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More rate increases and a 4.00% GIC

Last month, we saw the Bank of Canada raise its key interest rate by 0.25%, and savers are slowly starting to see the benefits.

Outlook Financial, Achieva Financial, and Implicity Financial have all increased their regular savings and TFSA interest rates from 1.85% to 2.00%. AcceleRate Financial’s main accounts sit at 2.05%. Alterna Bank’s regular savings account is now at 2.05%, while its TFSA interest rate is now at 2.10%. Hubert Financial made 2 separate increases in the past month, and its regular savings and TFSA interest rates now sit at 2.10%.

EQ Bank is still the leader on our comparison chart with a 2.30% rate on a regular savings account. Ideal Savings is tops for a TFSA at 2.25%.

On the GIC side, Oaken Financial is the current leader with a 5-year GIC at 3.25%, and its other GIC rates are rumoured to increase again tomorrow, with every term 18 months or longer offering a rate of at least 3.00%.

If you’re in BC, Coast Capital Savings blows all GIC rates out of the water with a current promotion for a 4.00% 33-month GIC on new money of at least $500 until March 20.

Manitoba credit unions: why such consistently higher rates?

Our comparison chart is full of Manitoba credit unions, and whenever interest rates start to rise, more people start to ask why the province’s financial institutions consistently offer higher rates. Is it simply because they are more efficient? Follow the discussion here.

Other credit unions available to out-of-province applicants

Why don’t we see more credit unions operating nationally? Manitoba, Saskatchewan, and Ontario technically allow credit unions to accept out-of-province members, but those financial institutions aren’t allowed to operate or solicit business outside of their respective provinces. In fact, when Hubert Financial first launched, they got in trouble for advertising outside of Manitoba.

To operate nationally, Ontario credit unions can either create a separate bank (such as Alterna Bank; also see Meridian Bank, rumoured to launch some time later this year) or adopt federal mandates for their existing financial institutions. There are reasons for them to not do the latter, including how provincial deposit insurance is higher than the 100K limit offered by the CDIC.

BC, Alberta, and Quebec don’t allow their credit unions to accept out-of-province members by default. However, Coast Capital Savings is making moves to become a federal credit union.

Hubert Financial referral promo: $25 for you, $25 for a friend or family member

For the month of February, Hubert Financial has a referral promotion offering $25 to open a new account, as well as $25 to the person who referred you. Looking for someone to refer you? Post a request in the forum thread.

More Tangerine promos

Didn’t get Tangerine’s net new deposits promo (2.50%) last month? You might have received one this month instead, so be sure to check your account! They’ve also essentially rolled over their new customer promotion, offering 2.50% for 6 months in a new savings account.

Speaking of promotions, the start of the year has seen quite a lot of them, so be sure to check our promotions page, especially if you’re currently taking part in Simplii Financial’s 3.00% net new deposits promo that is set to expire at the end of February.

Rising interest rates: how are savers affected?

The Bank of Canada raised its key interest rate on January 17, 2018 by 0.25%. It now sits at 1.25%.

10 years ago, the key interest rate was being lowered from 4.25% to 4.00%, down from its latest peak a few months earlier at 4.75%. The rate bottomed out at 0.50% in July 2015.

What does this all mean for savers? The key interest rate is now up 0.75% from the 2015 low, but our savings account comparison chart history shows that savings account interest savings are roughly where they were in 2015; where they’ve increased, such as with AcceleRate Financial, it’s been by a paltry 0.10%.

Will we see more savings account interest rate increases this year, especially with the key interest rate widely expected to increase again?

What we do know is that many mortgage rates increased in advance of the January 17, 2018 announcement, and GIC rates have increased across the board as well. The highest 5-year GIC rate is, at the time of this writing, 3.15% at Oaken Financial. We’d already seen a round of increases in December, when the highest advertised 5-year GIC was 3.00%.

