We’re now at Round 7 of interest rate cuts, following the Bank of Canada’s most recent 0.25% decrease. Our savings account leaders also happen to be those who haven’t cut their rates (yet) this round: PC Financial (at 3.50%), Neo Financial (at 3.00%), and Wealth One Bank of Canada (at 3.00%).
EQ Bank was among the rate decreases this round, dropping its regular savings account interest rate from 1.50% to 1.25%, and its TFSA down from 2.00% to 1.75%. However, it kept its standout 4.00% rate if you set up a direct deposit (of at least $2,000 per month) with them.
You can no longer get 4.00% in any GIC term, even through a broker. Among non-broker rates, Wealth One Bank of Canada is currently the outright leader for a 1-year GIC (at 3.70%), and is tied with MCAN Financial for the lead in other GIC terms:
- 2-year: 3.65%
- 3-year: 3.65%
- 4-year: 3.65%
- 5-year: 3.70%
A beginner’s guide to GICs
Our newest article is A beginner’s guide to Guaranteed Investment Certificates (GICs). It provides a detailed overview of the different types of GICs, the accounts in which you can hold GICs, payout options, insurance, and strategies such as GIC laddering.
Some quick math on promotional rates
A couple of the new customer promotions that we’re tracking are at Simplii Financial and CIBC. But what would be the effective interest rate if you leave your money in for an entire year, after the promotion expires?
Simplii Financial’s new customer promo is 3.70% for the first 7 months. After that, their regular savings account interest rate is 0.30% on the first $50,000 of deposits. That means if you leave $50,000 in the account for the first year (barring any additional promos for existing customers), your average interest rate for the year is about 2.28%1. If you were to earn 3.00% after the promotional period, your average for the year is about 3.41%2.
CIBC’s new customer promo is 5.00% for the first 4 months. After that, their regular savings account interest rate is tiered, but is effectively 0.415% on the first $50,000 of deposits. That means if you leave $50,000 in the account for the first year (barring any additional promos for existing customers), your average interest rate for the year is about 1.94%3. If you were to earn 3.00% after the promotional period, your average for the year is about 3.67%4.
This math is one of the reasons why almost 3/4 of our readers have at least 3 savings accounts, in order to take advantage of the best promotional and non-promotional rates at any given time.
1 Without compounding: (3.70 x 7 + 0.30 x 5) / 12)
2 Without compounding: (3.70 x 7 + 3.00 x 5) / 12)
3 Without compounding: (5.00 x 4 + 0.415 x 8) / 12)
4 Without compounding: (5.00 x 4 + 3.00 x 8) / 12)
motusbank is closing
Following years of speculation by our forum members about the future of motusbank, the online bank has officially announced that they are closing. For customers with mortgages, lines of credit, and home equity lines of credit in Ontario, the transition will happen as early as next month (May 1, 2025), as their accounts will be moved to Meridian Credit Union (the parent company of motusbank). For deposit accounts and everybody else, their accounts will be moved to Coast Capital, although there is no firm timeline for this yet.
On a related note, Coast Capital is proposing to merge with two other BC-based credit unions.
76% of poll respondents are increasingly buying Canadian
Last month, we asked our readers: Have you changed your spending due to the recently strained Canada-US relationship? There were some strong comments on both the “Yes” and “No” side, but an overwhelming majority at 76% responded “Yes”.