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Savers Roundup May 2022: Expect at least 1.50% from your savings account and 3.00% from your GIC; PACE Credit Union conclusion

Watering money

Your savings account should give you at least 1.50%

The Bank of Canada increased its key interest rate from 0.50% to 1.00% on April 13. This was the second of several expected increases this year, after being at 0.25% since 2020. Accordingly, there have been non-stop savings account interest rate increases over the past month, with even a couple of double increases. The largest increase was at Ideal Savings, whose TFSA interest rate went from 1.01% to 1.76%, although its regular savings account mysteriously remains at 1.01%.

Only 4 out of 19 savings accounts that we track have not increased their interest rates in 2022 (with Canadian Tire Bank even decreasing its rate back in February); those savings accounts now sit at the very bottom of our comparison chart.

Ontario-only Saven Financial has our first non-promo 2.00% savings account interest rate since 2020, although it doesn’t offer a TFSA. Future merger partners Hubert Financial and AcceleRate Financial both sit at 1.70% for their savings account and TFSA. If your financial institution is not giving you at least a 1.50% savings account interest rate, it’s behind the pack!

New deposit promos aren’t just for new customers

For the longest time, we used to complain that the highest savings account interest rates were only available in promotions for new clients. There are still plenty of new client promos out there, and we track many of them on our promotions page. New deposit promos for existing customers have been appearing like clockwork at Simplii Financial and Tangerine Bank for many years, but they are now available elsewhere, including:

3.00% is becoming the GIC rate floor

On January 1 of this year, the top rates on our GIC comparison chart were 2.00% for a 1-year GIC and 3.00% for a 5-year GIC. We might soon consider 3.00% as the floor for 1-year GIC rates.

Last month, we saw the first 4.00% GIC in several years with Oaken Financial’s 5-year GIC. Now our top rates are a 3.35% 1-year GIC (or 3.68% through a GIC broker) and a 4.15% 5-year GIC.

PACE Credit Union conclusion

Follow its previous administration’s mismanagement, PACE Credit Union will soon be folded into another credit union, Alterna Savings. Under very different circumstances, these two credit unions had previously attempted and aborted a merger in 2014.

Savers Roundup April 2022: Tax season; higher and higher GIC rates; a new type of Tangerine promo

Confused panda

How closely do savings accounts track the Bank of Canada’s key interest rate?

Since the Bank of Canada’s 0.25% key interest rate increase on March 2, only 8 out of the 20 savings accounts we track have increased their interest rates. The most recent increase was just today at EQ Bank (from 1.25% to 1.50% for both its regular savings account and TFSA).

How does the gap compare historically? The current EQ Bank savings account interest rate of 1.50% is 1.00% higher than the Bank of Canada’s key interest rate of 0.50%. In early 2020, right before the onset of the COVID pandemic, EQ Bank’s savings account interest rate of 2.45% was 0.70% higher than the Bank of Canada’s key interest rate of 1.75%. Generally across financial institutions, that spread is higher now than it was in early 2020. Time will tell whether savings account interest rates will rise slower than the anticipated increases in the Bank of Canada’s key interest rate. The Bank of Canada’s next interest rate announcement is on April 13.

The leaders on our savings account comparison chart are unchanged from January: Wyth Financial for a regular savings account at 1.55% and Wealth One Bank of Canada for a TFSA at 1.50%.

GIC rates are rising much faster

Almost every day it seems as though there is a financial institution increasing its GIC rates. Although most 1-year rates are still below where they were in early 2020, they continue to increase, and many 5-year rates are much higher than they were 2 years ago.

CIBC’s headline 3.25% 5-year rate from January is now at 3.50%, you can get a 4-year or 5-year GIC through Scotia iTRADE at 3.65%, and EQ Bank and Oaken Financial are tied for the GIC rate lead on our GIC comparison chart at 3.70%. You can even get 3.85% through a GIC broker. This might still lag inflation, but it doesn’t seem crazy to imagine a 4.00% GIC before the year is over.

Income tax software tips

Back in 2019, we ran a survey on Canadian income tax filing, which revealed that 92% of Canadians who use tax software to file their income tax use one of StudioTax, TurboTax, SimpleTax (now Wealthsimple Tax), or UFile. Has the “Big 4” changed? Share your experience in our forum!

