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In January 2016, EQ Bank launched to great fanfare. After years of seeing continuously dropping high interest savings account rates, were things turning around for Canadian savers? EQ Bank made a splash with a 3% interest rate, and quieted some skeptics when it boldly stated that it “is not a promotional rate; it is our current everyday rate”.

It took only 3 months for that 3.00% rate to drop to 2.25%, and in August it dropped further to 2.00%.

In addition to dropping its rate, EQ Bank has received mixed reviews, closed off new registrations for weeks, has no TFSA account, is not available in Quebec, and has no transit number (so that transfers cannot be initiated outside of EQ). It also removed its $25 birthday bonus, leaving one of our forum members to lament that the bloom is off the EQ rose.

However, EQ Bank got a lot of customers, got a lot of publicity, and still has the highest interest rate on our comparison chart.

Another recent addition to our chart is Alterna Bank, which has in some ways been an anti-EQ offering. Alterna is available to Quebec residents, added a TFSA option in July, and quietly became the only Canadian financial institution to increase its rate in 2016 (at least among those that we track). It now sits #2 on our chart just 0.05% below EQ, yet you hear almost nothing about Alterna in the media.

For those chasing the highest rates, new deposit and retention promos continue to be the story at PC Financial and Tangerine. PC Financial’s latest promo is 2.25% on new deposits until December 31, 2016. Tangerine’s current new deposit promo expires on September 30, and offers somewhere between 1.75% and 3.25%. No one has yet discovered what Tangerine uses to determine what rate it will offer you. But many people have learned to play the game of withdrawing their money before a promo ends in order to maximize their return on the next new deposit promo. And for those who don’t want to move their money around, they’ve learned that Tangerine will often give you a higher rate… if you ask. Add savings account interest rates to the list of things you need to negotiate these days, along with mortgage rates and TV, internet, and cell phone bills.

All of this song and dance around PC Financial and Tangerine is necessary because their base rates are a paltry 0.80%. This puts them so far off the chart that we have completely dropped them off the page. Not everybody in our forums agree that those banks should have been dropped — after all, there is more to an account than an interest rate — but for now you’ll have to find them on the promos page.

And speaking of promos, many other banks have gotten into the game, especially around new deposits and new accounts. DUCA, Meridian Credit Union, Luminus Financial, and BC credit unions are among those with current promotions.

In other news, if you’re looking for a free chequing account, our long-time forum member Doug has done a huge update to the free chequing account comparison chart. Be sure to check that out, and thank Doug for his hard work!

Today we saw the official launch of EQ Bank, whose headline feature is a 3% savings account. Regardless of whether even 3% can be called “high interest”, that is still 71% higher than the top rate (1.75%, shared by 6 institutions) on our chart and almost 4 times higher than Tangerine and PC Financial’s standard savings account interest rates (0.8%). EQ’s savings account also includes bill payments and 5 free Interac e-transfers per month, among other features.

EQ Bank’s launch is the latest in a string of new developments in the Canadian high interest savings landscape in this current era of generally low rates. Undoubtedly, people are seeking higher returns in equities and other investments, but high interest savings remain a key element of many Canadians’ strategies.

20 years ago, PC Financial launched, and a year later ING Direct (now Tangerine) came onto the scene. These were game-changers, offering rates much higher than the big banks and pushing an online model where the savings from not having traditional brick & mortar locations could be passed on to customers. They were considered pioneers in this space and are very much mainstream today.

Fast forward to 2012 when Scotiabank acquired ING Direct, and re-branded it as Tangerine in 2014. Savers complained about how Tangerine would never be as attractive again, but in reality, Tangerine / ING’s rates had lost their competitive edge since about mid-2009.

The online divisions of several Manitoba credit unions, as well as other upstarts such as Canadian Direct Financial, Canadian Tire Financial, and ICICI Bank launched in the 2000s. (Technically, Achieva Financial came even earlier: 1998.) They quickly hit the top of the rate charts and have stayed there to this day. None of them have reached the name recognition or adoption of PC Financial and Tangerine, but savers in search of the best rates have been touting these institutions for many years, and the number of alternatives has increased steadily.

In 2013, we saw the beginning of frequent promotion rates. While there have always been promos for new accounts, these promo rates advertised the best rates for new deposits in existing accounts. A look at our promo page shows the proliferation of such offers. Although PC Financial and Tangerine’s regular rates still languished at the bottom of the chart, these promos shot them back to general relevance. These promos require savers to strategize more, however, and many people transfer their savings between institutions before a “new deposit” promo ends so that they are eligible for the next one. Zag Bank joined the promo scene, although with a few glitches. Tangerine and Zag Bank have also started to offer promotion rates on entire balances instead of just new deposits. Tangerine has recently started an even more involved variation where you have to call in to ask for a higher rate, testing the limits of how much savers are willing to chase higher rates. This keeps the hardcore savers mostly happy but normal savers who can’t be bothered still get the lower rates.

Thus, at the beginning of 2016 we still have a few financial institutions offering good, normal rates on savings accounts on all balances, and an increasing number of institutions trying to stay relevant by relying on promotions that make savers jump through hoops. EQ Bank states that 3% is their regular, non-promo rate. There is a bit of hope that this could usher in a new era of high interest savings despite the general economic malaise, but only time will tell whether EQ Bank can become a serious player!