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BMO and CIBC 2019 TFSA promos
January 5, 2019
8:06 am
Peter
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I just saw ads for BMO and CIBC TFSA savings account promos:

* BMO 3.25% on new deposits until March 15, 2019: https://www.bmo.com/main/personal/investments/investwithbmo
* CIBC 3.00% on new deposits until March 31, 2019: https://www.cibc.com/en/personal-banking/investments/tax-free-savings-accounts/tax-advantage-savings-account.html

Beware, though, that the regular BMO TFSA rate is 0.75% (with a $50 transfer out fee) and the regular CIBC TFSA rate is 1.15% (with a $100 transfer out fee). If you max out the promo terms and keep your funds in those TFSAs for the entire year you end up with effective rates of ~1.3% and ~1.6% respectively, which are worse than what you can get on normal rates for other financial institutions on our comparison chart.

January 5, 2019
9:11 am
gicjunkie
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In my humble opinion, TFSA promos are not the way to go for these kinds of accounts. For regular savings accounts, with no really restrictive rules, it may be okay to keep moving your money around from place to place to take advantage of the latest and greatest interest rate specials. But, as Peter says, you are much better off investing with a FI that has historically high rates throughout the year to avoid the inconvenience and possible costs of relocating your TFSA funds once the promo expires.

January 5, 2019
9:46 am
Peter
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Looks like Meridian has a similar promo: 3.25% for the first 4 months on your first TFSA or RRSP savings account with them. Regular rate is 1.50%: https://www.meridiancu.ca/Personal/Accounts/Savings-Accounts/High-Interest-Savings-Account.aspx

January 5, 2019
9:52 am
Top It Up
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Peter said
Looks like Meridian has a similar promo: 3.25% for the first 4 months on your first TFSA or RRSP savings account with them. Regular rate is 1.50%: https://www.meridiancu.ca/Personal/Accounts/Savings-Accounts/High-Interest-Savings-Account.aspx  

And then to make sure you don't get too hasty on that TFSA withdrawal (although in THIS instance it wouldn't come into play) - from Meridian's Service fees

INACTIVE ACCOUNTS AND CLOSING ACCOUNTS - RRSP/RRIF/TFSA

- $100 if collapsed within 90 days of opening $50 for T2033 transfer out

https://www.meridiancu.ca/Meridian/media/images/PDFs/Personal_Accounts_and_Services.pdf

January 5, 2019
7:49 pm
Loonie
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I agree completely with gicjunkie's analysis. and it is even more true when dealing with relatively piddly amounts like 6K. The transfer fees can really add up, and there is no telling what they might be by the time you do your transfer. You may be able to negotiate reimbursement of these on the receiving end, but that is more difficult with smallish sums.

I have just been trying to work out some kind of system for the two of us as to how best to deal with this problem over time - i.e. where to put it, for how long, and how to get various years' contributions lumped together into more significant amounts which would be easier to deal with, without paying excessive transfer fees and having a lot of inconvenience doing so. At $50 per person over five years, with one maturing every year, it adds up to $500, assuming no increases in fee. The younger you are, the more this will cost you over time.

Right now, we have TFSAs at 3 different FIs, only 2 of which have consistently superior rates and 2 of which offer savings rates (not the same two!). After much figuring, I have concluded that, going forward, I want to reduce that to just two, maybe one - until the totals reach CDIC limits at least - and ignore all promos from elsewhere.
I much prefer FIs which offer savings accounts for TFSAs, as that gives me a place to dump them when they mature, so that they can be rolled into one larger GIC. Some of ours are with Oaken, but they will be moved out on maturity for this reason unless Oaken decides to offer a savings version by then.

Figuring all of this out has proven to be much more work than I anticipated! I'm still working on the strategy for how I will get them to lump together and, consequently, how long the terms should be until we get to that point.

Things were so much simpler when Peoples Trust had a nice reliable high daily rate!

Any suggestions?

January 6, 2019
5:43 am
gicjunkie
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HUBERT - They have decently competitive rates both for savings and GICs. The one year cashable GIC is better than savings and offers flexibility. Also, no insurance limits.

