Savers Roundup June 2024: The first rate cut is here

Canada’s first key interest rate cut in over 4 years – a time period that included 475 basis points of increases in 2022 and 2023 – has arrived. The Bank of Canada decreased its key interest rate on Wednesday, June 5 from 5.00% to 4.75%. It was the first central bank in the G7 to cut its rates this year, although Sweden and Switzerland made their first cuts a few months prior. The Central Bank of Europe made a similar interest rate cut the day after Canada’s.

Canada also led the US in making the first few interest rate increases in the previous cycle back in 2022, although in total the US had gone 50 basis points higher (for a total of 525 vs 475 basis points) and made one additional rate increase than Canada.

Reaction was swift in terms of rate drops for some GIC rates and brokerage investment savings accounts. GIC rates had already peaked in November and December, and we’re likely to see further decreases.

We’re also likely to see some savings account rate drops soon as well. Motive Financial had led our chart nationally at 4.10% since April 2023 (even though the Bank of Canada raised its key interest rate two more times after that). Saven Financial has led in Ontario since January 2024; its rate now sits at 4.20%.

The limit to your savings account love

In our reader poll last month, we discovered that almost 75% of respondents have at least 3 savings accounts. There are plenty of reasons to have multiple savings accounts, and we’ll just quote some of the answers here:

• “I can move funds from lowest to highest rates as promotions appear.”
• “I use various savings accounts for various savings goals, sort of like the envelope budgeting system”
• “You need more than one to get offers… they need ‘new money’ so you just transfer in and out to get offers.”
• “I have 7 savings accounts. Only a few dollars in each, except the one offering the highest rate at any given time.”

You’re doing pretty good if you have one of the savings accounts on our chart. Consider, however:

• EQ Bank offers 4.00% if you have recurring direct deposit to their account as well as up to 5.00% in their new Notice Savings Account (see the next section!)
• Laurentian Bank offers 4.00% if you have between $100K and $5M in deposits
• Wealthsimple offers 4.50% (if you have over $100K in assets with them) or even 5.00% (if you have over $500K in assets with them)
• Koho offers 5.00% if you have: recurring direct deposit to their account; or at least $1,000 in deposits every month; or if you pay them $4 per month
• Simplii Financial is offering 5.90% for 5 months for new customers and has a targeted new deposit promo for existing customers
• Tangerine Bank is offering 6.00% for 5 months for new customers and appears to have a new batch of targeted new deposit promos for existing customers every month
• There are always some other savings account promos on our promotions page

Thus, it’s no wonder that multiple savings accounts factor into the personal finance strategy of so many Canadians.

Higher rates if you can wait to access your money

Would you take a higher savings account interest rate if you had to give some notice before withdrawing your money? That’s the premise of EQ Bank’s new Notice Savings Account. It gives you 5.00% if you provide 30 days of notice, and 4.50% if you provide 10 days of notice.

This is not an entirely new concept, as Canadian Western Bank offers something similar, although with lower rates and longer notice periods. This seems to combine some features of a cashable GIC with some of the general flexibility inherent to a savings account.