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2020 TFSA GIC rates
December 22, 2019
8:09 pm
Canadianbull
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At the start of 2019, I was able to buy GIC @ 3.75% with Meridian. I am on a hunt for better rates. Please share rates on this forum.
Thanks

CB

December 23, 2019
3:08 am
Loonie
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I think I'm going to go with Oaken this time. We don't have any GICs to roll over right now, so it's only 6K.
I'm looking for a two-year and a four-year, one for each of us.

You really have to be careful about transfer out fees with TFSAs because the size of the deposit may be relatively small compared to other GICs you might have. With low rates, the impact of the transfer fee could be quite high. I have noticed that they are starting to creep up to $100 with some FIs. What's a 100% increase, eh?!
'The impact of this problem is greatest if you are buying a one year term, which seems to be fairly popular at the moment.

If you were to deposit $6000 for a one year term at 3% (good luck with that!), the interest received would be $180. But if you had to pay a $50 transfer fee at the end, that would eat into your return significantly. With a $50 non-reimbursed fee, your effective rate would be 2.25%. If the fee were $100, your interest would be reduced to $80 - less than 1.35%.

For larger amounts and longer terms, the situation would be somewhat more favourable, but everyone should do the math if considering a FI which charges a transfer fee - which is the vast majority of them.

I realize you can often get the fee reimbursed, but not always, and also not always if the amount is relatively small. And very few will reimburse a $100 fee.

The December manoeuvre, to avoid transfer fees, would not apply if you buy a one year GIC in January, although it could be useful with some of those "odd month" GICs.

My point is simply that you need to consider the impact of transfer fees when looking at comparing rate offers.

December 23, 2019
5:49 am
dougjp
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Current GIC rates here, you can click on the term to organize by that term's best banks:

https://www.highinterestsavings.ca/gic-rates/

My strategy - I would never buy a TFSA GIC that has 1-2-3-4-5 year terms in January. For all practical purposes you lock yourself into the same bank due to TFSA withdrawal rules. To escape, you have to do a transfer from one FI to another after expiry and incur fees, or, roll a maturing GIC into that FI's savings account for 11 months at whatever rate they decide to have at some future date, then withdraw. If going the GIC route at the beginning of a year, I look for oddball terms that get an expiry late in a fiscal year.

To me, if TFSA GIC buying, I'd do it in December. In fact, I do all TFSA change movement in December. If leaving one FI, I withdraw in December and invest back in January, assuming I'm happy with an alternative savings rate at a Bank that also offers good GIC rates. Then maybe go into a GIC later in the year.

December 23, 2019
9:07 am
GICinvestor
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Loonie said
I think I'm going to go with Oaken this time. We don't have any GICs to roll over right now, so it's only 6K.
I'm looking for a two-year and a four-year, one for each of us.

You really have to be careful about transfer out fees with TFSAs because the size of the deposit may be relatively small compared to other GICs you might have. With low rates, the impact of the transfer fee could be quite high. I have noticed that they are starting to creep up to $100 with some FIs. What's a 100% increase, eh?!
'The impact of this problem is greatest if you are buying a one year term, which seems to be fairly popular at the moment.

If you were to deposit $6000 for a one year term at 3% (good luck with that!), the interest received would be $180. But if you had to pay a $50 transfer fee at the end, that would eat into your return significantly. With a $50 non-reimbursed fee, your effective rate would be 2.25%. If the fee were $100, your interest would be reduced to $80 - less than 1.35%.

For larger amounts and longer terms, the situation would be somewhat more favourable, but everyone should do the math if considering a FI which charges a transfer fee - which is the vast majority of them.

I realize you can often get the fee reimbursed, but not always, and also not always if the amount is relatively small. And very few will reimburse a $100 fee.

The December manoeuvre, to avoid transfer fees, would not apply if you buy a one year GIC in January, although it could be useful with some of those "odd month" GICs.

My point is simply that you need to consider the impact of transfer fees when looking at comparing rate offers.  

I know we all have issues with Oaken not having registered savings accounts. I must admit that I moved funds from a registered account and was done quickly at NO CHARGE. Maybe there is a blessing to no savings accounts? I know we have heard stories about a transfer that sits in Silly Sallys basket while more are piled on top and yours gets buried or the general consensus of the FI (like Coast Capital) is to drag out the time for any transfer out....kind of a penalty system against you. But I can tell you this is not the case with Oaken.

EFF1E5C4-25AA-4D2D-9945-740D336E40E5.jpeg

December 23, 2019
3:24 pm
Loonie
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Yes, I am moving out my RIFs from Oaken, but they involve larger amounts and I have found good places to move them to. I agree, they are very efficient with transfers, much moreso than the FIs that charge you for the privilege and still complain about the work involved.

Case in point: a good friend of mine submitted a transfer request for RSP to TDDI on December 3 this year. Nothing happened. When he called last week to find out what was going on , they said the request had been rejected because of something unintelligible which nobody there could explain at all. Nobody contacted him to let him know or even to ask if it was a legitimate request, which you might think they would care about.The receiving FI has resubmitted. He's going to lose at least a month's interest because the funds have been available in cash all this time, and nothing he can do about it except never deal with TDDI again - which won't be difficult. It will cost $135 for this sloppy incompetent work plus significant loss of interest; new FI will pick up $100.

But, with a 6K TFSA, Oaken is my best bet right now, all things considered.

December 23, 2019
5:14 pm
Canadianbull
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Thanks @ Loonie.
My contribution room is 55K.

