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4.00% 33-month Convertible GIC offer
February 11, 2018
11:04 am
Doug
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One of the posts I've been meaning to share with everyone on here is a bit of a GIC miniature rate war going on since or around May 2017 of last year. It began with Coast Capital Savings Credit Union offering a 19-month special rate offer of 2%, which was quite attractive for any B.C. bank or credit union, and probably second only to some of the comparable 18- or 24-month GICs on offer at the time by the virtual Manitoba CUs. They subsequently increased that rate offer to 2.25%, which their fellow Lower Mainland rival Prospera Credit Union followed with an 18-month 2.22% special rate offer. Westminster Savings similarly got into the mix but at a lower 2% rate.

Coast continued through the summer, adding 15- and 16-month GIC rate offers that were higher than regular five year rate offer (then 2%, or less, I believe) but less competitive then their top-rate 19-month GIC. In the fall/early winter, they added both a 12 month Better Than Cash GIC rate offer special that paid 2% on net new money and was redeemable after 6 months without interest penalty and not at a reduced rate. The regular rate was like 1.5-1.6%. It's important to point out here that Coast doesn't automatically calculate what "net new money" is like Tangerine and Simplii Financial and staff have flexibility here in going back 30 (or sometimes more) days to see what was on deposit for the customer. The subsequently added a 1 year, non-redeemable 2.00% GIC, which Prospera matched.

In late November, I believe, they added a 33-month converitable GIC rate offer of 2.5% (slightly less than a regular 3 year GIC). (Noticing a "trend" or pattern year with Coast preferring to offer 1+ or 2+ year GICs for their special offers instead of manually setting rates for regular 1-5 year GIC terms?) The word "convertible" was interesting because it includes a one-time option to convert the GIC to a new one paying a higher rate, when rates rise, for a new term equal to or greater than the remaining length of the existing term. If the customer converts, they'd receive a 0.10% bonus on top of whatever that new GIC term rate is.

Now, they've "thrown down the gauntlet," figuratively speaking, with a "net new money" component to the 33-month GIC, which they keep renewing every calendar quarter it would seem. 4% (2.55% on money not new to Coast), with only the usual $500 minimum (quite small) but subject to a $25,000 maximum. I'd recently moved $75,000 to Coast, as I'd mentioned on these forums previously, with $5000 in a 19-month 2% GIC, $20,0000 in a second 19-month 2.25% GIC and $50,000 in a 33-month 2.5% GIC. The "net new money" caveat, though, allows for funds not on deposit up to 60 days ago. This works in my favour as I opened them on or after Dec. 29th, 2017. sf-cool

Accordingly, I plan to convert $20,000 from my 19-month 2.25% GIC and $5000 from 2% 19-month GIC, which would still leave my 33-month GIC with a one-time conversion option. Doing this, though and of course, would mean approximately 45 days lost interest but it's well worth it in the end. However, if they'll met me convert my 33-month GIC to a new one, using up that one's conversion option but giving me an option to convert the new one, I may do that as well. I'll let you all know how it goes. 🙂

33-month 4% GIC details:

https://www.coastcapitalsavings.com/Campaigns/2017/TermDeposit33Month/

Rest of their current rates and rate offer terms:

https://www.coastcapitalsavings.com/Rates/TermDeposits/

The 19-month one appears to be discontinued...for now.

Prospera has similarly launched a 30-month Rewrite GIC special paying 2.5% with the same terms as Coast's 2.55% 33-month Convertible GIC paying 2.55% now (the net new money one pays 4%).

https://www.prospera.ca/Rates/

Has anyone ever seen these convertible/rewriteable GICs before or are these brand new?

Cheers,
Doug

February 11, 2018
11:45 am
Trump
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It looks good.

I was a CC customer for quite a few years. And my experience of dealing with their incompetences......I would be suspect of this deal.

