36 articles Comparison

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:

Scotiabank Ultimate Package review: is it worth it?

Scotiabank branch

Scotiabank recently launched its Ultimate Package chequing account, with a whopping $30.95 monthly fee (or $371.40 per year). This fee is waived if you keep at least a $5,000 minimum daily closing balance in the chequing account, or a combined balance of $30,000 between the chequing account and the Scotiabank MomentumPLUS Savings Account. Instead of comparing the value of the account against the monthly fee (which the bank could have set at any amount), let’s presume that you have the cash to meet one of the minimum account balances to waive this monthly fee. We can easily price out whether it’s worth it over the long-term considering forgone interest.

What forgone interest? Well, the Scotiabank Ultimate Package pays 0.00% interest, and if you’re going to keep so much money in your chequing account, you certainly won’t be earning up to 2.80% (at Motive Financial) in one of the bank accounts in our comparison chart. Even if you earned 2.30% (currently offered at EQ Bank; 75% of financial institutions on our chart offer 2.30% or more), let’s do a quick calculation: to be safe, you keep $1,000 more than the $5,000 minimum balance in the Scotiabank Ultimate Package account for a total of $6,000. (If your end-of-day balance dips below the minimum balance even once, you have to pay that month’s $30.95 fee.) That earns $0 at Scotiabank, but $138 at EQ Bank. If you instead put $31,000 in the Scotiabank MomentumPLUS Savings Account, you’ll earn $341 per year at a base interest rate of 1.10%, but $730 at EQ Bank, for a forgone interest total of at least $389 (since this scenario puts nothing in the chequing account).

Are you going to get between $138 and $389 of value per year from the Scotiabank Ultimate Package? Let’s look at the features it provides:

  • Unlimited debit transactions and unlimited Interac e-Transfer transactions: Many other financial institutions offer this, including Alterna Bank, Motive Financial, and Simplii Financial, which have free chequing accounts with no minimum balances. As well, Scotiabank’s own Basic Plus Bank Account, which has a monthly fee of $10.95 or $0 if you carry a minimum daily closing balance of $3,000, offers 25 free debit transactions and 10 free Interac e-Transfers per month.
  • Up to $139 annual fee waiver each year on select credit cards: The applicable credit cards and their annual fees are Scotiabank Gold American Express ($120), Scotiabank Passport Visa Infinite ($139), Scotia Momentum Visa Infinite ($120 and currently first year free), and Scotiabank Value Visa ($29). Those are some decent credit cards, with the first 2 waiving the foreign currency exchange fee of 2.50% (and the first 3 currently available on our cash back site). Keep in mind, however, that only with 1 of those cards will you get the full $139 annual fee rebate value.
  • 0.10% bonus on the MomentumPLUS Savings Account: The regular interest rate in this savings account is only 1.10%, so you will earn higher interest by putting your savings dollars in a different financial institution, although you would lose the convenience of easier cash flow management by keeping both chequing and savings accounts at Scotiabank.
  • Unlimited free Global non-Scotiabank ABM withdrawals: This can be $5 per withdrawal, although note that the foreign bank or ABM/ATM operator might still charge you an additional fee.
  • No monthly Overdraft Protection fee: This is $5 when used, although note that Scotiabank-owned Tangerine Bank currently offers this for free if you pay off an overdraft balance on the same day.
  • “Ultimate” (higher) rates on select GICs: That’s currently 2- and 3-year GICs (2.25% and 2.26%); but you can most definitely get higher GIC rates elsewhere!
  • 10 free equity trades at Scotia iTRADE in your first year (approximately $100 value) and 5 free equity trades every year after: This is good if you want to use Scotia iTRADE or a similar big bank investment account. There are, however, alternatives that offer commission-free trades.
  • Free personalized cheques and drafts: You get 1 book of 100 cheques per year. Tangerine Bank gives you a free first cheque book, then $20 for each subsequent book of 50 cheques (going up to $50 in January 2020). The cost of bank drafts can add up. At Motive Financial, bank drafts cost $7.50 each.
  • $55 safety deposit box annual fee waiver: If you need a safety deposit box, you definitely cannot get one at a branchless bank.
  • No monthly account fee on a Scotia U.S. Dollar Daily Interest Account: The monthly fee on such an account is $1 per month, or $12 per year. Note, however, that Tangerine Bank offers a free US dollar account that currently offers 0.45% interest versus 0.15% with Scotiabank.

The features when taken as a whole can be compelling, but you must really take advantage of many of them in order to come out ahead. For example, if you want to carry the $139 annual fee Scotiabank Passport Visa Infinite, make several global ABM/ATM withdrawals in a year (3 x $5 savings), use overdraft protection frequently (3 x $5 savings), use Scotia iTRADE ($50 savings), need bank drafts (3 x $7.50 savings), go through many cheques in a year ($50 savings), and need a safety deposit box ($55 savings), that’s a total of $324 in savings plus whatever value you put on a big bank with lots of physical branches. You could also take a short-term view and take advantage of the up to $350 Scotiabank Ultimate Package sign-up bonus (if you meet certain conditions and open an account by the end of 2019), and the Scotiabank MomentumPLUS Savings Account promotion if you make a deposit before November 30, 2019.

If you’re only in it for the free Interac e-Transfers, write a few cheques in a year, and need bank drafts and international ATM access once in a blue moon, you have plenty of other cheaper options with better savings account and GIC interest rates. Be sure to do your homework and compare also against the BMO and TD “premium” chequing accounts with high monthly fees that can be waived with a minimum monthly balance.