It’s TFSA season again

It’s 2018, which means that if you turn 18 years of age or older this year, you have an additional TFSA contribution room of $5,500. If you were 18 in 2009 (when the TFSA was introduced) and have never contributed to a TFSA, you should have $57,500 of contribution room now.

Some common TFSA discussions are popping up again on our discussion forum, such as:

• Whether to prioritize TFSA or RRSP contributions
• What to put in your TFSA, remembering that it doesn’t necessarily have to be a “savings account”

Tangerine’s early 2018 net new deposits promo

Tangerine Bank has been running a targeted, quarterly net new deposits promo since 2015. Throughout 2017, the parameters around start date and a range of rate offers (different per person) were predictable. For January 2018, however, they changed up a few things:

• The promo started a day earlier than usual
• The rate period is for 5 months (until May 31) instead of 3 months
• Everybody who received the offer got the same 2.50% rate
• You have to activate the offer

It’s still a targeted offer, though, so if you have not already received an e-mail about it, be sure to log in to your Tangerine account and look under the “Insights” tab to see if you’ve received the offer. (And if you have received the offer, be sure to click the “Activate” button.)

The Tangerine offer overlaps with a couple of previously reported net new deposit promos: 3.00% at Simplii Financial until February 28, 2018 and 2.50% at Ideal Savings until April 30, 2018.

If you’re not yet a Tangerine customer, there is a separate promo if you open a chequing and savings account: you’ll get 2.40% in the savings account for 6 months.

More rate updates and promos

Last month, Alterna Savings increased its TFSA savings account interest rate from 1.90% to 2.05%. At the time, they did not indicate that this was a promo rate. However, they have since posted (thanks to some Twitter pressure) that the 2.05% rate is only good until March 31, 2018, at which point it is scheduled to decrease to 1.95%. 1.95% is still near the top of our comparison chart. Nevertheless, this serves as a good reminder that not only are regular savings account rates always subject to change, but you should be extra careful with TFSA contributions, since your funds are “stickier” inside a TFSA due to the contribution room rules and transfer fees.

Another promo, this time from CIBC: they have a net new deposits promo offering a 2.30% interest rate on regular savings, TFSA, and RRSP savings accounts between October 16, 2017 and March 31, 2018. Note that for the regular savings account, the balance must be over $5,000 for the promo to apply.

No more Amazon.ca Visa (and Marriott Visa), officially

The Amazon.ca Visa, best known for not charging a 2.5% foreign currency exchange fee, was closed to new applications in April 30, 2017. Existing accounts remained open… until now. As of March 15, 2018, all existing Amazon Visa and Marriott Visa (which also waived the foreign currency exchange fee) cards will be completely cancelled.

Current alternative cards that either don’t charge the foreign currency exchange fee or that provide an additional rebate on such purchases include:

• Rogers Platinum Mastercard
• Fido Mastercard
• Home Trust Preferred Visa
• HSBC Premier World Elite Mastercard (but you need to be an HSBC Premier member)
• Meridian Visa Platinum Travel Rewards and Meridian Visa Infinite Travel Rewards (but you need to be Meridian Credit Union member)

Advantages of TFSA withdrawals in December

If you are planning to move your TFSA funds from one financial institution to another, withdrawing funds from your current TFSA in December and then depositing them in the new financial institution in January has some advantages.

Most institutions charge a transfer fee for moving TFSA money elsewhere, and there is also the added inconvenience of completing the forms to arrange the actual transfer. However, withdrawing money (that is not locked in, such as in a GIC) from a TFSA to a chequing or savings account at the same institution is free. Any withdrawal that you make will open up contribution room for the following year, but if you don’t have excess TFSA contribution room, you still have to wait for the following calendar year to re-contribute. Make a withdrawal as late in December as possible in order to minimize the number of days the funds are outside of the TFSA for that year. Then, do a normal transfer to the other financial institution and deposit the funds into a TFSA once 2018 has arrived!