December 24, 2019
12:57 am
Loonie
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I see. So, if you are planning to use up all your contribution room, then a $50 transfer fee should not be a significant obstacle, particularly if you are going for a longer term. It may increase to $100 by the time you cash iit in. While I find all these fees unacceptable, it is still not prohibitive.
However, if you are only looking at a one year term, you should probably do the math.

55K x 2.55% x 1 yr with no transfer fee (Oaken) = 1402.50
55K x 2.60% x 1 yr with $50 transfer fee = 1380.00
55K x 2.65% x 1 yr with $50 transfer fee = 1407.50
55K x 2.65% x 1 yr with $100 transfer fee = 1357.50
55K x 2.75% x 1 yr with $100 transfer fee = 1412.50

Thus, for a deposit of 55K in a one year term, you need to get about 10bps higher rate to make it worthwhile if there is an additional $50 fee incurred - and even then it's not a significant increase in return.
And if the fee was $100, you would need about 20 extra bps.

This is all assuming the receiving FI doesn't reimburse you.

Personally, I don't like to deal with any more FIs than necessary, so, if I were doing this, I'd want at least an extra 25 bps and probably more in order to justify introducing a new FI to my portfolio, especially if I am happy with the ones I aready have. I can be a bit lazy that way!sf-embarassed

December 25, 2019
5:33 pm
Canadianbull
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So far I like below options.

1. OAKEN 18 month @ 2.60%.
2. Ukrainian Credit Union 19 month @ 2.65%.
3. Omnia direct 2 years @ 2.70%.
4. BCU financial 23 month @ 2.70%

December 25, 2019
11:52 pm
Loonie
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You are looking at relatively short periods, and relatively small differences in rates. Do you know what the current transfer-out fees are for these FIs?
The last time I asked, OmniaDirect did not offer TFSAs. Has this changed?

December 27, 2019
9:36 am
Canadianbull
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Loonie said
You are looking at relatively short periods, and relatively small differences in rates. Do you know what the current transfer-out fees are for these FIs?
The last time I asked, OmniaDirect did not offer TFSAs. Has this changed?  

Loonie, I sent omnia an email and below is the response from them.....

As a non-resident you can invest with Omnia Direct. The Government allows us, a certain percentage of investors outside the province.

At this time we only offer Non-Registered GIC’s and it is covered under the Deposit Insurance Corporation of Ontario for up to $250,000.

Omnia is specifically an online Financial Service. Once you submit an application, you can either mail in a cheque for the investment or we can do it electronically.

Electronically would require you to email or mail us a copy of a VOID cheque or Direct Deposit Form. This would allow us to pull the funds from your account and deposit into the investment.

CB

December 27, 2019
8:47 pm
Loonie
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Thanks. So, unfortunately, that eliminates Omnia for your TFSA.

Maybe BCU would be good if you live in the vicinity. The gift card may offset transfer fees+. It may depend on whether you already do business with them and how many FIs you want to be dealing with.

January 2, 2020
10:34 am
blahuenga
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Peoples Trust 1 year GIC 3% right now. Just saw it.

January 2, 2020
11:21 am
Doug
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Discussion on Peoples Trust's 3.0% GIC, beyond more than a few posts, should take place here (https://www.highinterestsavings.ca/forum/gic/peoples-trust-tfsa-rrsp-1-year-gic-3/); however, @Loonie, @Canadianbull, and @Canadian.100 will note that I called this. 😉

My only surprise is that they did this with the 1-year GIC, not their usual promo 15-month.

While this exists, this should help to solidify Motive's and Laurentian's 2.8% and 3.30% HISA rates for the balance of 2020 as people can easily just switch away from those HISAs if they lower their rates.

Cheers,
Doug

January 2, 2020
1:00 pm
Canadianbull
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Thanks Doug!

January 2, 2020
7:11 pm
HISAhopper
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Just saw Meridian offers 1% cash bonus if transfer (not deposit) min $10k to TFSA, end Mar 2nd.
So 2.55% TFSA + 1% cash total 3.55% interest (18 months)
a TFSA GIC matured in Jan can take advantage of this offer, transfer fee possibly covered if asked. (I got transfer fee covered by Meridian last year)

January 6, 2020
8:03 am
HISAhopper
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Just received message from Tangerine 2.75% from Jan 6 to May 31 for HISA, TFSA (probably targeted)
Open a TFSA with Tangerine is fast as all info, beneficiary or links are already there but will have to deal with transfer fee at the end of May.

January 6, 2020
9:38 am
Vatox
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HISAhopper said
Just received message from Tangerine 2.75% from Jan 6 to May 31 for HISA, TFSA (probably targeted)
Open a TFSA with Tangerine is fast as all info, beneficiary or links are already there but will have to deal with transfer fee at the end of May.  

Same criteria, but 2.5% for me. Also includes U.S.$

January 6, 2020
6:20 pm
HISAhopper
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Poked around, came across Tangerine "Registered funds transferred to another FI" fee = $125 as of Jan 1,2020 (it was $45 last year)sf-surprised

January 6, 2020
11:16 pm
Loonie
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WOW!
First it was "no fees", said Tangerine when they took over from ING. Then, a while later it was "no unfair fees" - as defined by them. And now, the highest fee I know of for any bank.
I sure am glad we took our registered funds out of there some time ago. People with registered GICs will get stung.

January 7, 2020
4:22 am
Saver-Mom
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Can they change the condition under which I deposited money, without warning? Combine this with an end to their promo rates on Registered money, there will be a flood of RRSP money out, and they will recuperate a lot of what they gave as promo rate by upping the transfer out fee.

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