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TFSA Transfer Fees when Funds are over CDIC Limit
February 1, 2024
8:57 am
for interest sake
Ontario
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Now that my TFSA is over CDIC's insurance limit, I dread having to split it, pay a transfer fee, then wait the 6-8 week processing time for transferring a portion to another FI, which won't even guarantee their current rate. Last time I moved it (for a better rate), I started the process in early December. It wasn't completed until Feb. 1. (So much for future December withdrawals to avoid the transfer fee.) It would be great if there were more 6-9 month terms for TFSA GIC's to avoid going into another year, and rates were guaranteed from the moment a valid application is received, not from when the FIs paperwork is completed. I'd be happy to leave the entire account where it is if only all of it was insured. Your thoughts? I've sent an e-mail to the Ministry of Finance (upon CDIC's suggestion). If in agreement, please do the same. The more, the better, and the faster much needed change will happen.

February 1, 2024
9:32 am
bobwatford
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My thoughts are don't worry about it. People put far too much thought into CDIC limits. If any of these GIC's are with remotely reputable institutions I wouldn't give it another thought.
If things ever get so bad that Canadian banks etc are defaulting, insurance would be the least of your worries. Your dollar at that point would be borderline worthless so whether you have a million dollars or a hundred dollars would be of little concern. At that point hard assets like gold, food, land, and most of all and guns and ammo should be where you were invested...LOL.

February 1, 2024
10:40 am
HermanH
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for interest sake said
It would be great if there were more 6-9 month terms for TFSA GIC's to avoid going into another year, and rates were guaranteed from the moment a valid application is received, not from when the FIs paperwork is completed.

I would like to see more FIs offer shorter-term TFSA GICs, too. The only two that I know are Motive and WealthOne (18-mo).

bobwatford said
At that point hard assets like gold, food, land, and most of all and guns and ammo should be where you were invested...LOL.  

A million dollars sure makes it easier to acquire those other necessary goods. sf-smile

February 1, 2024
11:06 am
Dean
Valhalla Mountains, British Columbia
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.
I have Never had a problem with the 'December TFSA Shuffle', and I usually complete it within two weeks or less . . .

    'Out' of the old TFSA Account during the last week of December ... and
    then 'In' to the new TFSA Account during the first week in January.

Why would it take so long (~ 2 months), as described in Post #1 ❓❗

    Dean

sf-cool " Live Long, Healthy ... And Prosper! " sf-cool

February 1, 2024
11:17 am
for interest sake
Ontario
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"I have Never had a problem with the 'December TFSA Shuffle', and I usually complete it within two weeks or less . . .

Why would it take so long (~ 2 months), as described in Post #1 ❓❗"

There is no problem with a straight savings account and I probably should have just put it there instead of making arrangements to put it into a GIC. I wasn't told at the time that it would take so long to process and thought 3.5 weeks would give plenty of time, but no, processing time between Motive (where it was coming from) and EQ (where it was going) took 7 weeks, with each FI pointing the finger at the other. Now my only option is to find one or two short term GICs (no more than 9 months) and leave the rest of it (or all of it) in a lower interest savings account.

February 1, 2024
12:48 pm
savemoresaveoften
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To not worry about CDIC if that matters to you, just stick to the too big to fail names, aka big5 for those registered accounts.

February 1, 2024
12:51 pm
Dean
Valhalla Mountains, British Columbia
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for interest sake said

There is no problem with a straight savings account and I probably should have just put it there instead of making arrangements to put it into a GIC. I wasn't told at the time that it would take so long to process and thought 3.5 weeks would give plenty of time, but no, processing time between Motive (where it was coming from) and EQ (where it was going) took 7 weeks, with each FI pointing the finger at the other. Now my only option is to find one or two short term GICs (no more than 9 months) and leave the rest of it (or all of it) in a lower interest savings account.  

Yup . . . A long time ago, I learned my lesson the Hard Way, too.

When moving money around, Always keep it; 'Super Simple'. sf-smile

    Dean

sf-cool " Live Long, Healthy ... And Prosper! " sf-cool

February 1, 2024
2:14 pm
Loonie
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Almost all provinces offer unlimited insurance on registered plans through credit unions.

