Simplii Financial provides 5% for TFSA accounts till April 30th, 2023 / Any better deals? | Tax Free Savings Accounts | Discussion forum

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Simplii Financial provides 5% for TFSA accounts till April 30th, 2023 / Any better deals?
December 27, 2022
1:00 pm
butterflycharm
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Simplii Financial provides 5% for TFSA accounts till April 30th, 2023.

$50 withdrawal fee and other than than no other fees.

For total of $500,000.00 across all accounts maximum. Promotional interest paid in May 2023 and regular interest on monthly basis I think.

Withdrawal before end of April still gets promotional interest without any penalties.

Are there any better rates out there than this today?

December 27, 2022
3:35 pm
dougjp
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Let's see shall we.

5% for 4 months and then 0.40% for 8 months (assuming their TFSA HISA rate stays the same and doesn't drop). Net yield for a year is $ 125.66 on $ 6,500-, before monthly compounding of interest.

Resulting yield for the year? 1.93%. $ 50- withdrawal kills the effective yield because if you withdraw May 1 and assuming you can get the money elsewhere "efficiently" re: interest earnings in the transition period (highly unlikely), your annualized return for the 4 months (after fees) is 2.69%.

This is not rocket science.

I'm not impressed either way, however I see where they are going with the, IMO, "slight of hand" marketing. I truly hope people don't get conned, but I know from other similiar patterns of behaviors by other banks in the past, that they won't do the math and will get "burned". In My Opinion. sf-cry

The main accomplishment of almost all organized protests is to
annoy people who are not in them.

December 27, 2022
5:26 pm
Doug
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It's in a TFSA, so you are right to consider the TFSA transfer out fee of $50.00. For a small value TFSA, it wouldn't be economical. Let's assume you have $75,000 to park. That's $1,232 for 120 days (January 1st-April 30th). Compare that with 4.25% in a Scotiabank ISA Series F at Scotia iTRADE, which is good for $1047.00 (assuming you already have a Scotia iTRADE account otherwise not worth setting up, and there'd be a $150 transfer out fee). Take off $50.00 from $1,232 and that nets you $1,182. It's still advantageous to go with Simplii Financial, but less so, as it's a registered account. If you can get 4.75% with Tangerine, that'll net you $1,171 in a non-registered account. It'll be taxable, yes, but assuming you're in the lower marginal tax brackets, still would be worthwhile, and you've got a year or so before the tax comes due. sf-cool

Bottom line: skip the registered plan HISA promotions and go with a non-registered HISA promo. sf-cool

Cheers,
Doug

December 28, 2022
8:37 pm
butterflycharm
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@dougjp, yes with that low of TFSA don't go shopping.

@Doug did very good calculation. Simplii still wins.

BUT I just found out the following about Tangerine so I say Tangerine wins after all:

*1st Note: Since Simplii deposits the promo interest amount in May I am assuming they are sneaky about compound interest. So it is safe to assume you will only get 5% for the 4 months and not 5.1% for the four months if it was compound interest. So there is a little loss there but then again the closest is 4.75% which is not a match anyway.

*2nd Note: Tangerine offers 5% too until end of April and deposits promo interest every month and it covers USD accounts too which I think Simplii doesn't so probably this is a better deal. Also, it accepts CAD $1M and USD $1M vs Simplii $500K CAD. This will do compounding too since it is deposited monthly.

Tangerine does have in their terms they can change interest rate anytime and probably Simplii does too.

Interesting that banks think rates and inflation will stay high until end of April.

December 29, 2022
6:17 am
Kirk
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We see promotions similar to this every year. Institutions get you aboard knowing that some clients will stay the course after the promotion is over. This is especially true for TFSA accounts that take weeks to transfer elsewhere. I think it has little to do with anticipated rates after April 2023.

December 29, 2022
12:48 pm
butterflycharm
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Kirk said
We see promotions similar to this every year. Institutions get you aboard knowing that some clients will stay the course after the promotion is over. This is especially true for TFSA accounts that take weeks to transfer elsewhere. I think it has little to do with anticipated rates after April 2023.  

Yeah, banks are calculating that some clients forget, don't have the time, etc and will leave deposits there. This is still the better rate available out there than any other.

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