February 11, 2018
12:28 pm
Rick
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Like Trump, I was also a CC customer for years. I also found them less than competent, downright rude on some occasions, and I have found their CSR's have absolutely NO flexibility whatsoever. Even their managers go "by the book" with no regard for customer loyalty, business, history or deposits. They went from being my sole FI with ALL my RSP,TFSA, savings, checking, overdraft... literally everything that had to do with my money, to just a checking account used as a middleman for transfers. That being said....holy crap! - 4%!!!! Just wish it wasn't for 33 months. Hate having GIC's mature at different times of the year. Like to keep all my ducks in a nice, easy to manage row.

February 11, 2018
4:19 pm
Loonie
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Maximum appears to be $25,000,000.

Let's hope this is a sign of things to come in the wider market.

EDITED: The screen I saw earlier suggested you had to personally visit a CC office, but now I don't see that screen.
Now, it looks like you could maybe do this remotely. https://www.coastcapitalsavings.com/Campaigns/2017/TermDeposit33Month/?intcid=hp_sb_2018_33m_convertible

February 11, 2018
5:14 pm
Trump
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Maybe you can get this through an adviser. I live in the Lower Mainland of BC. My Peak adviser acting as a CC agent would get us CC GICs at a higher rate than if you went into a Haggle Free (<= that’s a joke in their face) CC branch. I moved to Calgary for five years and now back in BC. During my “sentence” (no not incarcerated) in Calgary I was able to still purchase CC GICs. Also there was a vote for CC to go national which would have taken them out of Provincial Insurance over to CDIC. I quess it did not happen.

Over my lifetime of banking I always thought that TD was the worst but they come second to Coast Capital.

February 11, 2018
5:28 pm
Rick
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Trump said
\Also there was a vote for CC to go national which would have taken them out of Provincial Insurance over to CDIC. I quess it did not happen.
Over my lifetime of banking I always thought that TD was the worst but they come second to Coast Capital.  

Membership voted to go national, conditional approval last August, waiting for federal compliance approval.
https://www.coastcapitalsavings.com/PressRoom/NewsReleases/2017/20170814/
Don't THINK it will happen by the end of the promo, but that would certainly be a good way to attract deposits from across the country.

February 11, 2018
5:34 pm
Trump
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New money only!

2D8B480C-2A0A-4DEB-8E90-BCC64469B050.jpeg

February 11, 2018
5:43 pm
Rick
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Trump said
New money only!
  

OP pointed that out, with caveats, 4th paragraph.

February 11, 2018
7:25 pm
voodoo22
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This is a tempting offer. The only thing holder me back is the "stellar" service I have received from CC in the past. I think I'll wait until closer to the end of March to see if more favourable institutions come up with something similar. I didn't want to lock any money in at this moment, but I'm thinking 4% is high enough to consider as I could probably get a bridge loan or small mortgage for less than that for a little while with another institution.

February 11, 2018
10:00 pm
Loonie
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So,i hear two reasons why this kind of offer might not be repeated elsewhere:

1. CC is making this offer because they have to since a significant portion of their members can't stand them and have been withdrawing funds.sf-surprised

2. They are trying to open a national CU, and have big start-up costs.

Personally, I wouldn't tie up my money this way for almost 3 years if I thought I could need it. I don't think CC will increase their rate during this term unless something very extraordinary happens, as the rate is already well above others'. Remember that they are in charge of the rate; and borrowing rates, in a normal situation, are higher than deposit rates.
I am not up on current borrowing rates but I suppose it's possible that you could borrow the money to invest in this and come out ahead, but would have to look into all the details. I think you can borrow to invest and get a deduction or tax credit on the interest, can't you? I've never done it and am out of date on this subject. If that worked out, it would be a good bet because it would secure your borrowing rate while giving you the possibility of an increased deposit rate later.

Evidently, even if Coast Capital becomes a federal credit union during the next 33 months and thus becomes insured by CDIC, GICs issued before then will still be covered by BC credit union insurance, which does not have the maximums like CDIC. See link at bottom of this page https://www.coastcapitalsavings.com/

February 12, 2018
9:28 am
Doug
British Columbia, Canada
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Loonie said
Maximum appears to be $25,000,000.

Let's hope this is a sign of things to come in the wider market.