Alternataively, move it to Oaken, which consists of two CDIC-insured outfits - HOme Bank and HOme Trust. You can divide between the two and each is CDIC insured. That will last you a few more years. They currently have no transfer out fee.

Transfers don't necessarily take two months

February 1, 2024
4:59 pm
Bill
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Tangerine has 90, 180, 270 day, and 1 and 1.5 year, TFSA GICs, most at competitive rates right now.

February 1, 2024
7:06 pm
for interest sake
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Thanks all. I appreciate the input. I've decided to put the bulk of my TFSA into Tangerine's 270 day GIC, currently offered @ 5.3% and have submitted the form to start the process. They'll hold the interest rate for 30 days, starting today, but say the process could take 45 days depending on the other FI, at which point, if the rate has gone down, there will be a review. Remaining funds will stay in Motive's TFSA Savings Acct. @ 4.1% (for the time being). Both FIs charge $50 transfer out fees.

February 1, 2024
7:31 pm
bobwatford
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HermanH said
A million dollars sure makes it easier to acquire those other necessary goods. sf-smile  

It does....the problem is you need to make the purchase 'before' a needing CDIC insurance related event happens....otherwise the million may not be worth much more than the paper it's written on. Not a doomsdayer.....just know that if an event occurs that causes the Canadian banks to start failing.....being CDIC insured for 100k per account will be the least of anyone's worries. Hence worrying about CDIC insurance at all is a waste of time as long as you aren't in junk.

February 3, 2024
2:58 am
RetirEd
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Wait a minute - didn't for interest sake say:

Now that my TFSA is over CDIC's insurance limit, I dread having to split it, pay a transfer fee, then wait the 6-8 week processing time for transferring a portion to another FI, which won't even guarantee their current rate. Last time I moved it (for a better rate), I started the process in early December. It wasn't completed until Feb. 1. (So much for future December withdrawals to avoid the transfer fee.)

Was that a transfer (fee+delay) or a withdrawal and redeposit?

Transfers have a fee and often delays. Withdrawals should be pretty straightforward and with minimal delay.

When Tangerine took weeks to transfer a TFSA and missed the year-end, PT was happy to backdate the receipt a few days. On the other hand, for the rest of the GIC's life PT complained that I'd made their life hard by making them work during the holidays! sf-embarassed

RetirEd

February 3, 2024
5:15 am
savemoresaveoften
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bobwatford said

It does....the problem is you need to make the purchase 'before' a needing CDIC insurance related event happens....otherwise the million may not be worth much more than the paper it's written on. Not a doomsdayer.....just know that if an event occurs that causes the Canadian banks to start failing.....being CDIC insured for 100k per account will be the least of anyone's worries. Hence worrying about CDIC insurance at all is a waste of time as long as you aren't in junk.  

What you said is 200% correct. To sweat and waste time to move money around just because it’s over $100k CDIC hurts one on their mental and health more than financial front, especially when the money is with the big5. Big5s are so intertwined that one fail will bring down the others, CDIC either saves everybody’s a$$ or none. In fact the global domino effect if started can not be reversed. I know some who still argued 2009 financial bailout was unnecessary and help the rich, those who argued are just the uneducated crowd when it comes to global banking and finance.

Now if it’s a much smaller FI like Wealth one as an example, yeah by all means stay at or close to $100k maximum.

February 3, 2024
5:39 am
Alexandre
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I think ignoring CDIC limits is reckless.

From the other hand, all this "transferring TFSA challenges" is much ado about nothing.
Take over CDIC limit funds from FI TFSA this year, park them in HISA or 1yr non-registered GIC, move back to TFSA at different FI next year.

Even if you withdraw funds in January and have to wait 12 months to redeposit them, even with 5% HISA interest rate, even with 50% income tax rate on interest - the monetary loss from moving just excess few thousand dollars and getting taxed on interest income on them is so little its not worth the time and efforts for trying anything else. Surely not for starting the movement and writing letters to Ministry of Finance telling them to do better.

