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Moving TFSA from PeoplesTrust 1.75% to EQBank Regular Saving 3%
February 16, 2016
4:39 am
Save2Retire@55
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I have been with PeoplesTrust since their 3% offer. I think, it's time to move my money out of their now 1.75% rate to another bank. Based on my calculations of paying interest on 50% of the generated interest on a Taxable Saving Account (EQBank - 3%), I'd still make about $250 - $300 more a year comparing with 1.75% TFSA.

Anyone is doing the same or thinking of doing the same?

February 16, 2016
5:11 am
fabafter50
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Yes I've jumped ship. Just check on transfer fees if it is a TFSA. I got dinged $50 bucks when I moved my TFSA over to Tangerine from PC, so you want to figure out how many months it will take to recoop that. That is if there is a fee, I'm not sure if there is one at Peoples Trust. The only other issue I had, is it literally took 6 weeks for P.C. to move it even though I had filled out all the transfer funds correctly. They do not rush when it is a registered account and they make no bones about it. As long as EQ is going to hold that 3% it would be worth it. I moved savings out of Zag to EQ to also take advantage of the better rate. Here's hoping it lasts :)

February 16, 2016
6:50 am
Save2Retire@55
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fabafter50 said

Yes I've jumped ship. Just check on transfer fees if it is a TFSA. I got dinged $50 bucks when I moved my TFSA over to Tangerine from PC, so you want to figure out how many months it will take to recoop that. That is if there is a fee, I'm not sure if there is one at Peoples Trust. The only other issue I had, is it literally took 6 weeks for P.C. to move it even though I had filled out all the transfer funds correctly. They do not rush when it is a registered account and they make no bones about it. As long as EQ is going to hold that 3% it would be worth it. I moved savings out of Zag to EQ to also take advantage of the better rate. Here's hoping it lasts :)

Fortunately there is no fee with PeoplesTrust. And yeah it takes forever for these two banks to do something useful.

February 16, 2016
9:08 am
James
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Yas, why wouldn't you transfer TFSA to TFSA (rather than the regular EQ account). There is no fee to transfer from TFSA to TFSA at Peoples Trust. For example, you could transfer to Zag, paying 2.5% on TFSA until June (and you could lock in for longer if you wanted a GIC). Just a thought.

February 16, 2016
11:38 am
fabafter50
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Yas, why wouldn't you transfer TFSA to TFSA (rather than the regular EQ account). There is no fee to transfer from TFSA to TFSA at Peoples Trust. For example, you could transfer to Zag, paying 2.5% on TFSA until June (and you could lock in for longer if you wanted a GIC). Just a thought.

The Zag 2 year 2.5 GIC is a great deal, I signed up for that one too!

February 16, 2016
12:16 pm
Loonie
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As I understand it, the proposal is to move TFSA money from Peoples TFSA savings account currently at 1.75 to Eq regular savings account currently at 3.0
In 2017, the money could be redeposited into a TFSA bearing sufficient return to justify the move.

Peoples does not charge a transfer fee yet.

I think it depends on your marginal tax bracket.

If you are, for example, in Ontario, and at the lowest rate, i.e. 20.5%, then it might be worthwhile. 3 - 20.5% = 2.385% return, as opposed to 1.75 at Peoples. On a deposit of $50,000 (approx what one could potentially have in TFSA if only invested at Peoples), this would be net savings of $317.50

Again using Ontario as an example,if your income is a bit higher, you could easily be in the 29.65% bracket. This would give you a net improvement of only $180. If your taxable income is $90,000+, you would still be a little bit ahead but hardly worth it in my view, considering interest rate risk.

So, if your tax bracket is right and you are not a senior subject to clawbacks starting at about $35,5000 net income, all you have to worry about is how fast they will cash your TFSA and how stable the interest rates are going to be.

Personally, I would not bet on the Eq Bank rate still being 3% one year from now. But, then, I also wouldn't bet on Peoples' staying at 1.75%.

The Age Credit clawback could be a dealbreaker if your income is at or above about $38,000 and you are a senior. That would effectively wipe out your saving.

Worth a shot, maybe.

But if what you are looking for is a superior return for one year with no risks, why not go for a 1-yr GIC and stay within TFSA? The tax-sheltering makes it a better deal if you get one at 2.05, as it's worth closer to 3%, depending on tax bracket.

P.S. I'm not quite sure what Yas meant by "paying interest on 50% of the generated interest on a Taxable Saving Account", but hope I've covered it.

February 16, 2016
5:06 pm
JustMe
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I am with Peoples since day 1. They had great rates especially 3% for years and years. As somebody mentioned here, as they got enough capital or customers, they did not need a bait anymore and their interest rates are as anybody's else.

As they have no fee for transfer, my thought is to move $ to Hubert into 1y GIC. I would have an option to withdraw money every 3 months plus earning better interest than at Peoples.
I do not like locking it for 2 years especially with so young virtual bank (born on May 2015).
Annoying part is that Peoples requires Original document signed in blood and will not accept fax or scanned form so it will take a while for actual transfer to occur. In the mean time you might earn few more bucks of interest and then what? Another transfer or withdraw? Welcome to 19th century. Here is the fountain pen. Lick it first... we use ink spiked with stevia...

February 16, 2016
5:08 pm
2of3aintbad
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when people talk about transfer fees and delays, that applies only when you want to move the TFSA from Peoples Trust to another organization, but not to EQ since they don't have TFSAs. The only delay is when TFSA funds must be withdrawn to a chequing account that is linked with EQ. That can be done after you open your account with EQ with a $1 cheque.

February 16, 2016
9:17 pm
Loonie
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Another option, possibly only applicable in Ontario, and only for people who won't be needing the money any time soon, is the 80-month GIC at DUCA credit union. It pays 3.0% and is TFSA-eligible. AND it's cashable after 1 year at 2%. So, if rates go up significantly, you have a way out. Obviously they do not expect rates to go up any time soon.

When you consider the tax-sheltering, it's more like 4%, and might actually meet or exceed the rate of inflation!

DUCA may only be available to Ontario residents. I'm not sure about that.

DICO insurance covers all deposits in registered accounts, so is not subject to the 5-year limit of CDIC.

This rate is subject to being withdrawn, so you would need to extract a commitment from them to honour it upon receipt of transfer.

https://www.duca.com/mymoney/banking/deposit-products/the-flex80-gic/?gclid=CKCnyZqB_soCFQusaQodZSIG5A

February 19, 2016
6:51 pm
SavingIsGood
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I am in the process of transferring TFSA from PT to another institution.
If you do not want to leave any penny to PT after transferring funds, as advised by another institution, you should write a little note to PT to let them know to calculate interests up to the day of transfer and then send a cheque to receiving institution. There is a particular banking term for that action but I did not catch it up.
Otherwise they will transfer whatever is on you account and then, at the end of the month deposit accrued interest from beginning of the month up to the day of transfer. Worst case scenario, about $60 could be deposited as interest after the transfer.
To completely clear your account at PT you would have to do another transfer or withdraw funds.
Why Everything has to be so complicated with PT? Breach of security, flag on your credit history, etc. Time is to move on...

February 19, 2016
10:28 pm
Loonie
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Thanks for the report, SasvingIsGood. If you fill out the transfer form, it should give you a choice to ask for "all" of the account or just a certain specified amount to be transferred, or that's what I would expect. It seems that PT did not do the "all" option, although that's what you intended. If so, that really sounds more like incompetence to me.

February 20, 2016
4:39 am
Save2Retire@55
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James said

Yas, why wouldn't you transfer TFSA to TFSA (rather than the regular EQ account). There is no fee to transfer from TFSA to TFSA at Peoples Trust. For example, you could transfer to Zag, paying 2.5% on TFSA until June (and you could lock in for longer if you wanted a GIC). Just a thought.

Basically because I couldn't find a good rate for TFSA. Did Zag raised their interest for TFSA to 2.5% just recently? Let me do some research and if that can be sustainable for a year or so, I might move it to them rather than a Taxable account. Thanks for the suggestion

February 20, 2016
4:40 am
Save2Retire@55
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fabafter50 said

Yas, why wouldn't you transfer TFSA to TFSA (rather than the regular EQ account). There is no fee to transfer from TFSA to TFSA at Peoples Trust. For example, you could transfer to Zag, paying 2.5% on TFSA until June (and you could lock in for longer if you wanted a GIC). Just a thought.

The Zag 2 year 2.5 GIC is a great deal, I signed up for that one too!

Ok great. Does it take them forever to open the account too?

February 20, 2016
4:51 am
Save2Retire@55
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Loonie said

But if what you are looking for is a superior return for one year with no risks, why not go for a 1-yr GIC and stay within TFSA? The tax-sheltering makes it a better deal if you get one at 2.05, as it's worth closer to 3%, depending on tax bracket.

P.S. I'm not quite sure what Yas meant by "paying interest on 50% of the generated interest on a Taxable Saving Account", but hope I've covered it.

Hello Loonie, Helpful as always :) Thanks

I am not a senior :) I don't know if 2.05 - 1.75 = 0.3% on $46500 (Maximum allowed) = $139.5 would even worth the call to PeoplesTrust and then have the money locked for 1 year.

Zag Bank has the 2 years for 2.5%. Comparing with PeoplesTrust 2.5-1.75=0.75%
0.75 * $46500 / 100 = $348.75. This is much better. So in 2 years, I will have (not considering the interest on the interest) $418.5 more if going with Zag.

I couldn't find a better way to explain that :) I understand only 50% of the interest on a bank saving account is taxable?

February 20, 2016
4:55 am
Save2Retire@55
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JustMe said

As they have no fee for transfer, my thought is to move $ to Hubert into 1y GIC. I would have an option to withdraw money every 3 months plus earning better interest than at Peoples.

Thanks JustMe. PeoplesTrust has the 2.05% GIC for 1 year too. Almost same as Hubert's 2.10%. It is not millions to worth the 0.05%.

I might lock it with Zag for 2 years. I don' think I'll need this less than $50K anytime soon.

February 20, 2016
4:59 am
Save2Retire@55
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2of3aintbad said

when people talk about transfer fees and delays, that applies only when you want to move the TFSA from Peoples Trust to another organization, but not to EQ since they don't have TFSAs. The only delay is when TFSA funds must be withdrawn to a chequing account that is linked with EQ. That can be done after you open your account with EQ with a $1 cheque.

I think I got confused. Yes, the withdrawing to a regular account would be FREE. I won't close my TFSA with PT totally. Will leave 1K there. It took them 1 month to open the account years ago so will keep it hoping they introduce better rates after seeing $$ is flying out of their basket.

With EQ, after 1 month, they just cashed my cheque. So, I don't have an account yet. But it is the same account I linked to PT which makes the transfer (hopefully) easier (Not faster)!

February 20, 2016
5:01 am
Save2Retire@55
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Loonie said

Another option, possibly only applicable in Ontario, and only for people who won't be needing the money any time soon, is the 80-month GIC at DUCA credit union. It pays 3.0% and is TFSA-eligible. AND it's cashable after 1 year at 2%. So, if rates go up significantly, you have a way out. Obviously they do not expect rates to go up any time soon.

When you consider the tax-sheltering, it's more like 4%, and might actually meet or exceed the rate of inflation!

DUCA may only be available to Ontario residents. I'm not sure about that.

DICO insurance covers all deposits in registered accounts, so is not subject to the 5-year limit of CDIC.

This rate is subject to being withdrawn, so you would need to extract a commitment from them to honour it upon receipt of transfer.

https://www.duca.com/mymoney/banking/deposit-products/the-flex80-gic/?gclid=CKCnyZqB_soCFQusaQodZSIG5A

I need to confirm with them regarding the residency rules. I am not in ON but thanks again for the info.

February 20, 2016
5:04 am
Save2Retire@55
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SavingIsGood said

I am in the process of transferring TFSA from PT to another institution.
If you do not want to leave any penny to PT after transferring funds, as advised by another institution, you should write a little note to PT to let them know to calculate interests up to the day of transfer and then send a cheque to receiving institution. There is a particular banking term for that action but I did not catch it up.
Otherwise they will transfer whatever is on you account and then, at the end of the month deposit accrued interest from beginning of the month up to the day of transfer. Worst case scenario, about $60 could be deposited as interest after the transfer.
To completely clear your account at PT you would have to do another transfer or withdraw funds.
Why Everything has to be so complicated with PT? Breach of security, flag on your credit history, etc. Time is to move on...

Good points. I don't feel like closing it totally. You never know what happens. They might have a new 3% sometime soon specially after seeing other banks are offering higher rates and people are moving money out. PT will need money again which means higher interest again. So when that happens, I don't want to go through the same 1 month hassle I went through the first time.

Yeah, I think I still have the flag on my credit but so far it didn't give me any problem. I opened 2 new credit cards since then with no issues.

February 21, 2016
8:18 am
Rick
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Didn't have a problem at all. Opened the Tang credit card with no hassles from the flag. I just called PT when I closed my account. They said "where do I want the funds to go?", I directed them to transfer to CDF, interest was calculated and added, and the money was gone the next day and arrived at CDF the day after. They didn't even ask why I was closing. Two weeks later I can still log in, but doesn't show any accounts. Only regret I have is I didn't sign on sooner when they first offered the 3% rate.

February 21, 2016
5:26 pm
SavingIsGood
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I would not close accounts Unless there is a dormant fee. Having accounts open even with 0 balance makes moves more flexible. Imagine PT decides to go back to 3% and now you have to start process of opening accounts from the scratch. Major pain. I still have account at Achieva even I did not deal with them in years.

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