EDITED: The screen I saw earlier suggested you had to personally visit a CC office, but now I don't see that screen.
Now, it looks like you could maybe do this remotely. https://www.coastcapitalsavings.com/Campaigns/2017/TermDeposit33Month/?intcid=hp_sb_2018_33m_convertible  

hey Loonie,

Yes, that was to be part of another installment in Coast posts. Coast finally fully upgraded their online account process to use the same third-party provider that VantageOne and Meridian use, I believe. However, B.C. residency is still required, unfortunately. They're on track for an April-July 2018 conversion to a federal credit union so, hopefully, that promo will be ongoing for you Loonie. sf-cool

Thanks for spotting the $25,000,000 limit. Nice! Looks like I can convert the full $50,000 or even $70,000, if I wished. 🙂

Cheers,
Doug

February 12, 2018
9:35 am
Doug
British Columbia, Canada
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Loonie said
So,i hear two reasons why this kind of offer might not be repeated elsewhere:

1. CC is making this offer because they have to since a significant portion of their members can't stand them and have been withdrawing funds.sf-surprised

2. They are trying to open a national CU, and have big start-up costs.

Personally, I wouldn't tie up my money this way for almost 3 years if I thought I could need it. I don't think CC will increase their rate during this term unless something very extraordinary happens, as the rate is already well above others'. Remember that they are in charge of the rate; and borrowing rates, in a normal situation, are higher than deposit rates.
I am not up on current borrowing rates but I suppose it's possible that you could borrow the money to invest in this and come out ahead, but would have to look into all the details. I think you can borrow to invest and get a deduction or tax credit on the interest, can't you? I've never done it and am out of date on this subject. If that worked out, it would be a good bet because it would secure your borrowing rate while giving you the possibility of an increased deposit rate later.

Evidently, even if Coast Capital becomes a federal credit union during the next 33 months and thus becomes insured by CDIC, GICs issued before then will still be covered by BC credit union insurance, which does not have the maximums like CDIC. See link at bottom of this page https://www.coastcapitalsavings.com/  

Loonie, their startup costs are considerably less than Meridian because (a) they're converting the credit union from provincial to federal jurisdiction, (b) they now have almost all of the digital infrastructure in place (would like to see them add Me-to-Me Transfers and make Interac e-Transfers free, or at least so many per month) and (c) they're not adding branches at the rapid pace that Meridian is. They plan to grow "digital first" and then "tuck in" a branch in markets where they see high membership growth rates, like did with their new market branches in Courtenay and Kelowna. For instance, Kelowna had roughly 3,000 members already before they opened their branch in 2016, accumulated through members moving here from the Lower Mainland and from online account openings through the Contact Centre that required the "old fashioned" pre-printed initial deposit cheque to be mailed in. 🙂

Also, regarding service, other than the lack of free Interac e-Transfers and no me-to-me transfers, I've found Coast's service to be absolutely stellar and very accommodating. The local staff have a fair bit of latitude (i.e., one example, putting my first name as "Doug" and omitting my middle name from my account, etc.). Maybe Rick and Trump were heavy in-branch transaction users and Coast definitely is not staffed for those heavy teller use customers but in terms of product opening and account servicing, they rank better than Tangerine and Scotiabank combined and on par with Implicity Financial. They're roughly equal to Hubert, service wise.

Also, I would not make the "leap" that Coast is doing this to attract new deposits from fleeing members. Their annual deposit growth, which well exceeds their already impressive mortgage rate, rate numbers simply don't bear that out. They're growing their residential mortgage and commercial loan books pretty substantially and this is about old fashioned banking of needing these deposits to continue that growth rate.

As for borrowing to re-invest the interest, yes you could do this but your net return would be between 0.25-1% pretax, depending on your rate. Most prime rates are at or around 3.5% and even secured borrowings on HELOCs have a 0.50% spread on top of prime. Even older ones with no spread, that's only 0.5%. Not worth it, in my view. Yes, you can deduct the interest and there's no special requirements but it's recommended you have a separate line of credit for that special purpose, to properly track it and keep it separate. Also, you'd want to use a HELOC from an outside source as Coast may well manually decide that the funds from a Coast HELOC are not "new money" (it technically isn't) and thus only eligible for the 2.55%. For someone like yourself, though, Loonie, assuming this offer is still going post-conversion, I think it'd be great as you're retired. You would be CDIC protected to $100,000 plus accrued but unpaid interest per unique depositor. For pre-existing deposits, transitional CDIC coverage provides unlimited deposit coverage for between 6-12 months post "conversion date".

