promotions we track is at EQ Bank, where setting up an eligible direct deposit gets you 3.50%. This is down from 4.00% only a couple of weeks ago. Last month, we polled our readers about whether they have a direct deposit of at least $2,000, and 56% said no! Among the reasons given are that they are retired, self-employed, or unemployed.

Coast Capital is offering the highest promotional interest rate that we track, offering 5.00% on new deposits to a savings account if you become a new member by June 30.

Some GIC rates have been going up. 5-year rates are the highest (with Wealth One Bank of Canada at 4.00%), as was historically the case (prior to the past few years). The top 1-year (3.94%) and 2-year (3.97%) rates can currently be found at GIC brokers.

The Motive Financial brand is officially retiring

Last year’s announcement of National Bank’s takeover of Canadian Western Bank (which was Motive Financial’s parent company) affected a lot of savers, as Motive Financial has consistently been a savings account interest rate leader for over a decade.

National Bank emailed Motive Financial customers at the end of April to announce that the Motive Financial brand will be retired, and affected customers will be moved to accounts with National Bank. National Bank has promised “a similar interest rate”, although our forum users are skeptical about how long that will last, and assessing what to do next.

The PC Money account is still the top rate on our savings account comparison chart at 3.50%. Wealth One Bank of Canada recently increased its regular savings account (and TFSA) interest rate from 2.50% to 3.00%, joining a 5-way tie in second place. If we count EQ Bank’s 4.00% rate when you have direct deposit, that makes it the top non-promo rate.

The latest round of targeted new deposit promos reported by our forum users at Simplii Financial and Tangerine are somewhere between 2.25% and 4.00%, which is not just a wide range but also significantly down from the high of 6.00% in early 2024. The highest promotional rate we are currently aware of is 5.00%, which you can get as a new client at both CIBC and Coast Capital.

Rate leaders on our GIC comparison chart are little changed from this time last month, although we’ll see if the next Bank of Canada policy interest rate announcement on Wednesday, March 12 shakes things up.

More options for $0 trade commissions

There are now 4 Canadian online brokerages that offer fee-free self-directed trading. Questrade made a splash in February when it dropped its trading fees to $0, along with a short-lived (and now over) transfer bonus of 3% on the first $10,000. It has now joined Wealthsimple, National Bank Direct Brokerage, and TD Easy Trade in the world of commission free trading. While they might not all have a transfer promotion at any given time, they all currently reimburse any transfer fees. Thus, competition is heating up for your investment accounts.

Our readers care about “no-forex transaction fee” credit cards

Last month’s poll received several hundred responses, and 75% of you said that “no foreign currency transaction fees” is an important credit card feature. We keep a listing of such credit cards, although recent political tensions and an increasing desire to “buy Canadian” are reducing Canadians’ international spending, at least temporarily, and at least for US purchases.

Interest rate cuts appear to be slowing down. Near the end of January, the Bank of Canada had a key interest rate drop of 0.25%, marking the 6th decrease for a total of 2.00% since the recent peak in July 2023. For those financial institutions (on our chart) who decreased their savings account interest rates since the January 29 Bank of Canada drop, the decreases averaged 0.18%.

EQ Bank decreased its regular savings account interest rate from 1.75% to 1.50%, but upped the rate if you set up direct deposit to the account from 3.50% to 4.00%. The next highest non-promo rate is with the PC Money account, which offers 3.50%.

For a TFSA, Saven Financial actually increased its interest rate to 3.40% (from 3.15%, although it originally went up to 3.50%), putting it into a tie with Oaken Financial for the top TFSA rate.

Currently, all of the GIC rates we track are under 4.00%, although you can still get 4.00% or slightly more through a GIC broker.

Promo rates are drying up, in relative terms

Only a few months ago, you could get up to 6.00% in a new savings account, and 5.00% or more in some “new deposits for existing clients” promos. Nowadays, the new client offers at promo mainstays Tangerine Bank and Simplii Financial are for 4.50% and 3.90% respectively. The highest reported new “Tangerine lottery” promo for existing clients is 3.85%.