February 3, 2024
6:12 am
savemoresaveoften
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Alexandre said
I think ignoring CDIC limits is reckless.

There is a difference between ignoring vs understanding and accepting the risk.

Just like people are living in San Fran, tornado alley, etc. They are fully aware of the risk, but accepts the risk.
I will accept the risk of over the CDIC limits at the big5, over living at the mentioned places any day. 🙂

February 4, 2024
12:36 pm
bobwatford
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savemoresaveoften said

Alexandre said
I think ignoring CDIC limits is reckless.

There is a difference between ignoring vs understanding and accepting the risk.

Just like people are living in San Fran, tornado alley, etc. They are fully aware of the risk, but accepts the risk.
I will accept the risk of over the CDIC limits at the big5, over living at the mentioned places any day. 🙂  

Yes, saying it is wreckless is a bit extreme. To me, if someone is that concerned with CDIC limints there is no way in heck they'd ever be able to be stomach being invested in any publicly traded stock or any other investment. I've never understood the fascination with CDIC limits....and i guess I never will. It's like it's there, so people can't help but become worried about it even though what it insures carries the least risk of any investment on the planet. But heck I used to ride my bike as a kid without a helmet so I'm kind of a rebel sf-cool

February 4, 2024
2:11 pm
for interest sake
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There was much more to what I was saying in my original post -- perhaps I should have worded it and the topic differently, as it went off in all different directions. I'd just like to recap my concerns ...
• The processing time to transfer a TFSA with some FIs is far too long (whether or not this has been your personal experience). FIs should have to adhere to a more reasonable timeframe in which the transfer process must be completed – ideally less than one month.
• Since timing has to be right in order to take advantage of better GIC rates, and processing delays affect timing, short term GICs can help keep it within the same year, allowing for December withdrawals and without having to go after an often lower HISA rate. There should be more of them.
• The interest rate at the time an application to ‘transfer funds in’ is received should be honoured (no matter how long the FIs take to process).
• A customer shouldn’t be penalized (by having to pay a transfer fee) for moving excess funds that go beyond CDIC coverage (since that’s what makes some of us more comfortable -- after all, CDIC exists for a reason).

February 4, 2024
4:14 pm
Loonie
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I agree; FIs should be obligated to complete transfers of unencumbered funds within 30 days max, but, as it stands, there is no time requirement at all, only a sort of guideline which I think is up to six weeks and unenforceable.

They can do it if they want to; they just don't want to. They are not necessarily in any hurry to let go of your money.

The fastest I had was one leaving Oaken; it took less than a week. The slowest was from TDDI, took about 3 months and they couldn't explain why it took so long. Both were in cash. Oaken has free transfers; TDDI charges $150. Go figure!

There is a problem though with short term GICs in registered plans. It makes sense to arrange it so that it comes due late in the year etc., but then you have the same problem all over again in January when you try to reinvest. Best solution may be to look for an odd-month promo offer or make a deal for GIC to mature when you want if you can.

February 4, 2024
5:18 pm
Alexandre
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bobwatford said

Yes, saying it is wreckless is a bit extreme. To me, if someone is that concerned with CDIC limints there is no way in heck they'd ever be able to be stomach being invested in any publicly traded stock or any other investment.

Well, that does mean I am consistent. I do not put my money in equities. I don't need to engage in risky financial behaviour.

February 5, 2024
9:01 pm
bobwatford
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Alexandre said

bobwatford said

Yes, saying it is wreckless is a bit extreme. To me, if someone is that concerned with CDIC limints there is no way in heck they'd ever be able to be stomach being invested in any publicly traded stock or any other investment.

Well, that does mean I am consistent. I do not put my money in equities. I don't need to engage in risky financial behaviour.  

Different strokes for different folks I guess. If I was of that opinion I'd have about 20% of the money / net worth I currently have and wouldn't have been able to semi retire at 45. To make any real money a certain level of well researched, acceptable risk is required. As they say.....no guts no glory sf-wink

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