Also, unlike Meridian, while Coast has "authorized" preference membership shares, it almost nil outstanding. It prefers to raise funds, primarily, through old fashioned GIC deposits (direct-to-consumer and deposit broker-sourced), with only a small percentage through securitization activities.

Cheers,
Doug

February 12, 2018
12:30 pm
julio
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Doug, it looks like that there will be unlimited amount coverage during the whole 33 months:

The transition period would end:
• 180 days after the continuation day, in the case
of pre-existing demand deposits; and
• on the date of maturity, in the case of a preexisting
deposit that is to be repaid on a fixed
day (i.e., a term deposit or a GIC).

Do I read it correctly? Any thought if one could get the money out if there was an insolvency in progress during the maturity date?

February 12, 2018
2:58 pm
Doug
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julio said
Doug, it looks like that there will be unlimited amount coverage during the whole 33 months:

The transition period would end:
• 180 days after the continuation day, in the case
of pre-existing demand deposits; and
• on the date of maturity, in the case of a preexisting
deposit that is to be repaid on a fixed
day (i.e., a term deposit or a GIC).

Do I read it correctly? Any thought if one could get the money out if there was an insolvency in progress during the maturity date?  

Thanks, julio. Yes, that looks correct. I think I read that but it's been awhile since I read the "fine print" of the transitional CDIC rules. sf-cool

For those that create such a GIC after the continuation date, though, I think it would just be standard CDIC coverage right away.

Cheers,
Doug

February 12, 2018
6:50 pm
Loonie
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i understand what you're saying about Meridian. I had been thinking mostly about their intention to also go national. Not sure where that is at right now.
Meridian's projected niche seems to be mass market we'll-give-you-a-better-deal-than-BigFive rather than top of the heap rates.

Are you positive this is not available to non-residents of BC? I don't see anything about residency on their website app section. Somewhere, I read "wherever you live" or words to that effect, implying anywhere. But perhaps there is an overall restriction in BC which applies to all of them.

It's too bad the CUs have to lose their unlimited provincial insurance when they go national. I suppose this is some gov't regulation, but why can't the national CU organization set something up? CDIC limits are out of date IMO, and I see no good reason for them - unless it's true that CUs are better managed than banks.

Great deal for those in BC! I doubt they will have this offer when they roll out nationally, but there could be some kind of "opening special"!

February 13, 2018
9:05 am
JenE
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I have held GIC’s with Coast Capital in the past, although an Ontario resident. On speaking with the Financial Advisor who looked after this, I was told that this time, this special 4% offer is for B.C. residents only, offered by the B.C. Coast Capital credit unions. Rats!

February 13, 2018
9:27 am
Top It Up
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Just spoke with Coast Capital - the woman said you don't need to be a B.C resident BUT you need a B.C. address to open an account ... DUH!

February 13, 2018
9:41 am
tgaucher
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I used to bank with Coast Capital 10 years ago and am looking at the 4% deal and it looks to hard to pass up. Is there any reason not to invest with them if I dont need the money in the short term. Insurance is all good either through credit union or cdic?

February 13, 2018
10:20 am
Brimleychen
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That's weird.

I just finished a phone conversation from Coast Capital. She confirmed that Ontarion can open the account and also get 4% for the promotion of 33 months..

Does anyone have the terms and conditions for the promotion? I still hesitate to open the account.

----
As per out telephone discussion earlier, please find the link for joining Coast Capital Savings below:

https://www.coastcapitalsavings.com/Campaigns/2017/DigitalMembershipOpening/

....

February 13, 2018
10:31 am
Top It Up
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LOOKS like we need a 3rd caller, and perhaps even a 4th, and 5th caller to get the "truth" about residency.

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