However, as listed on our promos page, you can still get:

• 5.00% at CIBC for the first 4 months
• 5.00% at Coast Capital until April 30
• 4.75% at Motive Financial for the first 120 days (if you open an account before February 14)
• 4.70% at Manulife Bank until April 30

Poll result: how much is in your TFSA?

Last month, we asked our newsletter readers how much is in their TFSA. We got almost 500 responses, resulting in the following:

• Less than $20K: 6%
• $20K to less than $50K: 4%
• $50K to less than $100K: 15%
• $100K to less than $200K: 63%
• More than $200K: 11%

(Total is 99% due to rounding.)

Kudos to anybody who has contributed to their TFSA in any way so far!

It seems like every few days, we’re tracking yet another savings account interest rate drop. Since the beginning of December, 15 out of 19 bank accounts we track have experienced a rate decrease. One of the exceptions is the PC Money account, which we only recently added to our comparison chart. It’s by far the current rate leader at 4.00%, with the next highest rate being Wealth One Bank of Canada at 3.20% (which is also the highest non-promo TFSA rate).

The top GIC rates on our GIC comparison chart are as follows, compared to what the highest rate was 1 year ago:

• 1-year: 4.00% (5.70% a year ago)
• 2-year: 3.95% (5.60% a year ago)
• 3-year: 3.75% (5.30% a year ago)
• 4-year: 3.65% (5.00% a year ago)
• 5-year: 3.70% (5.00% a year ago)

Graphing savings account rates against Bank of Canada rates

One of the features on our website is the ability to compare savings account interest rate histories between financial institutions. Now we’ve added the Bank of Canada policy interest rates going back to 2010 to our database, so you can graph it against savings accounts.

For example, here’s Motive Financial vs the Bank of Canada’s key interest rate:

TFSA promos

We’re tracking TFSA (and non-TFSA) promos on our promotions page, where one of the headline promotions is a 2% match on new deposits at EQ Bank until the end of February. Remember to consider what the rate will be when a promo ends, since your funds will have to stay at that financial institution for the rest of the calendar year unless you withdraw it or transfer it to another TFSA.

How much do you have in your TFSA?

If you turned at least 18 in 2009, your cumulative TFSA contribution room, including this year’s $7,000 limit, is $102,000.

CRA stats indicate that for the 2022 tax year, the average value of a TFSA by age group was:

• 24 or younger: $6,168
• 25 to 34: $12,480
• 35 to 44: $16,552
• 45 to 54: $23,847
• 55 to 64: $36,625
• 65+: $50,918

Quick notes

• CDIC protection for Wealthsimple Cash accounts has increased to $1 million
• $0 and $4 bank accounts are coming to Canada’s big banks by December 1, 2025. Will these accounts be worth considering?
• Discussion: how to invest money for your 13 year old?

We can be pretty certain (barring a catastrophe) that the Bank of Canada has made its final rate cut of 2024. With the 50 basis points decrease on December 11, that makes a total 1.75% of cuts this year. Although the effect of the most recent decrease has not made it to all savings accounts yet, savings accounts on average haven’t fared too poorly, all things considered. At the beginning of 2024, the average interest rate from the top 5 financial institutions on our comparison chart was 3.98%; now it’s 3.37%, for an average decrease of 0.61%.

If we do the same comparison for GIC rates, the average interest rate for the highest five 1-year GICs was 5.72% on January 1, 2024; now it’s 4.12%. For the highest five 5-year GICs, the average was 5.04% on January 1, 2024; now it’s 3.94%. A few GIC rates have actually increased modestly in the past few weeks, although the general trend is still down.

On a related note, the absolute top rates on our chart recently were the answer to “who hasn’t yet – but will – join the latest round of decreases”. So you might want to double check the rate histories just before deciding to chase the highest rate.

Some final bullets to ponder, as we get ready for holiday / TFSA season:

• EQ Bank is offering a 2% match on new deposits made to TFSA, FHSA, or RSP accounts by February 28, 2025. We’re tracking plenty of other promos too.
• Wealthsimple now has registered (TFSA, RRSP, FHSA) savings accounts
• The TFSA contribution limit for 2025 will once again be $7,000
• December is the best month to remind everybody about the TFSA December manoeuvre to move TFSA money between banks
• We drew 5 x $25 Interac e-Transfer prizes last week just for having followed our Instagram account