Savers Roundup September 2019: a 3.30% savings account; MAXA Financial is the new TFSA leader; avoid PayPal forex fees

Interface to pay bills

Back to school means September bank account promotions

Big banks highlight the latest promotions we are tracking, as financial institutions compete for your savings account dollars this fall:

For BC residents only, Coast Capital Savings is offering $500 to new members who open a chequing account before October 6, 2019 and meet certain conditions, such as switching payroll direct deposits to them.

At motusbank, Alterna Bank, and Oaken Financial, rates are dropping

motusbank has now decreased its regular savings account interest rate from 2.25% to 2.10% and its TFSA from 2.50% to 2.35%. These are its first main account rate changes since motusbank’s end of March launch. Implicity Financial also decreased both its regular savings account and TFSA interest rates from 2.40% to 2.30%.

This leaves MAXA Financial as the highest TFSA rate on our chart at 2.45%. Motive Financial tops the regular savings account rate at 2.80%, which it has kept for almost 1 year. Our forum members have just started to discuss B2B Bank, a subsidiary of Laurentian Bank, which has an even higher regular savings account interest rate of 3.30%.

Alterna Bank recently decreased its GIC rates by as much as 0.80% and made a small decrease to its TFSA interest rate from 2.35% to 2.30%. Its regular savings account interest rate remains at 2.30%.

Oaken Financial has announced that its GIC rates are going to drop on Friday, September 20, which would remove the last remaining 3.00% rate on our GIC chart.

Is the concept of a separate chequing and savings account obsolete?

It takes work to manage cash flows between chequing and savings account, not to mention forgone interest earnings. Our latest article explores a few ways to make this easier, from EQ Bank’s single hybrid account, to automated coverdraft and overdraft features at Alterna Bank.

Other savings: USD, investment accounts, line of credit, and PayPal

Ideal Savings has a new USD savings account with a 1.00% interest rate on balances over $5000. Note that it pays little to no interest if your balance is $5000 or less.

If you have an investment account, you can look to Investment Savings Accounts for both your CAD and USD cash balances. A recent discussion also explores whether it’s worth considering savings account ETFs.

If you have a Tangerine account and are in the market for a line of credit, look in your online account to see whether you have received a 90-day 0.00% Line of Credit offer.

Lastly, whether you have a credit card that waives the foreign currency exchange transaction fee or not, make sure that you disable PayPal’s currency conversion feature when making USD and other foreign currency purchases! PayPal likely charges a higher fee than your credit card.

Beyond the rate: avoiding NSF charges and managing chequing and savings account cash flow

Reflection of a toonie

Most chequing accounts pay little to no interest. Savings accounts can pay much higher interest, but don’t have the features that chequing accounts do. How do you maximize the features and convenience in your day-to-day banking without sacrificing earned interest?

You can choose a savings account that pays the highest interest possible, but to get the most out of your hard-earned money, you need to manage your both accounts: specifically, the cash flow between the chequing and savings accounts.

Who needs a chequing account?

One approach is to forgo a chequing account. Is having separate chequing and savings accounts an antiquated concept that banks perpetuate simply because they can? At EQ Bank, there is no chequing account — only a savings account (the EQ Bank Savings Plus Account) that provides some features more traditionally associated with chequing accounts, such as free bill payments and unlimited Interac e-Transfers®. You can also do pre-authorized debits and make external transfers to other bank accounts. However, EQ Bank does not offer a debit card, ATM/ABM access, or cheques, at least not yet.

Free internal transfers

At Motive Financial, its Cha Cha Chequing Account also offers free and unlimited Interac e-Transfers but is a more fully-featured chequing account. At Motive Financial and most other financial institutions, you can make unlimited and often instant transfers between chequing and savings accounts at the same bank. That way you can keep as much money as possible in your savings account, and only move cash to the chequing account when you need to, for example, write a cheque. But it can be a hassle to do these transfers even if it’s just a few more clicks. And you can get hit with NSF charges if you don’t keep enough money in your chequing account and forget about an outstanding, uncashed cheque. This requires careful management. While Motive Financial charges no chequing account monthly fee, there are other financial institutions that make you keep a minimum balance in your chequing account in order to waive the monthly or transaction fees — requiring even more management and lost interest.

Overdraft and coverdraft

If you don’t want to manage the cash flow between your chequing and savings accounts, here are 2 ways to make sure you’re automatically covered. The first is overdraft protection, which is essentially a line of credit attached to your chequing account. If you make a debit or withdrawal transaction from your chequing account that is more than the cash in the account, the bank automatically loans you the difference. Overdraft protection can have a monthly fee on top of the interest it charges you until you pay back the loan. Overdraft protection is offered at Alterna Bank, but Alterna also has something slightly different that you can set up with a 1-time phone call: coverdraft protection. Coverdraft protection is not a loan, but uses the savings account to back the chequing account. If you make a debit or withdrawal transaction from your chequing account that is more than the cash in the account, it will automatically “sweep” the difference from your savings account (presuming that you have enough cash in the savings account), preventing you from being hit with an NSF charge.

Financial institution features can make it easier for you to manage chequing account cash flow, whether that’s doing away with a chequing account altogether; offering a convenient no-fee chequing account with free and unlimited transfers to and from a savings account; or preventing you from getting hit with accidental NSF charges. This can be more important and potentially save you more money than an account with a higher rate!

Got more tips to share? Join the discussion about paying bills from a savings account that prompted this article!