When depositing new money to the TFSA in January, leave it in savings until March and then invest it in the one year GIC. Re-evaluate the rates each quarter, but in particular in December, cash the GIC when that quarter is up, to avoid loss of interest, and reinvest it in another one year GIC or a longer one, again to mature in December. As suggested previously, start the GIC's longer than one year in December, so that if you want to withdraw the money to put elsewhere after maturity, in January, it can be done seamlessly, avoiding transfer fees.

Of course, this advice is for rates and conditions that exist now. Who knows what the future holds for rate changes.

January 6, 2019
5:57 am
Top It Up
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First off I am not a rate-chaser but I am a strong proponent of going with bird-in-the-hand rates i.e. grab the best 5-year rate NOW and move on. It is absolutely impossible to hit the highs forever and always - and we're talking about a yearly contribution (this year = 6 grand) which is not a life changing amount.

January 6, 2019
2:57 pm
Loonie
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I am leaning towards gicjunkie's solution. Hubert is one of the 3 where we currently have TFSAs. My only hesitation is that I would prefer to use a FI that is in my own province (ON) as I think it will just make everything simpler when i die or become incapacitated. Yes, I have beneficiaries etc in place.

Top It Up's solution is not dissimilar to where I am now, but it is leading to having too many accounts and is a nuisance to manage, not tenable over the years to come. If I always go for the highest five year rate, I end up with small amounts all over the place - a nightmare for my successors, and even for me as time wears on - and I age and they proliferate.

Ideally, I would go with Oaken. They offer fairly consistently good rates, have a convenient bricks and mortar branch (free parking!), the potential for 200K insurance - which , at my age, I may never exceed - and no transfer fees (yet), if I should change my mind. But the savings account is critical to amalgamating the smaller annual contributions.

For now, I probably will go with Hubert and hope for the best. There is still a bit of time before my largest lumps mature at Oaken, and I hope they will pull up their socks!

January 6, 2019
3:11 pm
Top It Up
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Loonie said

Top It Up's solution is not dissimilar to where I am now, but it is leading to having too many accounts and is a nuisance to manage, not tenable over the years to come. If I always go for the highest five year rate, I end up with small amounts all over the place - a nightmare for my successors, and even for me as time wears on - and I age and they proliferate.
  

Let me clarify - my TFSA is at ONE place only - I take the going 5-year rate from them each and every January 1st.

My comment was more directed at the account rigamarole suggested in Post #6 - lock it up for 5-years and move on.

January 6, 2019
4:45 pm
Loonie
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I see. It's a bit more complicated for me right now because I have to pull together and re-sort the existing GICs, of varying amounts. I need to be able to pull them all together through a savings account or cashable one-years, and they don't all come due on Jan 1 and certainly not in the same year. Then I can , step by step, divide into more equal amounts and re-invest.

So, for that reason, Hubert is the better bet for now. There is a clear advantage to the cashable one-year GICs. I have found that the best rates are usually at some other point in the year and the cashabde one-years or savings accounts allow me to take advantage of that. I will have a rolling savings account and/or one-years to receive matured GICs from the other two FIs, then siphon off for longer terms periodically. until I get a better balance. That requires very little maintenance work, once I get it organized.
It's a sort of modified rate-chaser plan. I won't go running around to various FIs, especially not for annual contributions, but I will allow for the possibility of waiting for better rates at the existing one. Having them mature in December allows for maximum flexibility but is not essential to me.

I just wish there was a better Ontario-based option. My hunch is that Oaken will eventually offer registered savings accounts. If they don't, they are going to find they lose a lot of deposits when they mature, as people start to realize the problem of not having a saivngs account option.

Of course, if someone wants to offer me 5% x 5, then I might be willing to deviate! sf-laugh

January 7, 2019
6:45 am
savemoresaveoften
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Never fall for those teaser rates at the big banks. You get 3 months of "high interest", then your money is stuck. If one chooses to keep their TFSA as cash, much better buying a GIC at one of the CUs etc, assume your TFSA is a retirement savings and not some funds you need to access soon.

Or if you are comfortable taking a bit of equity risk, just buy BMO or CIBC stock and earn a 4-5% div based on current price, as opposed to "lending them more or less free money"...

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