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RBC Drops Rates at Ally
February 20, 2013
5:23 pm
Rick
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February 17, 2013
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Checked my account today and found that they had dropped the HISA rate from 1.8 to 1.2 along with all their other products. Transferred my funds out ASAP. Just waiting for my check to go through with People's Trust then we'll transfer out TFSA funds out of Humoungous Banks grasp.

February 20, 2013
6:20 pm
Doug
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Yes, thanks for posting this update Rick; I meant to post it last night but didn't get a chance.

It seems to have happened effective Feb. 19th, 2013 but may have been Feb. 18th, 2013 as I hadn't logged into my account on Monday. Rates have dropped to equivalent to RBC Royal Bank demand deposit account/term deposit/GIC rates (or lower). I'm surprised they didn't drop them to 0%; I guess that's RBC's way of "playing nice," in their view. It's interesting - banks are required to give 60 days notice when they close a branch and hold a public meeting. Ally may not have any branches as a "virtual bank" but they still maintain one office in Ontario so could be considered a closure as such (not technically, though, since GICs will remain until maturity, minus online access) so they seem to be giving the just over the minimally-required notice. As of today, rates at Ally are as follows:

"High Interest Savings" - 1.20%

"USD Savings" - 0.25%

"High Rate GIC":
1 year - 0.8%
1.5 years - 1.70%
2 year - 1.30%
3 year - 1.80%
4 year - 1.60%
5 year - 2.15%

"Raise Your Rate GIC" - 1.30%

12-month, cashable "No Penalty GIC" - 0.80%

TFSA products - Same as non-registered products' rates
In terms of TFSAs, the reason they are likely keeping them is they are registered products and harder to transfer. That said, after April 30th, 2013, you won't have any online access to these accounts. What I could potentially see RBC doing is allowing people to transfer out their TFSAs with no transfer fee - or waiving the transfer out fee when you transfer it to a TFSA product from a member of the RBC Financial Group.

I checked comparable RBC Royal Bank products and all of Ally rates are equal to their products and possibly, in one or two cases, lower or comparable products are not available as RBC does not promote all the same terms for the GICs.

Ally's website says they'll let you renew your GICs with ResMor Trust Company but then the website seems to indicate that online access to "ally.ca" will cease after April 30th, 2013 so that reason they may let you do this is to preserve the ResMor Trust Company (possibly renamed as RBC II Trust Company or something like that) for extra CDIC deposit insurance coverage to customers. Plus, by cancelling high-interest savings accounts, GICs are a lot easier to transfer to the new RBC Royal Bank platform as all they need to transfer is the customer information and GIC numbers/maturity instructions; no direct deposits/pre-authorized payments that would need to get switched.

It's quite clear RBC bought Ally's Canadian assets solely for the dealer/floor plan financing and auto financing businesses, not the deposit business as Ally had only roughly $1 billion CAD equivalent (or less) in deposits & no mortgages (the mortgage portfolio was sold to MCAP last year in a separate transaction) whereas ING Direct Canada had something like $28-32 billion and at least that much in mortgages. By further comparison, Canadian Tire Bank had something like $2.5 billion in deposits so Ally's deposit business is easy for them to run-off with relatively little consumer upset based on Ally's relatively small number of customers, they are figuring, I guess. I was just thinking of moving my money back to Ally now that Hubert dropped their rates - good thing I didn't and left them with a zero balance! I will miss their online banking interface and easy transfers though. ;)

I will keep everyone updated on this forum and possibly this thread when Ally answers all of my questions and when I receive the promotional offer supposedly coming to Ally customers in the postal mail.

Some "food for thought". :)

Cheers,
Doug

February 23, 2013
3:04 pm
Doug
British Columbia, Canada
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A quick update - I've decided not to post the e-mail promotion I received from RBC as there was not that much new in the formation and it contains some personal information that would be difficult to obfuscate without taking a screenshot and that screenshot would need to be quite wide (which usually ends up being cut off when pasted in-line on these forums).

If any non-Ally Canadian customers absolutely wanted to see the wording of such e-mail of such promotion(s), then they can contact me privately to arrange for me to send them a screenshot.

I hope no one is disappointed by this.

On the plus side, more analysis is cross-posted here for review and comment. :)

Cheers,
Doug

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