February 16, 2016
Important note: I used the word "currently" because this is a flexible rate term deposit.
We've been members of one of the four "divisions" of the First West Credit Union in BC since the 70's. We still use it for monthly money movement. However, we had stopped keeping GICs and registered term deposits there when rates slipped compared to elsewhere.
I recently learned that they now have a term deposit option called "PrimeConnect" which has a flexible rate tied to the prime rate. The prime rate is in turn generally tied to the BoC rate. If the BoC goes up, so does the prime, and so does the return on this term deposit. Today, this account is paying 5.25%.
It's only open to BC residents who are members of one of the divisions. It's called a 3 year term, but a full or partial redemption can be made at each of the first and second year anniversaries. We had some available funds that we will not need for at least one year, and since we do not think the BoC rate, nor the prime rate, will go down in the next 12 months, we invested in that option. (If it does go down, we do not think it will be a large decrease.) For us, it did not require joining a new institution, which was a plus. We already had a transfer link established between another institution and our division of First West, and pushing the funds from that institution to FW was straightforward and fast.
The four divisions and their locations can be seen here: https://www.firstwestcu.ca/
The details of the PrimeConnect term deposit taken from the website of one of the four divisions are these:
PRIMECONNECT® Term Deposit
Get the security of a guaranteed deposit with 3-year variable rate term linked to our prime rate. Meaning, the interest rate of this term deposit will automatically adjust if and when our prime rate changes.
Key features & benefits:
- Low minimum deposit of $500 with no maximum limit.
- Term is fully or partially redeemable only at each anniversary date and at no other time (minimum redemption of $500).
- If the term value after the partial withdrawal(s) becomes less than the minimum deposit amount of $500, the term will be closed out.
- Tax sheltered growth: TFSA, RRSP, RRIF and LIF eligible
- Interest rate is expressed as an annual rate and is paid annually and at maturity. The PRIMECONNECT® interest rate is linked to the First West Credit Union prime rate. The interest rate is subject to change without notice.
- Should our Prime Rate change throughout the year, the annualized interest rate will be a weighted average of the rates.
- Deposits are 100% guaranteed by the Credit Union Deposit Insurance Corporation of British Columbia†
- This term deposit is different from traditional fixed-rate investments because it does not guarantee a return determined in advance. If you have any questions regarding redemption or whether this term deposit is suitable for you, please speak to your advisor or one of our representatives.