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July 17, 2019
12:36 pm
pianoman8849
Halifax, NS
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March 26, 2018
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This has probably been said before. I have been saving very comfortably with the EQ Bank for quite a while with their 2.3% HISA.

The problem is that EQ doesn't have TFSA. I have a $14000 TFSA limit and my wife another $ 12000.

Why wouldn't I go to Motus, open TFSA accounts for us and transfer those amounts and get the 2.5% rate instead of keeping it in CIBC and getting next to nothing in interest? If need be, one can make withdrawals and redeposit the following year. When the next $ 6000 comes in 2020, I'll no doubt be adding to these accounts.

To me, 2.5% is a pretty good rate. If it goes down, good bye. It's a highly competitive business. Lots of options out there.

July 17, 2019
5:18 pm
Loonie
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Welcome to the forum!

You should certainly get out of CIBC.

Some things to bear in mind:
EQ has said they will be rolling out a TFSA, most likely in the Fall.
CIBC will likely charge you a fee to transfer your TFSA. This is usually at least $50, which is what motus charges if and when you want to say goodbye. Because you have relatively low amounts of capital, this might be significant for you.
All savings accounts rates are unreliable. Motus may not be a leader down the road.
If the odds of you needing to access the money in a hurry are quite low, you might consider Hubert's one year GIC. It's currently 2.6%, and that rate is locked in for the year, which could be helpful if rates continue to fall as many think they will. The interest is paid quarterly and the rate escalates, so it averages to 2.6%, ever so slightly higher due to the quarterly compounding. Can be cashed at any time but if you cash between interest payments you get nothing for the time since the last payment. They do not charge transfer-out fees. Hubert is a Manitoba online division of Sunova credit union and generally has rates which are in the upper range. They are known for superior customer service. Not suitable if you think you might need the money.
Best time to switch banks for TFSA is December. You just withdraw it all from one bank at the end of December to a regular savings account for a few days, and put it in anther one in January. This usually avoids transfer fees. You need to do the math to see if it's worth your while to wait til then, considering the fee from CIBC. On this forum, we call this trick the "December manoeuvre". Sometimes there are bonus offers at the end of the year or in the new year, but beware of anything short term as you will be subject ot transfer out fees when it expires.
Sometimes the receiving financial institution will reimburse the transfer fee. It depends on whether they themselves charge such a fee (if they don't, they won't reimburse) and on the size of the account. You might be able to get Motus to do this for you both but you have to ask.
Make sure you have beneficiaries in place at your new bank.

July 18, 2019
12:34 pm
pianoman8849
Halifax, NS
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HI. Thanks for all the advice. Well taken. I inherited over half a million dollars about a year ago and most of it is in GIC's at the CIBC, most are "market linked". I also have a pretty good RRSP to fall back on too. I'm 70 so, next year when I go to RRIF, there's annual taxable income which I'll probably use to buy more lobster....:)

I only have $ 50,000 locked into a TFSA GIC at CIBC so it's not an issue. At least not until it matures. With the new TFSA at Motus, I have reached my allowable limit for 2019.

I'm a retiree from the federal public service so I'm well versed when it comes to the CRA and their regulations when it comes to TFSA, RRSP's, etc.

Just asking one thing re the $ 50.00 TFSA transfer fee to another FI. Could a person just transfer it to a chequing account in the same institution, then, a week later, just do a transfer to another FI cheqing account? Then take out a TFSA with them? I suppose that isn't a way to get out of the fee but just asking if people do this and "get away with it". Perhaps that's what you're saying in your post regarding end of year transactions.

For the foreseeable future, I'll be leaving that $$$ where it is in Motus, then decide what to do. Don't want to make any rash decisions.

July 18, 2019
12:47 pm
Londonguy
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pianoman8849 said

...Just asking one thing re the $ 50.00 TFSA transfer fee to another FI. Could a person just transfer it to a chequing account in the same institution, then, a week later, just do a transfer to another FI cheqing account? Then take out a TFSA with them? I suppose that isn't a way to get out of the fee but just asking if people do this and "get away with it"....

  

Sure, that'll work -- just remember that this is a late December move so that you can redeposit the withdrawal immediately after January 1 -- the idea is to not expose too much interest to taxation while you're waiting for calendar yearend to pass

July 18, 2019
1:25 pm
Loonie
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I like your meal plans!

I agree with Londonguy. There may be some FIs that charge for withdrawals from TFSA, which is what you're asking about, but I'm not sure. I've never made any TFSA withdrawals. A few charge for RSP/RIF withdrawals beyond mandatory RIF, which is why I advise caution. Always wise to ask before investing.

I had assumed you must be a recent immigrant since you had so little contribution room, hence the level of detail you didn't require. I didn't realize you had other TFSA funds.

July 18, 2019
3:30 pm
pianoman8849
Halifax, NS
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No, born and brought up here in Nova Scotia. My TFSA has been deposited to and withdrawn over the years. So the numbers can be misleading.

Loonie, I think there's a misunderstanding here. Probably my misleading. The new TFSA I opened with Motus was from an EQ HISA and not a TFSA transfer from CIBC so the $ 50. This had nothing to do with CIBC. My original deposits to EQ just came as an ordinary transfer between EQ and CIBC.

Thanks

July 18, 2019
4:18 pm
Loonie
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I understand. I hadn't realized until your second post that you'd already gone ahead with Motus.

We were mostly thinking in terms of fees you may have to pay in future and how best to avoid them.

To summarize, there are basically 3 ways:
1. Invest only in financial institutions that don't charge those fees.
2. Do the "December manoeuvre".
3. Negotiate reimbursement at the receiving institution.
You should be able to get at least one of those to work for you; it just requires thinking ahead.

Please write your comments in the forum.