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Higher GIC Rates
March 15, 2018
7:36 am
gicjunkie
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Don't know if everyone missed this, or I just missed it, or if nobody cares anymore, but TANG has new (higher) GIC rates:

1 year 2.10%
2 years 2.30%
3 years 2.50%
4 years 2.60%
5 years 3.00%

I guess they finally decided they weren't competitive ?

March 15, 2018
10:42 am
Koogie
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Cool... thanks.

March 15, 2018
11:12 am
Kidd
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As i said in another thread. I believe the reasons for these higher rates are... bad paper. Debts are not going to be repaid and the banks want cash. Credit card, auto, mortgage, they are all debt.

When a FI needs to make a purchase, they often offer a higher rate of interest to get an 'x' amount of dollars. Once their goal has been reached, their rates drop back down.

In todays enviroment, every week FI's seem to be increasing their rates, either their savings, gics or both. I see this as a cash grab. Why do they all want your cash?

March 15, 2018
1:23 pm
savemoresaveoften
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gicjunkie said
Don't know if everyone missed this, or I just missed it, or if nobody cares anymore, but TANG has new (higher) GIC rates:

1 year 2.10%
2 years 2.30%
3 years 2.50%
4 years 2.60%
5 years 3.00%

I guess they finally decided they weren't competitive ?  

still not competitive if you ask me 🙂

March 15, 2018
1:29 pm
Peter
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According to https://www.tangerine.ca/en/rates/historical-rates/index.html

... the increases are:
1 year: 0.10%
2 years: 0.15%
3 years: 0.20%
4 years: 0.20%
5 years: 0.40%

March 15, 2018
7:50 pm
Save2Retire@55
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It is still not competitive as long as the blessing of Manitoba keeps coming.

I am doing the ladder with Oaken for RRSP, LIRA, TFSA from 18 months to 5 years for now.

March 16, 2018
9:24 am
Koogie
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Peter said
According to https://www.tangerine.ca/en/rates/historical-rates/index.html

... the increases are:
1 year: 0.10%
2 years: 0.15%
3 years: 0.20%
4 years: 0.20%
5 years: 0.40%  

Will you be adding them to the gic comparison chart ?

March 16, 2018
9:48 am
Peter
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So far I've been sticking to the same financial institutions that are on the main comparison chart, although we could start to make exceptions since the two aren't really tied together.

March 16, 2018
12:23 pm
Koogie
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Probably worthwhile. There are a lot of Tangerine fans out there.

It would also increase the number of CDIC insured institutions on the GIC list.
Most of them are DGCM/DICO members. Some people seem to be happier dealing with CDIC members so that would give them more choice.

March 17, 2018
10:15 pm
Peter
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I've added Tangerine to the GIC chart now.

April 27, 2018
7:14 am
GR
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Some GIC rates increased:
1 Year Guaranteed Investment 2.50%
1½ Year Guaranteed Investment 2.55%
2 Year Guaranteed Investment 2.60%
3 Year Guaranteed Investment 2.70%
4 Year Guaranteed Investment 2.75%
5 Year Guaranteed Investment 3.00%

April 27, 2018
12:44 pm
toto
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Not too shabby tangerine!

April 29, 2018
1:05 pm
Scruge
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It looks like the GIC interest terms have changed. I have current Tangerine GICs that pay interest annually but the fine print now says interest is paid at maturity. "Interest is calculated daily and paid monthly in the case of our Savings and Chequing Accounts; and is calculated daily and paid at maturity on a GIC."

April 29, 2018
4:50 pm
Kidd
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Scruge, thanks for the heads up.

So there is no compounding of interest?
How is the yearly T5 calculated, if all the interest is paid at the end of the term? A 5 year GIC could be one HELL of a big T5.Screenshot_20180429-193829.png

April 29, 2018
5:23 pm
Loonie
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Sleazy! It's not the first itme we've seen this, but it is usually just with special promo rates. Tangerine's are not even at the top of the heap.

I believe you have to declare interest annually with CRA, regardless of whether paid out yet. This means you would be paying tax on money you don't yet have,with principal tied up.

April 29, 2018
5:38 pm
Top It Up
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Loonie said
Sleazy! It's not the first itme we've seen this, but it is usually just with special promo rates. Tangerine's are not even at the top of the heap.

I believe you have to declare interest annually with CRA, regardless of whether paid out yet. This means you would be paying tax on money you don't yet have,with principal tied up.  

Where's the argument - that's the way it's always been for long term, non-registered, compounded annually GICs - trying to make a hornet's nest where there is none ... sheesh.

April 29, 2018
5:57 pm
Loonie
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I see no evidence so far that the interest is in fact compounded annually.
Obviously, if it were compounded, it would not also be paid out annually.

April 29, 2018
6:11 pm
Kidd
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Hi,

By the wording of tangerine's "gic interest to be paid at maturity" here's the difference.

Example, $1,000 for 5 years at 3%

Compounded
Year 1 principal is $1,000, interest is $30.
Year 2 principal is $1,030, interest is $30.90.
Year 3 principal is $1,060.90, interest is $31.83.
Year 4 principal is $1,092.72, interest is $32.78
Year 5 principal is $1,125.51, interest is $33.77
At maturity Total $1,159.27. Interest paid $159.27

If the interest is paid at maturity, it becomes "simple" interest, not compounded.
Year 1 principal is $1,000, interest is $30 but not paid.
Year 2 principal is $1,000, interest is $30 but not paid.
Year 3 principal is $1,000, interest is $30 but not paid
Year 4 principal is $1,000, interest is $30 but not paid
Year 5 principal is $1,000, interest is $30 but not paid
At maturity Total $1,150. Interest paid $150.00

Norman1? Is this correct? By reading tangerine's gic policy, i take this to mean simple interest?

When the interest is compounded, it is realized at the end of each year. A T5 is issued stating the interest earned for that year.

April 29, 2018
6:53 pm
Kidd
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I love to hate tangerinesf-yell

April 29, 2018
7:55 pm
Norman1
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Kidd said

Example, $1,000 for 5 years at 3%

Compounded

At maturity Total $1,159.27. Interest paid $159.27

If the interest is paid at maturity, it becomes "simple" interest, not compounded.

At maturity Total $1,150. Interest paid $150.00

Norman1? Is this correct? By reading tangerine's gic policy, i take this to mean simple interest?

When the interest is compounded, it is realized at the end of each year. A T5 is issued stating the interest earned for that year.

It could mean simple interest. It could also mean paid out only at maturity. One will need to ask Tangerine to clarify whether one will be receiving $1,159.27 or $1,150 on maturity.

A T5 can be issued yearly for simple interest as well.

Compounded rate of return is just a measurement unit. Five year, 3% per annum, compounded annually is the same as five year, 3.18548% per annum, no compounding.

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