An interesting point to keep in mind, especially during the rest of the year, is that some financial institutions will cover the cost of the transfer fee depending on the size of the account.
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Lastly, the 2018 TFSA contribution limit has been announced. It will remain at $5500.

GIC rate increases: a refreshing race to the top

We haven’t seen big increases in regular savings account and TFSA interest rates lately, but GIC rates have seen some impressive increases.

Motive Financial was briefly leading the pack with a 5 year GIC rate of 3.02% which was covered in the Savers Roundup November 2017. This rate is now slightly reduced to 2.97%, which is still attractive.

In the meantime, Accelerate Financial, Implicity Financial, Hubert Financial, and Oaken Financial have become the best options with 5-year GIC rates of 3.00%, subject to change of course.

Outlook Financial and Maxa Financial have also increased their GIC rates and are quite competitive as well.

While we’re on the topic of GICs, be careful about “escalator” GICs that often tout a very high rate in the last year — it’s important to average out the rates in order to do a proper comparison against GICs that offer the same rate for each year in the term. (See an escalator GIC example from Luminus Financial.)

Also worth mentioning is that when choosing a GIC with a specific financial institution, first check their posted rate and compare it with the rate posted through your online or discount broker, which might offer a better rate for the same GIC.

BMO World Elite Mastercard changes, mostly worse

Just announced are some significant upcoming changes to the BMO World Elite Mastercard as of January 15, 2018. Currently, 100 points earned on the card gets you $1 in travel rebates. As of January 15, 2018, that changes to 140 points for $1 in travel rebates, which is a 40% decrease in the purchasing power of the rewards.

According to its website, BMO promises to offset this change for points you’ve already accumulated by increasing your existing points balance accordingly.

There are some positives. You will soon be able to earn 3 BMO Rewards Points — instead of 2 — for every $1 spent on eligible travel, dining, and entertainment purchases. Overall, this makes the redemption rate slightly better for purchases made in those categories, but much worse for other purchases. Also, some gift card rewards, as well as BMO financial contributions, will require fewer points. And BMO Rewards will be able to used as a general statement credit, although undoubtedly at a lower rate than travel redemptions.

Simplii Financial applications for snowbirds

Snowbirds who want to open an account with the recently rebranded Simplii Financial, especially to take advantage of its 3.00% promo — on new deposits into any savings account until February 28, 2018 — should take note of Simplii’s requirement to show personal identification at a Canada Post outlet. This is of course tricky for someone in Florida for the winter. One workaround is to have Simplii Financial mail you a signature card. Then, sign it with and send it back with a $25 cheque with your printed name and address from your other bank.

Northern Credit Union 4.00% promo (which is now over)

Northern Credit Union recently came out with a savings account promo offering a 4.00% rate… for only 1 month of deposits. You had to open an account by November 27, so this was a short-lived promotion with a short effective time frame but this was the first promo in recent memory with such a high savings account interest rate.

Other interest rate changes for savers

The Canadian Tire Financial TFSA interest rate recently went up from 1.50% to 1.80%; will it stay there for long into 2018? Between 2009 and 2012, Canadian Tire Financial would have a higher rate to start the year, only to drop it a few months later. Since TFSA funds are typically less liquid than normal savings account funds (due to transfer fees and contribution room effects on withdrawals), this made quite a few savers mad back in the day. This is the first rate increase at Canadian Tire Financial we’ve seen since then.

Only a month after we added Wealth One Bank of Canada to our comparison chart, it decreased its regular savings account interest rate from 2.50% to 2.00%. This has sparked a recurring general discussion about how fair this is, and whether it should have been advertised as a promotional rate.

Update: Just after we published this article, Alterna Savings increased its regular savings account interest rate from 1.90% to 1.95%, and increased its TFSA from 1.90% to 2.05%.

For those playing the promotion game, stay tuned to see whether Tangerine will have another net new deposits promo in January! In the meantime, have a happy and safe rest of 2017!

