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Wealthsimple Cash review: Hybrid accounts, FinTech, and what it means for you

Wealthsimple Cash

Wealthsimple, the 5-year old online investment service, has introduced Wealthsimple Cash, which is being branded as a hybrid chequing and savings account with a 2.40% interest rate.

Wealthsimple Cash is the evolution of Weathsimple Save (originally called Wealthsimple Smart Savings, launched in partnership with EQ Bank). It is technically, as of today, mostly a savings account with an updated interest rate, but promises that some key chequing account features are coming soon.

The interest rate would rank well on our high interest savings comparison chart; it would be tied with Outlook Financial behind LBC Digital (3.30%), Motive Financial (2.80%), EQ Bank (2.45%), and MAXA Financial (2.45%).

Note that Wealthsimple Cash cannot be held inside a TFSA or RRSP. It is also not CDIC insured, although the deposits are stored at 2 of the 6 Canadian Big Banks — Wealthsimple declines to mention which ones specifically — and are CIPF insured.

Hybrid account: is it chequing or savings? It’s both!

Once the chequing account features are added, Wealthsimple Cash will be a hybrid chequing and savings account — designed so that you can do all of your day-to-day banking and savings needs in one account. This way, you don’t have to manage cash flow between the chequing and savings accounts, or worry about holding large minimum balances in order to avoid chequing acccount fees.

Currently, the other main competitor in the “hybrid account” space is the EQ Bank Savings Plus Account, which was originally a Wealthsimple Save partner. EQ Bank not-so-coincidentally increased its hybrid account interest rate from 2.30% to 2.45% 2 days after the Wealthsimple Cash announcement, in order to top Wealthsimple Cash’s 2.40% interest rate by 0.05%.

Wealthsimple Cash is a no-fee account with no minimum account balance. It will soon include bill payments and free Interac e-Transfers. After that, there are some differences in features between Wealthsimple Cash and EQ Bank.

Weathsimple Cash supports joint accounts, which are apparently coming soon to EQ Bank.

You’ll be able to make purchases and ATM/ABM withdrawals (with ATM fee reimbursements) with Wealthsimple Cash’s Prepaid Visa card (made of tungsten, as it appears to be trendy to have metal cards) rather than a traditional debit card. It won’t charge you a foreign currency exchange transaction fee if you make purchases in US dollars for example. (It’s a Visa after all, and there are quite a few pure credit card options that also waive the forex fee.) Although not quite the same, EQ Bank has its own forex partnership with TransferWise for sending money internationally.

FinTech and why you should care

Wealthsimple has been touted as one of the great examples of FinTech in Canada. But is the definition of “financial technology” actually important to you? When EQ Bank talks about moving their core banking system to the cloud, is it as good as they say it is?

Wealthsimple Cash and the EQ Bank Savings Plus Account are branded as a different type of account. However, while EQ Bank is a Schedule I Bank, Wealthsimple is not. It’s up to you to decide whether the lack of technical CDIC coverage at Wealthsimple is a deal breaker.

What is clear is that FinTech is helping to accelerate innovation in personal banking. 91% of Canadians believe that “banking has become a lot more convenient because of new technologies”. Wealthsimple Cash’s Prepaid Visa will be implemented in partnership with Peoples Trust, using a similar setup that Peoples Trust already has with the KOHO Visa and Stack Mastercard. Both of those cards have an offering that waives foreign currency exchange fees, and offer rewards such as cash back. KOHO even has a 2.00% savings account that is not CDIC-insured and that is “offered by Canadian ShareOwner Investments Inc” — a company owned by Wealthsimple.

Wealthsimple has been steadily adding to its offerings, including its commission-free stock trading platform Wealthsimple Trade and its recent acquisition of SimpleTax, one of the most used tax return software. This is helping to make more Canadians aware of FinTech’s reach, even though the Big Banks play a part in some of the offerings and still hold 90% of assets.

Savers Roundup January 2020: short-term promos in TFSAs and RRSPs

2020 fireworks

New year, new TFSA contribution room

If you turn 18 or older this year, you received an additional $6,000 of TFSA contribution room on January 1, 2020. Remember that you can use a TFSA for investments other than a savings account. If you choose to use a savings account, there is no shortage of financial institutions with short-term TFSA promotions to start the year. Be sure to take into account what the regular interest rate is after the promo has expired, as well as any transfer-out fees should you wish to move your money elsewhere. Compare these offers against the regular rates on our comparison chart. If you decide to leave your money in the account all year, you might be better off forgoing a higher promo rate in favour of a decent regular rate.

For example, CIBC has a 2.75% TFSA promo until March 31, 2020. After the promo period has ended, the regular rate is 1.00%. That averages out to less than 1.50% in interest if you leave your money in for the entire year, which is worse than the regular rate for all of the financial institutions on our chart. There is also a $100 transfer-out fee should you wish to directly transfer your TFSA funds to another financial institution.

