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Winter 2016 Rate Promotion
January 26, 2016
9:25 am
Jack Keen
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January 26, 2016
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Re: CDIC limits. If you are a couple it takes a lot of money to exceed the CDIC limits at one insured institution. On their website I read:

:CDIC insures eligible deposits at each CDIC member institution up to a maximum of $100,000 (principal and interest combined) per depositor (or, in the case of joint deposits, per set of joint owners), in each of the following:
-savings held in one name,
-joint deposits (savings held in more than one name),
-savings held in trust for another person,
--savings held in Registered Retirement Savings Plans (RRSPs),
-savings held in Registered Retirement Income Funds (RRIFs),
-savings held in Tax-Free Savings Accounts (TFSAs), and
-money held for paying realty taxes on mortgaged property.

So, for example, a couple could have $700,000 of insured deposits at one institution if the funds were properly distributed between 2 savings accounts, 1 joint account, 2 RRSPs and 2 TFSAs.

January 26, 2016
1:09 pm
Loonie
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It's possible. Unlikely though that the couple would each have 100K in TFSA at this time. Also, need to consider advisability of having 2 personal accounts. When one dies, they will have to pay probate on that person's non-registered personal account, which they don't have to do with joint account.

January 26, 2016
3:29 pm
dentgal
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Just read the fine print on the 2.5% GIC. From what I'm reading, they are only guaranteeing the 2.5 till june 2016--then you're locked in and they can drop the rate:(
so the 2.5 is fine in a bank account only...
p.s. why not take the 3% at EQ instead?

January 26, 2016
5:29 pm
semi-retired
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Hello From what I read the 2 year promo GIC for 2.5 % will be that rate for the full 2 year term.

January 26, 2016
6:32 pm
Bill
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dentgal, I don't see the wording you refer to, where are you seeing that in the fine print?

I see that it says as long as you buy the GIC by June 1 the 2-year rate you'll get is 2.5%.

January 26, 2016
9:06 pm
Norman1
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I think I see what dentgal means in the Winter 2016 promotion fine print:

The promotional rate is 2.5% on a 2 year GIC (non-registered, TFSA, RRSP), that fulfills the following requirements:

• Clients must have successfully opened a 2 year Zag GIC (non-registered, RRSP, TFSA), between January 11, 2016 and June 1, 2016 (midnight EST).

• An account is deemed as successfully opened when you have satisfied the Product Agreement.

• Interest will be calculated as outlined in the Product Agreement.

• Eligible clients will receive the promotional interest rate on all deposits made to applicable accounts until June 1, 2016 (midnight EST)

• Existing clients must open a new Zag 2 year GIC to qualify for the promotional rate.

Does the "until June 1, 2016" qualify "receive the promotional interest rate" or "all deposits made"?

January 27, 2016
2:27 am
2of3aintbad
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despite the ambiguous wording, it's a gIC. does anyone really think that Zag will change the rate on June 2 for existing gICs? g = guaranteed

January 27, 2016
4:42 am
NorthernRaven
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Norman1 said

I think I see what dentgal means in the Winter 2016 promotion fine print:

• Clients must have successfully opened a 2 year Zag GIC (non-registered, RRSP, TFSA), between January 11, 2016 and June 1, 2016 (midnight EST).

• Eligible clients will receive the promotional interest rate on all deposits made to applicable accounts until June 1, 2016 (midnight EST)

Does the "until June 1, 2016" qualify "receive the promotional interest rate" or "all deposits made"?

Think of the wording with the clauses rearranged: "On all deposits made to applicable accounts until June 1, 2016, eligible clients will receive the promotional interest rate". Once you receive a rate on a GIC, that's the rate for the term (unless it is designed as a rate-changing escalator or something). Open a new 2-year before June 1, and the rate will be 2.5%. Also, I'm pretty sure I saw somewhere that someone had confirmed this with Zag.

January 27, 2016
6:56 am
Jack Keen
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"... they will have to pay probate on that person's non-registered personal account..."

I was addressing the question of CDIC limits, which are often misunderstood, but obviously there are other considerations.

