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3.30% five-year CIBC Bonus Rate GIC. Non-registered, RRSP, and TFSA.
March 22, 2022
8:13 am
Norman1
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Another chance for those who missed the previous 3¼% sale:

https://www.cibc.com/en/personal-banking/investments/gics/bonus-rate.html

RRIF's and LIF's not included though.

March 22, 2022
10:52 am
Loonie
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"For terms of one year or more, you can choose simple interest, which is paid monthly, semi-annually or annually. Or you can choose compound interest, which is calculated annually and paid at maturity."
It doesn't say there is a penalty for more frequent payouts. If there isn't, this is an especially good deal for non-registered for those who want it.

On the other hand, rates are still creeping up and we still don't know for sure why the big banks have joined the charge. My guess is that rates will go even higher in months to come, but no guarantee.

Too bad RIFs are left behind - again. One more reason for me to wish I'd never bought RSPs.sf-frown

March 22, 2022
11:37 am
Bruford
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With real inflation at or near near 15%, I consider this to be "return free risk"

March 24, 2022
1:03 pm
hwyc
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The 1-yr rate is pretty damn good too (vs chart). The others from big-5 are nowhere near.

2.30% 1-yr sf-smile
2.40% 1.5-yr
2.70% 2-yr
2.80% 3-yr
2.90% 4-yr
3.30% 5-yr

March 24, 2022
1:43 pm
Loonie
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Where does it say RIFs are excluded?

I thought I saw that when I looked at it earlier, but now I only see this:
"The CIBC Bonus Rate GIC is available in non-registered and registered accounts."
That sounds more inclusive.

March 24, 2022
4:50 pm
Norman1
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On the CIBC Bonus Rate GIC page, click on the "RRIF" and "LIF" buttons.

The five-year CIBC Bonus Rate GIC rate in the "Terms and rates" table is only 2½% for RRIF and LIF.

March 24, 2022
6:00 pm
COIN
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Norman1 said
The five-year CIBC Bonus Rate GIC rate in the "Terms and rates" table is only 2½% for RRIF and LIF.  

Maybe CIBC is offering a lower rate for RRIF and LIF because they are "captive" funds?

March 24, 2022
6:16 pm
Norman1
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The RRIF and LIF flavours of the five-year CIBC Bonus Rate GIC are not really committed for the full five years:

  • You can cash out some or all of your GIC with no interest penalty for scheduled or lump sum payments, proceeds on death or unlocking a locked-in RRIF.
March 24, 2022
7:08 pm
Loonie
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I see what you are referring to now.
Wouldn't that clause about withdrawals be there basically to allow for the mandated and planned RIF withdrawals? Every RIF has annual withdrawals; it's in the nature of them. So I don't see it as an added feature from CIBC.
I'm not planning on buying them, but I would argue that the broader statement, which I cited, ought to apply as it did not say "except RIFs, LIFs"; it said "available in... registered accounts". Worth a shot anyway, if you are a valued CIBC customer.

March 24, 2022
7:25 pm
Loonie
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@COIN:
I think the reason FIs are generally less interested in RIFs is because they are a diminishing asset, by law; and the people who own them are all seniors and are not going to be candidates for future sales.
I don't think this is a good way for them to look at it though as these old folks usually have children and grandchildren whom they can influence when it comes to what to do with one's money.

March 25, 2022
7:56 am
Norman1
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Loonie said

Wouldn't that clause about withdrawals be there basically to allow for the mandated and planned RIF withdrawals? Every RIF has annual withdrawals; it's in the nature of them. So I don't see it as an added feature from CIBC.

That clause turns the RRIF and LIF flavours of the CIBC Bonus Rate GIC into cashable GIC's.

Cashable GIC's are not a good way of funding non-callable loans like five-year mortgages. The RRIF holder may decide to take an extra 10% lump sum RRIF withdrawal part way into the five years. Lender would then have raise funds to replace that 10% as the mortgage borrower cannot be required to return 10% of the borrowed funds in the middle of the five year term.

March 25, 2022
10:00 am
Loonie
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If that's what they really meant, it's a very confusing way to communicate it. A cashable GIC is a different beast; many FIs list them separately from GIC rates.
They should have clearly said RIFs were not eligible for the Bonus rates instead of saying available to registered accounts.

