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CIBC - 5 yr @ 3.25%
January 12, 2022
12:40 pm
rookie2022
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I'm confused by CIBC's footnotes 3 and 5 in CIBC's terms and conditions for the 5 yr Bonus Rate GIC, which read,

"3 These are the annual rates as of January 12, 2022 for the $1,000 to $4,999 investment tier (refer to GIC rates)."

Does this mean that the 3.25% rate only applies on the portion of deposits up to $5,000, meaning that the excess earns only the 2.50% rate? I haven't seen any indication on this site that this is the case but otherwise I don't understand what the footnotes are referring to. Help anyone?

January 12, 2022
12:54 pm
Loonie
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Good question. I don't know the answer.

January 12, 2022
1:24 pm
Alexandre
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Norman1 said
The 3.2882% per annum effective average that CIBC quotes does accurately reflect what one will get:

CIBC Escalating Rate GIC (5 year)
Investment
amount
Year 1 Year 2 Year 3 Year 4 Year 5 Effective
yield
$500 to $999,999 1.000% 2.250% 3.500% 4.250% 5.500% 3.2882%

(1+0.01)*(1+0.0225)*(1+0.035)*(1+0.0425)*(1+0.055) = 1.17558372
(1+0.032882)5 = 1.17558367

One will end up with the same as a non-escalating 3.2882% five-year GIC.  

When looking at it that way, it is like the story of The Hare and The Tortoise. Will the Hare (annual GIC) who can accelerate fast but can take a nap during the long race manage to overrun slowly and steadily moving Tortoise (escalating rate 5 year GIC)?

The story gives one answer, but looking at first 3 years horizon of these 5 years it is not so clear.

One can get 2% annual GIC today and while rates might not go up dramatically by next year, it is safe to assume 2.25% annual GIC a year from now won't be a rarity.

CIBC GIC after 3 years: 1.068870375 = (1+0.01)*(1+0.0225)*(1+0.035)
Annual GICs: 1.06902375 = (1+0.02)*(1+0.0225)*(1+0.025)

As long as one can find annual GIC at 2% today, 2.25% a year from now and 2.5% two years from now, the Hare will be side by side with the Turtle by the end of the third year.

-------------
On a side note: at any point of their journey you will only need to wait a year or less to have hare stew if you need to. Whatever happens, you'll have to wait five years for tortoise soup. 🙂

January 12, 2022
1:40 pm
Bill
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Good eye, rookie2022. CIBC chat agent ("Charles") said good question and went off to check, came back and told me amounts over $5K get the non-promo 2.5% rate.

January 12, 2022
1:59 pm
Alexandra
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I purchased two of their 5yr. GIC @3.25% interest paid out annually. Here is what the on line product detail says for the one:

GIC type CIBC Bonus Rate GIC; Interest rate: 3.25%; Interest payment frequency: Annual; Term: 5 years; GIC Issue date: Jan 10 2022; Maturity date: Jan 10, 2027; Maturity Instructions: Credit CIBC account; Principal value: $32K; Current value:$ 32,005.70; Projected maturity value $33,040.

So each year on the anniversary date the GIC will pay out simple interest of $1040 into my CIBC account. On maturity the final payment will be Principal of $32K plus one year simple interest of $1040 = $33,040.

It couldn't be much clearer.

I guess with all this talking, no one really has purchased.

January 12, 2022
2:07 pm
Alexandra
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I believe that you get the bonus rate if you are bringing in "new" money. The posted rate is if you are using money that you already had with at time of offer.

January 12, 2022
2:34 pm
rookie2022
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Thanks folks for your replies.

Alexandra,
The numbers you quote certainly compute to 3.25% and would seem pretty persuasive. Since footnotes 3 and 5 only apply to non-registered deposits, could you confirm that you bought for a non-registered plan for my piece of mind. After which I'll probably arrange to purchase one of their 5 yr GICs. Thanks.

January 12, 2022
2:48 pm
Alexandra
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Yes, I purchased two non-registered bonus rate gic's. You will have the certificate for proof.

January 12, 2022
3:09 pm
Loonie
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It hadn't clicked with me that this is a "new money" offer
I'm glad you pointed it out, Alexandra, as I do have an account there that is used a lot.

Does anyone know what is the "start" date for this promo?

January 12, 2022
3:27 pm
HermanH
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I just called my Imperial Service rep and arranged for two 5-yr GICs at the 3.25% rate and she assured me that there would be no reduced tier-interest calculation and that I would receive the full promotional rate.

