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Savers Roundup December 2023: Would you pay for a higher interest rate?

Paying for a savings account

Neo Financial ups the competition

For the second time in less than a month, Neo Financial has raised its savings account interest rate, which now sits at 4.00% and is also newly available in Quebec. In Quebec, this ties it with the Wealthsimple Cash account for the highest interest rate on our savings account comparison chart. In the rest of Canada, that puts it in a 3-way tie behind Motive Financial’s 4.10% interest rate.

One of the accounts tied with Neo Financial at 4.00% is Wealth One Bank of Canada, which increased its regular savings account and TFSA interest rate from 3.65% to 4.00% last week.

KOHO Financial: Paying $4 per month earns you 5.00% interest

KOHO Financial’s account plans have changed again. Its Easy plan is free and offers a 3.00% interest rate on the balance in your account. However, you can get a 5.00% interest rate if you pay $4 per month for its Essential plan. This brings up the question of whether you would pay to get a higher interest rate, and reminds us of the forever debate of whether you would pay an annual fee for a credit card to get better rewards.

If you consider only the raw numbers, paying $4 per month could make financial sense. If your alternative is a 4.00% savings account elsewhere, you would need to keep an average of more than $4,800 in the account for the month to come out ahead with KOHO Financial’s Essential plan. (The difference is 1.00% of $4,800, divided by 12 months.) If you’re comparing against the KOHO Financial Easy plan’s interest rate of 3.00%, then you’ll need to keep more than $2,400 in the account to make the monthly fee worthwhile.

Holiday headlines

Savers Roundup November 2023: Neo Financial’s new savings account; 6.00% 1-year GICs

Girl holding maple leaf

Neo Financial’s Neo Money account has been languishing near the bottom of our savings account comparison chart, having kept its rates the same — despite a rising interest rate environment — for over a year. However, Neo Financial just released its High-Interest Savings account, and that account just got an interest rate increase to 3.75%.

Elsewhere, Canadian Tire Bank has increased its regular savings account and TFSA interest rate from 3.50% to 3.70%, while Ideal Savings increased its regular savings account interest rate from 1.01% (yes, 1.01%) to 3.60%, presumably to match merger partner Hubert Financial.

Motive Financial continues to top our chart with a 4.10% rate for both its regular savings and TFSA accounts. Wealthsimple is garnering more attention on our discussion forum thanks to its 4.00% Cash account interest rate and growing feature set.

GICs for 6.00%+

Both Motive Financial and Oaken Financial have hit new highs with 6.00% 1-year and 2-year GICs to lead our GIC comparison chart, and you can even get over 6.00% for a 3-year GIC via a GIC broker.

Ontario-only Omnia Direct is offering 6.00% for a 6-month GIC, 5.90% for 1-year GIC, and 6.05% for an 18-month GIC.

Latest promos for new deposits

Some recently added promotions to our promos page include:

Odds and spends

Savers Roundup October 2023: New accounts on our chart; maximize your GIC returns with partial year terms

Calculator

Wealthsimple and Manulife Bank are new to our chart

We’ve made two additions (Wealthsimple and Manulife Bank) and one removal (AcceleRate Financial) on our savings account comparison chart. AcceleRate Financial merged with Hubert Financial, and the merger has been the hottest topic on our forum over the past month.

Wealthsimple’s Cash account offers a minimum of 4.00% (with higher rates if you meet minimum thresholds for combined deposits across Wealthsimple’s offerings), which is just below rate leader Motive Financial at 4.10%.

Manulife Bank’s 2.85% savings account interest rate is a bit middling, but is nationally available and thus on the consideration list for Quebec residents.

How widespread are the Tangerine Bank and Simplii Financial promos for existing customers?

Net new deposit promos for existing customers at Tangerine Bank and Simplii Financial have become a staple on our promotions page. But just how prevalent are these promos? We ran a quick poll and discovered that 78% of respondents have received a Tangerine Bank promo at least once per year, versus 34% for Simplii Financial customers. 19% of Tangerine Bank customer respondents have received promos but less than once per year, versus 45% for Simplii Financial customers. And 3% of Tangerine Bank customer respondents have never received a new deposit promo, versus 21% at Simplii Financial.

Some GIC terms don’t need to be in full-year increments

Motive Financial is a financial institution that allows you to open GIC terms in partial year increments. Its 1-year rate is for terms of 12 months to less than 24 months; its 2-year rate is for terms of 24 months to less than 36 months; its 3-year rate is for terms of 36 months to less than 48 months; and so on.