A different type of promotion at Tangerine

Every month, we seem to get another existing customer new deposit promo at Tangerine Bank and a fresh round of speculation on how they choose who to target. The latest one started on April 5 and is 2.40% for 5 months, which applies to registered, non-registered, CAD, and USD savings accounts.

In mid-March, however, some Tangerine customers were notified of a new type of savings account promotion. It was for a 2.80% interest rate for 5 months, which was the same as the targeted promo that some got at the beginning of March. But it was different in a few important ways. First of all, Tangerine customers were given advance notice of the promo. Second of all, the promo applies to their entire savings account balance. So far so good. But it only applies to Canadian dollar, non-registered savings accounts, and you must keep the balance in the account for the duration of the promo in order to get the higher rate. The next round of emails has already gone out for a similar promo starting in May, but for a rate of 2.20% over 7 months. Having trouble keeping up? Us too!

Correction: as pointed out in our forum, the new, “advanced” notice promotion states “you’ll have to keep the funds in your Account […] to keep earning your special rate” BUT you can withdraw funds any time during the promotion without losing the promo rate. You simply won’t be earning the promo rate on the funds you withdrew, since they’re not in the account anymore. Sorry for the confusion!

More promos and cash back for the rate chaser in you

See our promotions page for more!

Savers Roundup March 2022: Rates are heading higher; how to improve the TFSA

Butterfly

Bank of Canada rate increase, finally

After the Bank of Canada kept its key interest rate unchanged at the end of January, it made a much anticipated interest rate increase at the beginning of March. This was a rather modest 0.25% increase to 0.50%, although more increases are expected to come this year. This was its first rate increase since 2018, following several decreases totalling 1.50% in 2020.

Continuous upward march of GIC rates

GIC rates have been trending upwards so much that many people were skeptical about locking in to a recent 3.25% 5-year GIC promo at CIBC.

EQ Bank and Wealth One Bank of Canada are currently tied for the highest 2- through 5-year GIC rates on our GIC comparison chart, with the 5-year rate for both at 3.15%. Tangerine Bank has the highest 1-year rate at 2.25%, and you can get up to 2.87% on a 1-year rate through some GIC brokers.

EQ Bank’s promo of 2.05% for a 3- or 6-month GIC has been attracting quite a bit of attention as well.

Savings account rate increases continue

In general for financial institutions on our savings account comparison chart, savings account interest rates have been increasing since November.

The most recent ones have been at merger partners AcceleRate Financial and Hubert Financial, which both sit at 1.40% now.

Wyth Financial is still the leader at 1.55%. It’s interesting to note that the same company will soon hold the funds for 3 of our rate leaders — Wyth Financial, Neo Financial, and EQ Bank — following Equitable Bank’s purchase of Concentra Bank.

Tangerine Bank and Simplii Financial have some juicy promo rates

For years, we’ve been following the rolling promos at Tangerine Bank and Simplii Financial, although their current ones stand out more than usual given just how high they are. For existing customers, Simplii Financial’s latest targeted new deposit promo is for 2.75% between March 1 and June 30, 2022, while Tangerine Bank’s latest targeted new deposit promo is 2.80% until July 31.

For new customers, Simplii Financial is offering 2.20% in a savings account until April 30 (and up to a $350 bonus in a chequing account), and Tangerine Bank is offering 2.50% for the first 5 months (and up to a $300 bonus in a chequing account).

How to improve the TFSA?

We’ve now released the full results of our 2022 TFSA survey, which received 455 responses. One of the questions we asked was about how the TFSA could be improved. The first answer was rather predictable, but the top 6 answers might contain some surprises:

  1. Increase the contribution limit.
  2. Allow re-contributions within the same year, and/or allow easier transfers between financial institutions.
  3. Improve the CRA’s accuracy and timeliness of reporting on TFSA contributions.
  4. Better educate Canadians about the TFSA. Perhaps call it a TFIA (Tax Free Investment Account)?
  5. Expand what investments can be put in a TFSA, such as a business, or a property, or metals
  6. Make USD dividends tax exempt in a TFSA, just like they are in an RRSP.