If I were buying one, I would still try to get the bonus rate on RIF. Some mortgage holders do pay down an extra 10% annually, and some mortgages are variable rate, so the bank can certainly afford to make exceptions - not to mention they have other uses for the money as well.

March 25, 2022
5:03 pm
Norman1
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A lender can't rely on borrowers paying extra on their mortgages by the same amount the RRIF GIC holders are exercising their right to cash out early for lump sum RIF withdrawals.

Fixed term variable rate mortgages are not funded by fixed rate GIC's. There will be losses should interest rates decline as they did these past two years. Such mortgages are funded by matching fixed term floating rate deposit notes.

March 25, 2022
8:01 pm
Loonie
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We have disagreed before about whether the banks actually match up the GICs and mortgages as closely as you suggest. I argue that they do not and cannot. However, I don't see any point in repeating the discussion.

March 25, 2022
11:34 pm
Norman1
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Yes, they do match up their loan and deposit books. Having significant mismatches beyond the bank's ability to bridge will result in a liquidity crunch and a bank failure.

That's what happened with Home Trust's near failure around 2016. They had over a billion dollars of mismatches between their deposit and loan books that were being bridged by HISA deposits that were above CDIC limits.

Those uninsured HISA deposits bolted because of a smear campaign by some short sellers of Home Capital Group shares. Home Trust was within hours of not being able meet its obligations on time before it got that line of credit from the Healthcare of Ontario Pension Plan.

March 25, 2022
11:57 pm
Loonie
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What I said is that they don't match them as closely as you suggest. Being out by billions of dollars is another matter, especially for a small bank, but sitting there at a place like CIBC matching up every GIC like a jigsaw puzzle is not credible to me.
The larger banks who have much bigger and more diverse businesses are also a whole different situation than Home Capital Group which, as far as i know, makes all its money from mortgages, usually ones that other lenders may turn down. BUT, even so, Oaken (Home Capital) doesn't discriminate; they gives the same rate to RIFs as to non-registered for the most part, which CIBC is refusing to do. Nobody is in danger of going broke by giving the same rates to RIFs.

I REALLY don't want to repeat the entire argument, which we've had before.

March 26, 2022
6:01 am
savemoresaveoften
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Loonie said
What I said is that they don't match them as closely as you suggest. Being out by billions of dollars is another matter, especially for a small bank, but sitting there at a place like CIBC matching up every GIC like a jigsaw puzzle is not credible to me.
The larger banks who have much bigger and more diverse businesses are also a whole different situation than Home Capital Group which, as far as i know, makes all its money from mortgages, usually ones that other lenders may turn down. BUT, even so, Oaken (Home Capital) doesn't discriminate; they gives the same rate to RIFs as to non-registered for the most part, which CIBC is refusing to do. Nobody is in danger of going broke by giving the same rates to RIFs.

I REALLY don't want to repeat the entire argument, which we've had before.  

Banks match to the extent their treasury dept decided to. Some banks run their treasury as profit center, some as cost center. Both have leeway how much they want to run "naked", obviously profit center approach may decide to run a bigger gap. To the big 5, anything within a couple of hundred millions is considered more or less fully hedged.

March 26, 2022
7:42 am
Norman1
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Loonie said
What I said is that they don't match them as closely as you suggest. Being out by billions of dollars is another matter, especially for a small bank, but sitting there at a place like CIBC matching up every GIC like a jigsaw puzzle is not credible to me.

Home Trust was not missing billions of dollars. They never issued loans that they never had the deposit money for. They never had significant loan losses.

They had days where they had to pay billions more out of their deposit book than they had funds from deposits not loaned yet and from loans that were repaid. That's the result of having billions of mismatched deposits that matured before the loans had to be repaid.

It's the cashability, not the rate, of the RIF GIC's that makes them less desirable to the issuer.

March 26, 2022
9:54 am
Loonie
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Cashable or not, CIBC isn't offering a bonus rate on RIFs according to what you wrote earlier.

March 26, 2022
5:22 pm
Norman1
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That correct.

The five-year CIBC Bonus Rate RRIF GIC is 2½%. Same as the 2½% rate on the five-year CIBC RRIF GIC.

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