The first 60 days of 2020 also represent your last chance to apply RRSP contributions against your 2019 tax return, and some of the TFSA promos (including the CIBC one mentioned above) also apply to RRSPs.

Manulife Bank is offering 3.00% in a TFSA or RRSP until April 30, 2020 on new deposits made before March 13, 2020. Its regular rate is 1.20% and it currently has no transfer-out fee.

Meridian Credit Union has a 1% bonus promo for transfers (minimum $10,000) from other financial institutions into an RRSP or TFSA, which can stack with a 3.00% offer for 4 months in your first account. Its regular rate is 1.30% and it has a $75 transfer-out fee.

If you’re an existing Tangerine customer, its next round of targeted promos has been reported as being between 2.50% and 2.75% on new deposits made between January 6 and May 31, 2020. New clients can get 2.75% for 5 months. Both of these offers apply to regular savings accounts, TFSAs, RRSPs, RRIFs, and US dollar savings accounts. Tangerine’s regular interest rate for the regular savings account, RRSP, and TFSA is 1.05%, and there is a $50 transfer-out fee for registered accounts.

LBC Digital is the only widely available 3.30% savings account remaining

After only a few months, B2B Bank’s 3.30% savings accounts can no longer be opened directly by consumers, and requires a relationship with a financial advisor or deposit broker. However, LBC Digital still remains available to everybody with the same 3.30% savings account interest rate. How long this rate will last remains to be seen!

Take your pick for GICs

On our GIC comparison chart, Peoples Trust has the highest 1-year GIC at 3.00%, while Oaken Financial is the leader for all the longer terms, the highest being 2.90% for a 5-year GIC.

There is no shortage of other GIC promos elsewhere (especially at Ontario Credit Unions), including:

Check out our continuously updated promotions page for more!

Cash back and more news

Savers Roundup December 2019: another 3.30% savings account

3.30 announcement

LBC Digital: A second 3.30% savings account from Laurentian Bank

Just a few months after unveiling B2B Bank with a 3.30% savings account interest rate, Laurentian Bank has now launched LBC Digital with yet another 3.30% savings account, as well as a no-fee chequing account. LBC Digital has separate CDIC coverage from B2B Bank. The 2 financial institutions are quite similar, although LBC Digital is not officially available in Quebec yet, whereas B2B Bank is. (People have reported that you can still open an LBC Digital account in Quebec if you register through its English site.) If you already have a B2B Bank account, you must use a different e-mail address to sign up with LBC Digital.

Some forum members have had a smooth experience with LBC Digital so far, but others have reported problems logging in, errors in the online interface and features, and struggles to even open an account. For the time being at least, the bottom line is that both B2B Bank and LBC Digital offer a 3.30% interest rate that tops our comparison chart and beats all of the numerous new deposit and new account promos we track. Read more about other people’s experiences (and share yours) with LBC Digital on our forum.

GIC leaders and non-standard GIC terms

With its latest across-the-board GIC rate increases, Oaken Financial is the current outright leader on our GIC chart for 1-year (2.55%), 2-year (2.65%), 3-year (2.70%), 4-year (2.80%), and 5-year (2.90%) terms. It also has a 2.60% 18-month GIC.
If you live in Ontario, you might want to look into Buduchnist Credit Union, which has the only GIC promos that beat the Oaken Financial rates, albeit for some non-standard terms: 11 months (2.50%), 23 months (2.70%), and 44 months (2.85%) if you open the GICs before January 11, 2020.

Holiday reading: TFSA limit, Amazon.ca Mastercard, more free Interac e-Transfers

Savers Roundup November 2019: Savings account interest rates higher than GICs

Shocked face because savings account interest rates are higher than GIC rates

Work for your GIC deals

We’ve seen very little movement on our GIC chart over the past month. The spread between the best 1- and 5-year rates is only between 2.50% and 2.85%.

Look a little closer at some lesser-known financial institutions, and there are some better deals to be had, such as the following:

Savings account interest rates beat GICs?

Look even closer, and in some cases, keeping your money liquid might offer you a better rate than a GIC.

We have now added B2B Bank to our comparison chart. It tops the regular savings account chart at 3.30% — a rate that it has kept since B2B Bank first appeared on our radar on August 12, 2019. Note that it does not have registered accounts, at least not yet. If you’ve had any issues opening an account with B2B Bank, check out other people’s experiences in our forum. The next highest rate on our chart is Motive Financial 2.80%, then MAXA Financial (2.45%), Ideal Savings (2.40%), and Outlook Financial (2.40%).