Simplii Financial, formerly known as PC Financial

On November 1, 2017, PC Financial officially re-launched as Simplii Financial. The Simplii Financial rebrand was a result of CIBC and PC Financial officially ending their banking partnership, with CIBC taking over PC Financial’s banking customers.

Customers were assured that day-to-day banking would be largely the same, at least to start. There were 2 main positives in terms of new “features” as well: free Interac e-transfers and a 3.00% net new deposits promo.

There were still some reported glitches and complaints that nothing material had changed. Simplii Financial’s regular savings account and TFSA interest rate remains at a paltry 1.00%, in lock step with Tangerine. We don’t expect that to change, but it’s encouraging to see them trying to differentiate in other ways, such as with free e-transfers.

Motive Financial branding change follow-up from Canadian Direct Financial

It has been 7 months since Canadian Direct Financial re-branded to be Motive Financial. This was related to its parent company’s (Canadian Western Bank) sale of Canadian Direct Insurance 2 years prior. Motive Financial has so far appeared to be no different than Canadian Direct Financial, except for its name, appearance, and some additional marketing lingo. There have been no new account offerings, and its online interface is the same.

Motive Financial’s regular savings and TFSA rates have not changed since 2015; while it was once a leader on our comparison chart, it is now closer to the middle or bottom. However, in spite of the loss of the 0.25% GIC rate bonus for Canadian Direct Insurance customers, its GIC rates have rocketed to be close to the best or the best in the industry. Its current 5-year GIC rate of 3.02% (for non-registered, RRSP, and TFSA accounts) is unmatched against any publicly listed rate — in fact, its 2, 3, and 4-year GIC rates also beat any other publicly listed rate.

Is there more brewing at Motive Financial? We’ll see whether it can start to differentiate itself again in 2018.

Wealth One Bank of Canada: added to our comparison chart

We covered Wealth One in last month’s roundup. This month, after many requests from forum members, we’ve added it to our comparison chart! Its regular savings interest rate of 2.50% is the top non-promo rate in the country, whereas its TFSA interest rate of 0.85% is the lowest on our chart.

More new deposit promos

In addition to Tangerine’s quarterly, targeted net new deposits promo and Simplii Financial’s launch promo (mentioned above), there are a few other current new deposit promos:

• Ideal Savings, 2.50% until April 30, 2018
• DUCA Credit Union, 2.75% until December 15, 2017
• TD Canada Trust (targeted), 2.50% on balances of $10,000 and more until March 31, 2018

These are all listed on our Promos page.

More savings account interest rate increases

We’ve also seen a few more savings account interest rate increases in November:

• AcceleRate Financial increases its regular savings account and TFSA interest rates from 1.85% to 1.90%
• Ideal Savings increases its TFSA interest rate from 2.00% to 2.25%
• Canadian Tire Financial increases its regular savings account interest rate from 1.30% to 1.50%
• MAXA Financial increases its regular savings account and TFSA interest rates from 1.85% to 1.90%

Rate movements: Some increases, some surprising drops

It has been interesting to see the impact of the Bank of Canada’s key interest rate hikes (amounting to a total of 0.50%) from July and September. Outlook Financial, Implicity Financial, AcceleRate Financial, Hubert Financial, MAXA Financial, and Achieva Financial have all increased their regular savings and TFSA interest rates by 0.15%. Ideal Savings increased its regular savings and TFSA interest rates by 0.25%.

Oddly, Oaken Financial decreased its regular savings interest rate by 0.25%; Peoples Trust dropped its TFSA rate by 0.10%; and Meridian Credit Union decreased its regular savings and TFSA rates by 0.10% just before the July key interest rate hike and hasn’t change them since!

Even with the increases, it doesn’t seem like savers are seeing much benefit from the key interest rate hikes despite all of the competition!

You can view a list of the changes in our news digest and view current rates in our comparison chart.

Wealth One High Interest Savings Account: 2.50%

A discussion about Wealth One began in the forum about 1 year ago when the bank first opened. Wealth One currently has branches in North York, Markham, and Vancouver and is available to all Canadians outside of Quebec, with a particular focus on Chinese-Canadians. While the verdict is still out on its customer service, Wealth One is a member of the Canadian Deposit Insurance Corporation (CDIC).

Wealth One currently offers an attractive High Interest Savings Account rate of 2.5% with no monthly fee and no minimum balance. While its TFSA rate of 0.85% is not that competitive, its regular savings rate would make it the top one on our comparison chart. Wealth One also has RRSP accounts, GICs, mortgages, loans, lines of credit, a business savings account, and business GICs.

Tangerine: new interface, Q4 retention and new client promos

Tangerine redesigned its online interface in September, and so far reviews in the forum have not been favorable. Many people have found the new site confusing, with the general consensus being that the old site didn’t need to be changed. However, over time we’ll see whether people get used to the new interface; it might simply have a steeper learning curve than usual.

In the meantime, current clients are dithering over the October / Q4 2017 retention offers. Like clockwork, net new deposit offers appeared to some clients on the 3rd business day of the quarter. This time, the rates seem to range from 2.00% to 2.75%. For those who did not receive an offer, some people have had success calling Tangerine to ask for a custom offer.

To continue the party, Tangerine is putting forth their usual bonus offerings around new mutual accounts; new savings, TFSA, or RRSP accounts; and advanced deposits for a 2018 TFSA.

Remaining credit cards that waive the 2.5% foreign currency exchange fee: Rogers, Fido, Home Trust, and HSBC

The Marriott Rewards Visa has followed the Amazon Visa by no longer accepting new applications. While existing Marriott Rewards Visa cardholder accounts remain open for now, this leaves the Rogers Platinum Mastercard, the Fido Mastercard, the Home Trust Preferred Visa, and the HSBC Premier World Elite Mastercard as the only cards that effectively waive the 2.5% foreign currency exchange fee. For some consumers who do a lot of cross border shopping (online or at brick and mortar stores) this can really add up.

The Rogers Platinum Mastercard and Fido Mastercards give you 4% cash back rewards for purchases made in foreign currencies — minus the 2.5% foreign currency exchange fee that’s effectively 1.5% back in rewards. The Rogers credit card gives you 1.75% cash back rewards on purchases made in Canadian dollars and comes with a $29 annual fee. The Fido credit card has no annual fee but gives you 1.50% cash back rewards on purchases made in Canadian dollars. The respective cards advertise that rewards can be applied to a variety of Rogers and Fido services, although you can also get the “cash back” as statement credits.

The HSBC Premier World Elite Mastercard and Home Trust Preferred Visa do not charge you the 2.5% foreign currency exchange up front. The HSBC Premier World Elite Mastercard has quite a comprehensive list of travel benefits but requires you to be an HSBC Premier client (which has its own set of requirements) and has an $149 annual fee ($50 of which is oddly waived for HSBC Premier clients — technically you could no longer qualify as an HSBC Premier client after 1 year but still have the credit card). The Home Trust Preferred Visa is much simpler with no annual fee and a straight 1% cash back rewards rate.

PC Financial transition to Simplii

As of November 1st CIBC will cut ties with President’s Choice and unveil their own digital bank called Simplii Financial, rebranding from what was previously known as PC Financial. There has not been a great deal of discussion about the changes so far. The biggest change other than the name is that the physical PC Financial banking pavilions will be closed. Other than that, the official messaging has been that account features, account numbers, and ATM access will stay the same.

Expect the “big” unveiling of the Simplii Financial website on November 1 to be rather uneventful. It will be interesting to see if Simplii will provide any meaningful changes, or whether the changeover will be similar to Canadian Direct Financial’s rebranding to Motive Financial, which has so far been a ho hum experience.