For example, Motive Financial is currently offering a 2-year GIC for 5.70% and a 3-year GIC for 5.40%. If your desired term is closer to 3 years than 2 years, you could open a 35-month GIC (1 month shy of 3 years) for the 5.70% rate and end up with more money after 3 years than you would have in the 3-year / 36-month term.

More news for savers

Savers Roundup September 2023: The new Hubert Financial; prepaid card options; more 6.00% rates

Hopefully happy savings from the mascot

The new Hubert Financial has almost arrived

Following the 2022 merger of Access Credit Union (the parent of AcceleRate Financial), Noventis Credit Union, and Sunova Credit Union (the parent of Hubert Financial), the merger of the beloved online divisions are upon us. Starting on September 22, the AcceleRate Financial brand will be retired and merged into Hubert Financial.

The new Hubert Financial will see a whole raft of changes. Some of the changes are good, such as free Interac e-Transfers and the addition of mobile cheque deposits. Also, the popular 1-year quarterly redeemable GIC is staying. However, at least for the time being, there will be no more ability to transfer funds to/from external accounts (from within the Hubert online interface) and no more self-serve option for GICs within online banking.

All prepaid roads lead to KOHO… or EQ Bank or Wealthsimple

First Mogo and now STACK. After becoming significantly worse, the STACK Prepaid Mastercard has fully shut down (as of September 11), and is directing all users to KOHO. When it comes to prepaid cards, KOHO isn’t the only game in town, as EQ Bank and Wealthsimple have somewhat similar offerings. These prepaid cards combine some features of a credit card (including cash back rewards) and some features of a standard bank account (including a decent interest rate on your savings), thus sitting in an interesting category of their own.

If you’re willing to pay a monthly fee, the $9 and $19 KOHO plans offer no foreign currency exchange transaction fees, and the $19 plan also offers a 4.5% interest rate on your entire balance. 4.5% would be the highest non-promo rate on our savings account comparison chart but of course you’ve got to get out your calculators to factor in the monthly fee.

More 6.00% rates

In our last Savers Roundup, we highlighted Simplii Financial’s 6.00% rate (for 5 months) for new customers. Since then Tangerine Bank has come out with several 6.00% rates:

Elsewhere, you can get nearly 6.00% at a few other financial institutions, including but not limited to:

In related news, three founding investors of Wealth One Bank of Canada have been ordered to sell their shares.

Savers Roundup August 2023: We’ve reached 6.00%

Mountain summit

This time last year, we wrote that 5.00% was the new 4.00%. Looks like the new benchmark is 6.00%.

If you’re not yet a Simplii Financial customer, you can get 6.00% for the first 5 months in their savings account. This handily beats other new account offers such as BMO’s 5.00% savings account offer, and narrowly tops Tangerine’s 5.75% savings account offer. Among the other promotions listed on our website is DUCA Credit Union’s 5.25% interest rate on new deposits to an Earn More Savings Account, which has been extended until January 31, 2024.

Tiered interest rates

Are tiered savings account interest rates becoming a thing? Last month, Simplii Financial introduced a higher rate (which is now 5.50%) for all customers with balances above $1 million. Now, Laurentian Bank is offering 4.00% for balances between $100,000 and $5 million. If you have less than $100,000, the interest rate is 3.00%.

Decent rates for everybody else

Over the past month, 7 out of the 19 accounts we track on our savings account comparison chart increased their rates. Perhaps more notably, Ontario-only Saven Financial has launched a TFSA with a 4.00% interest rate, although that still trails Motive Financial, whose regular savings account and TFSA interest are both at 4.10%.

Canadian Tire Bank, which is one of the most infrequent rate changers on the savings account side, has increased its regular savings account and TFSA interest rate from 3.00% to 3.50%. Its GIC rates continue to change several times per week – such a high frequency is unheard of at the other financial institutions we track. The GIC rate leaders are generally LBC Digital, Motive Financial, and EQ Bank, which have all seen recent rate increases. The top non-broker rates on our GIC comparison chart are:

  • 5.60% for a 1-year GIC
  • 5.60% for an 18-month GIC
  • 5.65% for a 2-year GIC
  • 5.35% for a 3-year GIC
  • 5.10% for a 4-year GIC
  • 5.10% for a 5-year GIC