Savers Roundup March 2022: Rates are heading higher; how to improve the TFSA

Bank of Canada rate increase, finally

After the Bank of Canada kept its key interest rate unchanged at the end of January, it made a much anticipated interest rate increase at the beginning of March. This was a rather modest 0.25% increase to 0.50%, although more increases are expected to come this year. This was its first rate increase since 2018, following several decreases totalling 1.50% in 2020.

Continuous upward march of GIC rates

GIC rates have been trending upwards so much that many people were skeptical about locking in to a recent 3.25% 5-year GIC promo at CIBC.

EQ Bank and Wealth One Bank of Canada are currently tied for the highest 2- through 5-year GIC rates on our GIC comparison chart, with the 5-year rate for both at 3.15%. Tangerine Bank has the highest 1-year rate at 2.25%, and you can get up to 2.87% on a 1-year rate through some GIC brokers.

EQ Bank’s promo of 2.05% for a 3- or 6-month GIC has been attracting quite a bit of attention as well.

Savings account rate increases continue

In general for financial institutions on our savings account comparison chart, savings account interest rates have been increasing since November.

The most recent ones have been at merger partners AcceleRate Financial and Hubert Financial, which both sit at 1.40% now.

Wyth Financial is still the leader at 1.55%. It’s interesting to note that the same company will soon hold the funds for 3 of our rate leaders — Wyth Financial, Neo Financial, and EQ Bank — following Equitable Bank’s purchase of Concentra Bank.

Tangerine Bank and Simplii Financial have some juicy promo rates

For years, we’ve been following the rolling promos at Tangerine Bank and Simplii Financial, although their current ones stand out more than usual given just how high they are. For existing customers, Simplii Financial’s latest targeted new deposit promo is for 2.75% between March 1 and June 30, 2022, while Tangerine Bank’s latest targeted new deposit promo is 2.80% until July 31.

For new customers, Simplii Financial is offering 2.20% in a savings account until April 30 (and up to a $350 bonus in a chequing account), and Tangerine Bank is offering 2.50% for the first 5 months (and up to a $300 bonus in a chequing account).

How to improve the TFSA?

We’ve now released the full results of our 2022 TFSA survey, which received 455 responses. One of the questions we asked was about how the TFSA could be improved. The first answer was rather predictable, but the top 6 answers might contain some surprises:

1. Increase the contribution limit.
2. Allow re-contributions within the same year, and/or allow easier transfers between financial institutions.
3. Improve the CRA’s accuracy and timeliness of reporting on TFSA contributions.
4. Better educate Canadians about the TFSA. Perhaps call it a TFIA (Tax Free Investment Account)?
5. Expand what investments can be put in a TFSA, such as a business, or a property, or metals
6. Make USD dividends tax exempt in a TFSA, just like they are in an RRSP.