For a TFSA account, MAXA Financial still leads our chart at 2.45%, followed by Ideal Savings, Motive Financial, and Outlook Financial at 2.40%.

Elsewhere, Alterna Bank has decreased its regular savings and TFSA interest rates from 2.30% to 2.25%.

There are quite a few active deposit promotions, including:

Credit card cash back offers and a free personal finance course

On our cash back site for the rest of November, you can get $80 if you successfully sign up for one of a few Scotiabank credit cards: the Scotiabank Momentum Visa Infinite Card, Scotiabank Passport Visa Infinite Card, and Scotiabank Gold American Express Card.

Need to improve your personal finance knowledge? McGill University is offering a free online personal finance course!

In other news, if you have the Home Trust Preferred Visa, starting in 2020, it will still waive the foreign currency transaction fee, but will no longer give you 1% cash back for such purchases. (Other purchases will continue to earn 1% cash back.)

Savers Roundup October 2019: Upgradeable-rate GIC terms; password-less Interac e-Transfers; are $31 chequing account monthly fees worth it?

Interac e-Transfer accept request for money

B2B Bank still has a 3.30% savings account

The only change on our comparison chart over the past month is that Peoples Trust has decreased its TFSA interest rate from 2.25% to 2.10%.

Although we have not yet listed it on our chart, B2B Bank has kept its non-registered savings account interest rate of 3.30% for about 2 months now. Users on our website have reported mixed reviews on the account opening process; regardless, B2B’s 3.30% rate tops chart leader Motive Financial’s 2.80% rate.

Protection from low GIC rates

ICICI Bank of Canada made it back onto our GIC comparison chart, held the lead on 5-year GIC rates at 3.00%, and someone even reported getting an additional 0.10%. It only topped our chart for a few weeks, though, as ICICI introduced some steep rate decreases, such as a new 5-year GIC rate of 2.50%. With the Peoples Trust 3.00% 15-month GIC promo now down to 2.50%, there are no current reported GIC rates of 3.00%. Oaken Financial leads the 2- through 5-year rates, including 2.85% for a 5-year GIC, while AcceleRate Financial has the highest 1-year rate at 2.55%.

To attract savers who don’t know whether to wait for rates to go up again, Meridian Credit Union has a new type of GIC called a “Raise the Rate GIC”, available on 3- and 5-year terms, which works roughly as follows: if a similar term GIC goes up while you hold the GIC, you can match that higher rate once for a 3-year GIC and twice for a 5-year GIC. Its current rates are 2.60% for the 3-year GIC and 2.70% for the 5-year GIC.

Sign-up bonuses and whether it’s worth keeping minimum balances in chequing accounts

New on our promotions page is another iteration of National Bank’s new deposit promo: 2.75% in High Interest Savings Accounts between October 1 and December 30, 2019.

If you previously participated in one of this year’s Manulife Advantage Account interest rate promotions, the base rate has dropped again. This means that if your 6-month new deposit rate was initially 3.25%, it is now 2.95% after the latest 0.05% drop.

As was reported last month, several of the Canadian big banks have new deposit promotions on their savings accounts. Almost all of them have sign-up bonuses on their chequing accounts as well. For example, the new Scotiabank Ultimate Package chequing account has an up to $350 bonus (if you meet certain terms). It has a $30.95 monthly fee that is waived if you have $5,000 balance in account or $30,000 combined in chequing and savings accounts. Features include a maximum credit card annual fee rebate of $139, free cheques, free Interac e-Transfers, free global ATM withdrawals, free overdraft protection, and a 0.10% bonus on the savings account interest rate. Are the Scotiabank Ultimate Package features worth the forgone interest if you keep the minimum monthly balance in a 0.00% chequing account? Read our analysis.

Secure Interac e-Transfers with Autodeposit and Request Money

The security of Interac e-Transfers is lower if you choose weak transfer passwords. Two ways to eliminate the need for Interac e-Transfer passwords is to set up Autodeposits and use the Request Money feature. Motive Financial recently introduced support for both features. With Autodeposits, you can configure any Interac e-Transfers you receive at certain e-mail addresses to go immediately into a specific account. One way to describe the Request Money feature is that it’s the “Send Interac e-Transfer” feature in reverse, where the recipient starts the payment process by sending out a request. Once the sender responds to that request, the money is immediately deposited into the account the recipient originally specified. If the recipient uses an account that has free Interac e-Transfers (such as the Motive Financial Cha-Ching Chequing Account), the sender might not pay a fee.

More news: Weathsimple buys SimpleTax; Tangerine fees; and Tangerine cash back

You have plenty of time before you need to file next year’s personal income tax return. However, some recent news might affect how you prepare your return: investment management service Wealthsimple has purchased SimpleTax.

Tangerine Bank features in the remainder of our news this month: