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Email this1:30 pm
daily balance annual rate (%)
$0 - $1,000.00 0.50
$1,000.01 and up 1.00
5:40 pm
Why have their rates dropped so low now? When I first opened the account, they were second highest, now they're pretty much at the bottom of the barrel. Comparing their historical rates with Canadian Tire's, CT's started about the same level back in Jan '08 but have managed to keep rates much higher. Could this be somehow related to CIBC's write downs? Just curious...
9:31 pm
December 12, 2009
Offline
It all has to do with the Bank of Canada and their continued, in my opinion, overly aggressive prime rate cuts which the commercial banks have been forced to match. Had people not complained about the banks not matching every rate cut, there would've been greater spread between the rate the Bank of Canada charges and commercial banks' prime rates, which would've allowed profitability to remain constant, but instead they've had to match each rate cut (except for maybe one, if I recall).
Long story short: I blame the central bank for cutting rates too hard and too fast. They should've used other tools available to them earlier, such as that talked about "quantitative easing", instead of just cutting rates.
Cheers,
Doug
7:36 am
Thanks for your thoughts Doug. Interesting... so then why wouldn't others such as CT not be dragged down in the same way? It sounds like you're saying that PCF's strong ties with CIBC has played against them in this instance as it was forced to drag down rates in step with CICB. Is CTFS truly owned solely by CT or is it linked to one of the big banks like PCF?
8:50 am
PCF is a disgrace! They have been unmatched in the department of plummeting rates, instead of customer service. I need to put my savings somewhere else...
9:39 am
This latest cut by PC has forced me to pull ALL of my savings, which will be moved to Canadian Tire Financial (they have a 3.25% promotion for 90 days).
Part of my savings included a maxed-out TFSA of $5000. I have moved this amount back into my PC chequing account so that I can transfer it into a savings account at Can Tire. The question I have: can I now put this money back into a TFSA at Canadian Tire Financial in this calendar year without penalty (probably when the promotion rate has expired in 3 months time)? Perhaps there is a more efficient way to do this...
Any thoughts?
10:30 am
My understanding of the TFSA is that once you withdraw the money in a given calendar year, you must wait until the beginning of the next calendar year to re-deposit what was withdrawn. However, like an RRSP, as long as it stays under the TFSA umbrella you can get the financial institutions to transfer to one another (in whole or in part? not sure) without having to wait.
2:42 pm
Look into getting the banks to make a direct transfer between TFSAs. I believe if you do it that way, you won't be penalized.
3:12 pm
December 12, 2008
Offline
Its prolly not worth it to transfer as the transfer fees involved would most likely still cut you at a loss of any gains on interest made elsewhere.
My advice would be to just keep it where its at for the next 8 months then withdraw and recontribute elsewhere in Jan 2010 (without penalty).
djino
3:27 pm
Thanks for the replies! I think I will just pull the $5000 from the TFSA at PC (where it is only making 1%), and just add it to the rest of my savings for the rest of the year in the Can Tire savings account (with promotional rate of 3.25% for 3 months, and base amount of 2.25%).
Even though the interest on that $5000 will now be taxable, I will see more return than I would have leaving it at 1% in PC's TFSA.
Another important point here: screw PC! for getting everyone on board with their competitive rates and then turning on them. I will be utilizing their free banking services and nothing more.
8:56 pm
December 12, 2009
Offline
I can't speak to Canadian Tire Bank specifically but I do know it is wholly-owned by Canadian Tire Corp. Ltd. They securitize their credit card and mortgage portfolio and likely have a higher percentage of subprime mortgages in Canada than some of the big banks. Plus, they may be having difficulty getting new credit with the frozen ABCP market and general credit crunch. Since they rely heavily on securitization, their only alternative is too pay out a relatively high interest rate on deposits so that they're actually losing money (big time) on deposits in order to fund new mortgages, lines of credit and credit cards. That's my guess, anyway. Eventually, however, they will lower their rates on deposits and quite dramatically - perhaps as much as 1% in one swoop. 🙂
Cheers,
Doug
12:09 pm
I was one of many who got roped into PCF's TFSA in January. Their TFSA rate at the time was well over 3%. Classic bait-and-switch.
To the poster who is contemplating transferring his TFSA to another bank, you should know that PCF will charge you a big transfer-out fee for this. I believe it's $50, but it could be more. As far as I know, all banks do this except for ING Direct.
I've withdrawn my $5000 from PCF's TFSA (there are no fees to withdraw) and simply transferred it to an account that currently pays 2.5%. Even after paying taxes on $5000 growing at 2.5%, I still come out ahead compared with the same $5000 growing tax-free at 1%.
3:45 pm
I hear you Craig...what a dirty move by PCF! I am aware of that ridiculous transfer fee and have withdrawn the $5000 from PCF's TFSA, instead. As soon as Canadian Tire finalizes my recently opened savings account, I will be taking advantage of their 3.25% for 3 months. Even if they significantly drop their rates, I will be doing much better than 1% for the next few months.
Originally, I didn't want to go through the small hassle of linking my PC chequing account to other savings accounts. However, given the conduct of PC, I was quite happy to pull my savings out of their accounts.
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