My beef is with PC Financial. I opened my first account with them in 2006; currently have 3 PC accounts (Savings, RRSP, Tax Free) and have been singing their praises for all these years. However, now that their rate is lower than most regular banks, I want to move my money.
Thing is, to close my tax free savings account, I will be charged $50. I opened my account on January 2 and deposited $5000. I am angry, because I would have been better off having never opened an account, as the amount to close this account is greater than the interest I have earned over the majority of a year.
I spoke to PC Financial about this - doesn't seem to matter that I've been a long time faithful customer, they are charging this fee. Doesn't make sense to me when this was a government incentive to *save* money. I think PC is making its money by lowering its rate and then snatching the $50 fee when people are closing their accounts. I find it very sneaky.
Has anybody else had this problem? And if so, have they found a solution? I also phoned Revenue Canada, and they said there's nothing they can do. Thanks.
Perhaps this will be of some help to you.
Do not transfer your TFSA funds
Rather, simply withdraw all your TFSA funds
(including interest earned) from PC Financial
on say December 28,2009 and have the funds
sent back to your linked (home bank).
When the funds arrive at the home bank simply
open up a new TFSA at an institution of your
choice (funds plus interest earned).
Because you have put the maximum ($5,000) for
a TFSA in 2009, you will only be able to open
another TFSA with those funds in early 2010,
say Jan.04 plus of course the amount you would
like to invest for 2010.
Example : Withdraw Dec.28 $5,000.00 (2009)
plus (interest) 65.00 (2009)
Reopen new TFSA $5.065.00 From 2009
plus contribution $5,000.00 For 2010
TOTAL $10,065.00 Jan.04
Nick , this will save you the fifty dollar transfer fee that PC Financial wants to charge you. Granted, it is a pain in the butt however there are no charges for withdrawals(interest earning products). Good Luck !
I did not realize that withdrawals made within a year cannot be added back to a TFSA until the next year. Since then, I've done more research on the Revenue Canada web site and understand your advice better.(http://www.cra-arc.gc.ca/tx/nd.....m-eng.html)
However, one more question: will I need to wait a certain period for Revenue Canada to recognize/report on my Notice of Assessment that my contribution room for 2010 is $10,065 instead of just $10,000? The examples I see of withdrawals on the Revenue Canada web site all show withdrawals that don't account for interest earned (ie. less than $5,000 withdrawn, and contribution room for the following year always seems to add up to a multiple of $5,000 ie. $10k for 2010, $15k for 2011). I just want to be sure that if I open a TFSA account at the beginning of January and deposit $10,065 (given that I withdraw $5,065 from my current TFSA before year end), that I will not be charged for excess contributions.
Thanks a lot!
Yep, just leaving a zero or one dollar balance in an account and withdrawing everything else is a simple way to get around exorbitant account closing fees. I have three TFSA accounts open and just have to make sure I ensure that the total added up between them all did not exceed $5,000 this year. On the last business day of the year I plan to withdraw all the money from the two accounts that now have the lower rates. Then I'll put that money into the one with the highest rate come the first business day after January 1st.
Like you, I hate it when financial institutions have high teaser or introductory rates (which they usually never inform you are teaser rates) and then reduce them substantially a few months later.
There should be a law outlawing the practice of teaser rates, or requiring up-front disclosure in big fonts. Teaser rates have no purpose other than deceiving and trapping unsuspecting customers. If their rate isn't financially sustainable they shouldn't be offering it in the first place.
Nick : I may have given you incorrect information in regards to withdrawing
TFSA funds from one institution and reinvesting with another. The
rules for TFSA's are or can be very confusing to say the least. I
would like to therefore appologize to you for my ill attempt of
providing advice when I was not 100% sure of what I was talking
about. Please forgive me ! The only advice that I can offer you now
is to simply educate yourself regarding any and all money matters
that will be of concern to you not only now but in the future as well.
Good luck !
November 16, 2009
So this is what I have discovered:
PC Financial will charge you a fee of $50 to transfer your TFSA funds to other financial institution. This allows the entire amount (principal + interest) to be moved to the new account. If you withdraw the funds and close the account that is free, also leaving the account empty and inactive is free... so why close it. The fee for the transfer basically negates the tax savings within a TFSA, so that option for me is out. I plan on withdrawing $5000 (principal only) from my PC TFSA in late December, then in early 2010 depositing the original $5000 plus a new $5000 contribution. This will maximize my TFSA and allow me to keep the interest I earned in 2009 working for me. After speaking to the Canada Revenue Agency it appears the financial institution will report to the government the contributions and any amount withdrawn during the year. I believe that as long as the financial institution recognizes the amount is withdrawn in 2009, a contribution as stated above shouldn't be a problem in 2010. As an aside, personal record keeping of money movement is always a good idea just in case the government ever comes calling.