Savers Roundup February 2022: Rate leaders are merging x 2; TFSA survey results

Missing puzzle piece in a heart

AcceleRate Financial and Hubert Financial vote to merge

The proposed merger between Access Credit Union (the parent of AcceleRate Financial), Noventis Credit Union, and Sunova Credit Union (the parent of Hubert Financial) has been approved. Whatever changes are coming to AcceleRate Financial and Hubert Financial will take place after July 2022.

For comparison, the parent companies of Implicity Financial and Outlook Financial agreed to merge last August, with the merger becoming official on January 1, 2022. Their interest rates have been nearly the same for years, and the Implicity Financial website now directs everybody who is interested in opening an account to go to Outlook Financial.

EQ Bank and Wyth Financial to merge

Continuing the consolidation momentum, just last week Equitable Bank (parent of EQ Bank) announced the acquisition of Concentra Bank (parent of Wyth Financial). It was only in December that we added Wyth Financial to our savings account comparison chart, a chart it now leads with an interest rate of 1.55%. EQ Bank’s rate is still competitive at 1.25%. The official news release states that “at closing, EQ Bank will become the sole digital platform, replacing Wyth” but the exact details are anyone’s guess!

TFSA survey results: Are you one of the 14% who have over-contributed to their TFSA?

Over the past month, we ran a TFSA survey and got 455 responses. Thanks to all who participated! Here are some quick results:

  • 98% of respondents have a TFSA; 85% have an RRSP or RRIF.
  • 95% intend to contribute to a TFSA this year; of those eligible for an RRSP, 46% intend to contribute.
  • 76% max out their TFSA contribution room every year, whereas only 39% max out their RRSP contribution room every year.
  • 63% hold more than just savings accounts or GICs in their TFSA, while 4% didn’t even know this was possible!
  • 64% consider the primary use of their TFSA to be retirement or long term savings.
  • 14% have over-contributed to their TFSA.

We’ll release the full results on the HighInterestSavings.ca website later this month!

If you’re looking for promotions, you’ve come to the right place

There have been so many savings account and GIC promos recently, both registered and unregistered, that we could dedicate an entire newsletter to them. Instead, we’ve listed a few of them below, and encourage you to check our promos page for the full list.

More personal finance news

Savers Roundup January 2022: CIBC’s 3.25% GIC and other new rate leaders; what’s your TFSA plan?

Eating ketchup chips

A big bank is a GIC rate leader

CIBC currently has a 3.25% 5-year GIC, which applies to a non-registered, TFSA, or RRSP GIC. That beats the best 5-year rate on our GIC comparison chart (3.00% at Hubert Financial) and it’s unusual for a big bank to be a rate leader.

Despite this market-leading rate, some of our forum members are being cautious. Are other banks (big banks or not) going to match the rate? And with the Bank of Canada’s key interest rate expected to increase this year, will there be further GIC rate increases? Or should you just stick to a GIC laddering strategy?

Wyth Financial takes the outright lead for a savings account interest rate

It’s the new kids on the block Wyth Financial (1.55%), Ontario-only Saven Financial (1.50%), and Neo Financial (1.30%) leading our high interest savings comparison chart to start 2022. Rate leaders at the beginning of each of the previous 5 years were Canadian Tire Bank (in 2021), Motive Financial (in 2020 and 2019), and EQ Bank (in 2018 and 2017).

After launching in November with a 1.40% rate, Wyth Financial increased its savings account interest rate to 1.55% in mid-December.

None of Wyth Financial, Saven Financial, and Neo Financial offer a TFSA, though. Wealth One Bank of Canada continues to have the highest non-promotional TFSA interest rate on our chart at 1.50%, followed by a 4-way tie at 1.25%.

What’s your TFSA plan?

Are you going to max out your $6,000 in additional TFSA contribution room this year? If so, that would put you in a small minority of Canadians.

For those who have a TFSA at all (of any size), are you aware that you can use it for more than a savings account? According to a 2020 BMO study, 41 per cent of those with a TFSA use it for mutual funds or stocks. Almost a quarter of respondents were unsure of what could go in a TFSA.

What are your TFSA plans for 2022? Take our short TFSA survey for a chance to win one of 6 x $50 cash prizes!

If you’re going to choose to put some or all of your TFSA funds in a savings account or GIC, be sure to check out our promotions page, which currently includes the following:

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