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EQ Bank vs Alterna for down payment
June 19, 2017
8:01 am
newmoney
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I am thinking of parking my down payment + wedding fund in a savings account and have narrowed it down to Alterna and EQ Bank. I already have a TFSA with Alterna and am more familiar with them, but the 2.3% rate at EQ has peaked my interest. For those of you "in the know" about these two banks... which one would you recommend?

I need something reliable. I am comfortable with technology and online banking, just would like to place my money where I can take it out whenever I need it without having to jump through too many hoops. Thanks in advance.

June 19, 2017
8:23 am
NorthernRaven
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Whatever you choose, don't try and make those last few pennies of extra interest with your down payment money. Make sure you transfer it to whatever account you will actually be using for closing the house purchase well in advance, say two weeks or more. Even though most transfers may go through in a couple of business days, you want to have lots of time for problems, dealing with bank bureaucracy, etc. on the off chance that something goes wrong. You don't want be lacking funds where they are needed on the closing date! If you start house-hunting and there is a possibility of a quick closing date, have the money in your closing account.

Also, many online account will have something like a 5-day "hold" on funds transferred in (earns interest, but perhaps can't be transferred out again). Make sure you know the details on the account you choose, and don't try and transfer in a big lump that may suddenly be need again a couple of days later if you change your mind.

June 19, 2017
11:08 am
MG
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I totally agree with NorthernRaven. Make sure you leave a buffer time period between when you remove the funds from Alterna/EQ and when you actually have to provide the funds. I can remember years ago, people used to put their funds required for house closing into a GIC and when the lawyer called to get the money, their GIC had not yet matured. They incorrectly assumed the lawyer would not need the funds until the day of closing. Surprise, surprise - they were definitely left scrambling and complaining how they had lost alot of interest. sf-wink

June 19, 2017
2:19 pm
Loonie
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Bear in mind that Alterna has withdrawal limits - per day, per week, per month. You need to plan well in advance for a substantial withdrawal, not just a week or two if your down payment is 125K+, I think. Check for details on this.

You mention a wedding and a property. Do you want to have a joint account with partner? If so, EQ doesn't offer them but Alterna does.

Be prepared to be flexible with shorter term rates. You may get a great offer from Tangerine if you play your cards right and are lucky. Keep your eyes open for short term offers. They are worthwhile, especially as your nest egg gets larger, and you can still get your money out; just don't close the account right away, as there is usually a fee for closing an account in less than 3 months.

Tangerine is probably the fastest with transfers.

The high rate at EQ won't be forever unless rates in general go up quite a bit. They only raised it to 2.3 to ward off any run on the bank because of the fiasco at HCG/Oaken. Their normal rate is 2.0 and they will revert to that in due course.
If you are concerned that EQ could get into financial trouble because of the fallout from HCG, then you should probably avoid them. I am not concerned about this, but they themselves were sufficiently concerned to take out a large line of credit and also to raise their rates. I don't think there is any real risk here but some might.

If your down payment + wedding fund is going to be greater than 100K (not out of the question in some housing markets) then you will need more than one account and more than one bank, in order to have CDIC insurance coverage. EQ and AlternaBANK are covered by CDIC, with maximum 100K coverage. EQ doesn't permit more than 100K plus interest in account.

For wedding costs, where you can often use a credit card or write a cheque, AlternaBank does offer chequing account. You won't have a delay if you are just transferring from savings to chequing in the same bank. EQ does not offer chequing.

Thinking ahead about access to funds for property purchase, there are 2 stages at which you will need money. First is when you make the offer - most require a certified cheque at that point for several thousand - depends on the seller how much. It's a sign of good faith. If your offer is not successful, you will get that back. Second is for the down payment itself, for closing the deal. See comments by others above. Both will require a certified cheque. It would be best to get a certified cheque through a bricks and mortar bank, so you do need to allow ample time for the money to clear into that chequing account. The bank will be very particular about that.

Good luck!

August 28, 2017
1:12 pm
newmoney
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Thank you all for your replies!

I tried to open an account with EQ a couple of weeks ago, but kept getting an "error" page, even after multiple tries and asking the chat CSR for help. They told me to "wait a couple of weeks and try again"... but the fact that I couldn't even open an account without errors has given me pause. If such an error occurred while I was trying to retrieve money from my account for something big (like housing or paying wedding vendors), I would certainly be in a bind! Maybe Alterna is the better option here...??

My amount will not be close to $100K, so I am not too worried about that. What I am worried about is online security/app usability and the ability to access my money when I need it...

August 28, 2017
4:58 pm
3oakwest
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I've been with EQ since they started and never had a problem.

August 29, 2017
6:44 am
Koogie
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threeoakwest said
I've been with EQ since they started and never had a problem.  

+1

Might be worth calling EQ again and talking with someone else. Or trying from a different computer or using your phone. That is what I used to open my EQ account.

August 29, 2017
7:52 am
Rick
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threeoakwest said
I've been with EQ since they started and never had a problem.  

Ditto.
Is it worth going through setting up and maintaining another bank account for a hundred or so bux a month? I signed up and all my liquid cash is now sitting in Tangerine until I don't get a promo offer, then it's right back to EQ. In the meantime, I've set up an ASP for 10 bux a week just to keep it active. I feel it has always been a good idea to have an account for savings/emergency fund at a bank other than the one I use for everyday banking. That extra step in transferring/using the funds gives you a time for sober second thought before committing. Set up an ASP for 25 bux each (or whatever you can afford) every payday (assuming you both work) and forget about it. You will need an emerg fund for sure once you are a homeowner. Never ending expenses/maintenance.
Keep in mind EQ also has withdrawal limits. Last I looked it was max 30K per transaction, but you could do more than 1 withdrawal per day/week. Not sure of the exact terms.
Congrats on your impending wedding.

August 29, 2017
9:55 pm
Loonie
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Any bank that expects you wait around two weeks to "try again" to open an account is not one I would depend on for quick reliable service. They obviously have only the one route through which you can do it, and I would say that is generally true of everything they do. I believe I spoke about this rigidity, perhaps in other terms, above or in another thread. It's in the same vein as refusing to offer joint accounts, a very "bare bones" operation. Their target market seems to be young singles - which you are transitioning out of.
Go somewhere else. I don't think you'll regret it. I probably said this before but the ONLY reason I keep them is the rate. I look forward to more competition in the banking industry as the country grows.
Tangerine remains the most reliable in my books, but I know the rates are terrible if you don't get a promo. Hubert is good too but Tangerine is 24/7 on the phone.
It's not worth the worry for the extra bit of interest you'll get.

August 31, 2017
8:28 am
newmoney
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Loonie said
...
It's not worth the worry for the extra bit of interest you'll get.  

Yeah that's basically the conclusion I've come to. I already have another account with Alterna and have had no problems with them, so I will forgo the extra $10 per month in interest, and open in a HISA with them. 1.9% isn't too bad, I think.

August 31, 2017
8:28 am
newmoney
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Rick said
...
Congrats on your impending wedding.  

Thank you! And thanks for sharing your experience. In the end, I've decided I will be more comfortable sticking with Alterna for the time being.

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