The funds will be transferred to CIBC tonight; she made no distinction about new or old funds. I was alarmed by the footnotes mentioned by rookie2022 and immediately called to confirm the terms.

January 12, 2022
4:05 pm
Bill
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rookie2022, when you call CIBC you might want to ask specifically what footnote 3 you quoted above is referring to. When I chatted with "Charles" that was my question and he came back with his response. Hopefully, based on the info others here have received, it's correct that he was wrong. Also, I didn't ask about the "new money" requirement, I didn't see that as a condition on CIBC site (link below).
https://www.cibc.com/en/personal-banking/investments/gics/bonus-rate.html

January 12, 2022
4:33 pm
Alexandra
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With my purchases the money was "new money". I'm just guessing about maybe only getting the posted rate if you were to fund with monies that were already with them.

January 12, 2022
4:47 pm
Alexandra
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Me again....I was just thinking. Probably, if one had a "roll-over" maturing GIC for the same term as the last, then it would more than likely roll over to the posted rate at the same term. But if you called to cash the GIC into one of your bank accounts, or if maturity instructions were to cash into account, then you could purchase the new bonus rate GIC with the cash. I hope I am making sense.

January 12, 2022
5:37 pm
Loonie
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On further examination of T&C, it says it has to be a "new purchase'", not a rollover, but doesn't say "new money". Looks like the focus is simply on getting you to lock up the money, however obtained.

January 12, 2022
10:02 pm
Norman1
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Bill said
rookie2022, when you call CIBC you might want to ask specifically what footnote 3 you quoted above is referring to. When I chatted with "Charles" that was my question and he came back with his response. Hopefully, based on the info others here have received, it's correct that he was wrong. …

It looks like sloppy advertising.

According to their GIC rate page, non-registered CIBC Bonus Rate GIC's normally have two rate tiers. Rate depends on the amount invested:

Term $1,000 to $4,999 $5,000 to $999,999
30 days n/a 0.050%
90 days 0.100% 0.100%
180 days 0.150% 0.150%
60 months 2.500% 2.500%

Footnote #3 means the shown rates, including the 3.25% rate for five years, are for the first tier, $1,000 to $4,999:

3.25%†, 3, 5
5-year CIBC Bonus Rate GIC
Posted rate: 2.50%
3 These are the annual rates as of January 13, 2022 for the $1,000 to $4,999 investment tier (refer to GIC rates) The rate may change at any time without notice. The maximum investment is $999,999. …

It doesn't necessarily mean that rate for the second tier is lower. CIBC could have done a better job and mention that the second tier rate also gets a 0.75% boost.

The † footnote is puzzling:

† Your total interest rate is annual and calculated by adding the posted rate and your promotional rate. …

Does that mean one gets the posted rate plus promotional rate?!? That would be

2.50% + 3.25% = 5.75% sf-laugh

January 13, 2022
5:50 am
savemoresaveoften
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I think folks here pay more attention to the T&C then the CIBC treasury staff that post the promotion, lol
If it is indeed tiered, they would have to declare it upfront and can’t just bury it in the T&C. Think of the legal implication, a judge won’t side with them just because it’s in the T&C.

January 13, 2022
7:15 am
COIN
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Starting to think that it is best to just go with the 5 year escalator which appears to have a yield to maturity of 3.288%, instead of messing with the 3.25%.

January 13, 2022
7:40 am
savemoresaveoften
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COIN said
Starting to think that it is best to just go with the 5 year escalator which appears to have a yield to maturity of 3.288%, instead of messing with the 3.25%.  

only if u opt for collect int at maturity ? If you choose annual, 3.25% is better.

January 13, 2022
12:55 pm
COIN
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savemoresaveoften said

only if u opt for collect int at maturity ? If you choose annual, 3.25% is better.  

Good point(s). I was thinking for my TFSA account.

January 13, 2022
12:55 pm
HermanH
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COIN said
Starting to think that it is best to just go with the 5 year escalator which appears to have a yield to maturity of 3.288%, instead of messing with the 3.25%.  

I just changed my 2 GIC purchases to Escalator versions after checking with my Imperial Service advisor, who confirmed that they are the same product terms for the Promo GIC and the Escalator and that I would get the entire 3.288% rate. It works out to a few hundred dollars more for me at the end, and every dollar counts. sf-smile

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