CIBC sneakily change the 1y variable rate GIC "fixed spread" | GIC discussions | Discussion forum

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CIBC sneakily change the 1y variable rate GIC "fixed spread"
December 9, 2022
11:38 am
savemoresaveoften
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Just noticed with the latest rate hike, the CIBC 1y variable rate GIC only goes up from 3.95% to 4.25%, a 30bps jump instead of the 50bps rate hike.
The rate on this variable rate GIC is defined as "Prime rate less a fixed spread" in the fine print. The fixed spread has been 200bps since they started offering this product. Any new GIC signup is now based on a fixed spread of 220bps.

I checked the details of my current GIC, which gets the bump to 4.45%, as the fixed spread was explicit to be 200bps if I remembered correctly.

December 24, 2022
5:50 am
savemoresaveoften
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Just noticed this 1y CIBC variable rate GIC dropped yet again. Now showing 4% only on the site. It should have been 4.45% all things being equal if they kept the spread the same when this GIC was first introduced a few months back.

At the same time, Simplii is offering 5% until end of April for targeted customer....

Senseless marketing dept if u ask me.

December 24, 2022
11:23 am
AltaRed
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Has the spread changed for those who already had the GIC, or only for new purchases?

If the former, that is wrong. If the latter, they are free to change the spread every day.

December 24, 2022
11:31 am
Norman1
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Only new purchases of the variable rate GIC's are affected.

The GIC's spread against the prime lending rate is locked for the term of the GIC.

This is from the terms and conditions of a Royal Bank Prime-Linked Cashable GIC:

If interest is paid annually or semi-annually
Principal Amount of Deposit Interest Rate
$5,000.00 - $49,999.99 Prime Interest Rate minus 2.45%
$50,000.00 - $99,999.99 Prime Interest Rate minus 2.45%
$100,000.00 - $249,999.99 Prime Interest Rate minus 2.45%
$250,000.00 - $999,999.99 Prime Interest Rate minus 2.25%
$1,000,000.00 or more Prime Interest Rate minus 2.00%
September 5, 2023
7:18 pm
fsabbagh
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I was looking at CIBC Variable Rate GIC and noted the following in the T&C.

If a GIC is redeemed before maturity to transfer funds to the same account type at a different financial institution, no interest will be paid and a transfer fee will apply.

How the heck do they know what I did with the money once I redeem it?

September 5, 2023
7:59 pm
MG
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fsabbagh said
I was looking at CIBC Variable Rate GIC and noted the following in the T&C.

If a GIC is redeemed before maturity to transfer funds to the same account type at a different financial institution, no interest will be paid and a transfer fee will apply.

How the heck do they know what I did with the money once I redeem it?  

They would know if, along with cashing in the GIC, you also submitted a form to transfer your RRSP/TFSA/LIRA/RRIF, etc. (which held the GIC) to another financial institution.

September 6, 2023
11:48 pm
RetirEd
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Note that fsabbagh said "Transfer," not withdraw, and "redeemed before maturity." Because the TFSA is registered with CRA, the financial institution releasing the funds has to be told where they are going.

Even so, the releaser doesn't care WHERE the funds are going, only that they are leaving as a transfer (incurring a transfer-out fee) and being early-redeemed. Not all outfits charge transfer-out fees, allow early withdrawals, or eliminate all interest on registered accounts.

RetirEd

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