Let's consider, for example, a NS couple who currently have $300000 in one joint bank account who have decided that they are no longer comfortable exceeding the CDIC limits. They decide that their choices are to have one joint account and 2 personal accounts (each with $100,000) at their current bank or to open 2 new joint accounts (each with $100,000) at 2 different banks. They notice that the new banks will pay 1% less interest than their current bank and they question whether they should do it anyway just to avoid future probate fees.

And the answer is "Not if they will live so long that the extra interest at their current bank will more than cover the probate fees." And that might not be as long as they think. In NS if the deceased spouse's $100,000 bank account is the only estate asset (everything else is jointly owned) than the probate fee would be $973 and if their estate is valued at over $100,000 than the additional fee for the $100,000 account would be $1645. So if the personal account is the only estate asset he/ she would only have to live one year before the higher interest would more than compensate for the probate fee. If he/ she has other estate assets then they would need to live approx 20 months for the higher interest to compensate for the probate fees.

January 27, 2016
7:45 am
Loonie
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Good thinking, Jack.

People would need to figure out how this applies to their particular situation and province.

Also need to remember that in most cases the superior interest rate is not guaranteed for very long, so may not cover the fee.

January 30, 2016
10:21 am
christinad
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Is there a transfer fee for tfsa? Sorry this may have been covered but there is a lot of posts.

January 30, 2016
10:38 am
Norman1
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Yatti420 reported this earlier:

Just a heads up.. Zag charges a registered transfer fee (25$).. Undisclosed at this time (unless its on reg account page)

Dear ----,

Thank you for contacting Zag Bank Client Services. It’s important to us that you are satisfied with your Zag Bank experience.

Zag does charge a $25 fee for transfers of registered accounts to other institutions. However, this is the only fee that Zag has. Our website does not currently have a fee page, but we are always looking for ways to improve our website, so stay tuned!

If you have any other questions, please visit zagbank.ca

Sincerely,

Andrew L.

Zag Bank Client Services Team

http://www.zagbank.ca

January 30, 2016
2:31 pm
AltaRed
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I would suggest that everyone always assume there will be a transfer fee for registered accounts. There is more involved with the transfer of registered accounts than taxable accounts. Not to be obnoxious about it, but as a shareholder of financial institutions, I want them to cover their costs.

January 31, 2016
11:13 am
Loonie
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I would agree with AltaRed that you should always assume there will be a fee. Even if there isn't one when you first enrol in the plan, there very likely will be by the time you want to take it out. If you have a GIC in the plan, you are stuck with the fee, even if it wasn't in place when you signed up.

If you sign up with an institution that doesn't have a fee, and it still doesn't when you leave, then you have been lucky. Some appear to understand that this is aacost of doing business for them.

the best strategy for an institution that wants to serve customers well is to ensure they don't want to leave by offering excellent customer service and competitive rates. Then there will be no need for people to pay fees.

I recently deregistered a fund at the National Bank. I was charged $100 for the privilege. I was glad to be rid of them as they were paying virtually no interest at all. I find it interesting that the institutions with the lowest rates usually charge the most for transfers. For an institution with such low rates, they have no moral right to charge these fees in my opinion. We've already paid, several times over.

February 1, 2016
12:36 pm
2of3aintbad
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did anyone check the interest calculation for January? I didn't get what I expected for the 4 accounts that I monitor. A few cents less, but consistently less. In one account that I made no deposits or withdrawals, I got one cent less than in december, also 31 days. Obviously the one cent doesn't matter, but I think they have changed their interest calculation formula, maybe 2.49xx? compounded monthly to approximate 2.5% annually.

February 1, 2016
1:56 pm
bb123
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2016 is a leap year. Check your calculations to see if that is what is contributing to the difference.

For example: instead of $1,000 X .025 / 365 X 31.

Try $1,000 X .025 / 366 X 31.

That's probably the difference.

February 1, 2016
2:58 pm
2of3aintbad
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Thanks, using the 366 does indeed make my calculations match !

February 4, 2016
6:02 am
threeoakwest1
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January 22, 2016
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I just talked to a representative at Zag and they said the 2 1/2 interest rate on the GIC in a TFSA will be for the full 2 year term.

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