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Motive Financial headlines savings account rate drops

The first savings account rate changes on our comparison chart in 2021 are decreases: First, Outlook Financial decreased its regular savings account and TFSA interest rate from 1.20% to 1.10%. This was most recently followed by equivalent decreases at MAXA Financial (from 1.20% to 1.10%). Peoples Trust has decreased its savings account and TFSA rates from 1.30% to 1.20%. Most notably, Motive Financial decreased its Savvy Savings account and TFSA interest rate from 1.55% to 1.25%.

Canadian Tire Bank is still our savings account rate leader at 1.80%, followed by Bridgewater Bank at 1.55% and EQ Bank and Wealth One Bank of Canada at 1.50%. EQ Bank still has the top TFSA (and RRSP) rate at 2.30%, although time will tell how long those rates will last.

Does EQ Bank have the easiest online account opening process?

Last summer, our forum members highlighted a few financial institutions with fully online account opening processes. This month, there’s been a new discussion about which financial institutions have the easiest online account opening process. EQ Bank takes the crown according to our forum members, with Tangerine Bank and Hubert Financial garnering some mentions as well.

GIC rates are mostly unchanged

Generally, GIC rate changes have been few and far between to start 2021.

Motive Financial has decreased its chart-leading GIC rates, leaving Wealth One Bank of Canada as the 5-year rate leader at 1.90%. Wealth One is tied for the top 3-year and 4-year GIC rates at 1.65% and 1.70%. Peoples Trust and LBC Digital have the highest 2-year GIC rate at 1.60%, and Peoples Trust has the highest 1-year GIC rate at 1.55%.

Promotions and credit card cash back offers

The latest addition to our promotions page is Tangerine Bank’s targeted 1.50% new deposit promo between March 9 and July 31. If you are a current customer, check your Insights tab to see if you have received the offer.

On our cash back website, we have a few elevated cash back offers for the rest of March: $60 cash back for signing up for a Tangerine Money-Back Credit Card or World Mastercard, and $100 cash back for signing up for one of a trio of Scotiabank credit cards: the Momentum Visa Infinite Card, Passport Visa Infinite Card, and Gold American Express Card.

New year, new banks

Looking for a new bank? Not only are there plenty of existing options from long-established financial institutions, but there are also brand new accounts to choose from.

New Ontario-only online bank Saven Financial (a division of FirstOntario Credit Union) has a 1.55% savings account and a set of GICs that include a 2.05% 5-year GIC.

Neo Financial, which launched last year, no longer forces you to apply for its credit card before you can open a savings account, although you must still use its mobile app to open the savings account for now. Neo Financial’s savings account, which is technically held behind the scenes by Concentra Bank, has an interest rate of 1.55%.

Lastly, Concentra Bank has its own savings account with a 1.55% interest rate, but for now this savings account is only available if you have a GIC with them.

1.55% is the second highest savings account interest rate on our comparison chart, whereas 2.05% for a 5-year GIC is better than any other rate on our GIC comparison chart.

Promos before RRSP season ends

Are you looking for a place to make your RRSP contributions before the March 1, 2021 deadline for the 2020 tax year? There are quite a few RRSP-eligible promotions on our promotions page, including the following:

• Manulife Bank: 2.00% on new deposits to TFSA and RRSP savings accounts until April 30 (on deposits made before March 12)
• DUCA Credit Union (Ontario only): 6.67-year cashable RRSP or TFSA GIC: 1.00% if you cash in after 1 year; 2.00% if you hold the GIC for the full 80 months. Promo ends March 31
• RBC: 1.5% promo for 3 months in a new savings account before April 30; 2.0% for 3 months if you also open a TFSA or RRSP
• Tangerine Bank targeted 1.75% new deposit promo between February 9 and June 30 for existing clients

More reading: Retirement savings rules, a CDIC contest, and tax credits

• A discussion thread on RRSP, OAS, and pension rules
• The CDIC (Canadian Deposit Insurance Corporation) has a free online “Earn & Learn” Game with a total of $10,000 in prizes
• Canadians can claim up to a $75 tax credit on their 2020 to 2024 income tax returns for digital news subscriptions
• Accounts payable: Paying suppliers and vendors electronically in Canada

What a difference a year makes for rates

Last January, we were talking about a 3.30% savings account at LBC Digital, and every financial institution on our savings account comparison chart had an interest rate of at least 2.00%, with the exception of Canadian Tire Bank. Today, Canadian Tire Bank leads our chart with a savings account interest rate of 1.80%, and most other rates are closer to 1.00%. Just last month, there were more rate decreases at LBC Digital and MAXA Financial, and Hubert Financial even decreased its rate twice in 7 days.

12 months ago, 5-year GIC rates were nearing 3.00%, and there was even a 1-year GIC promo at 3.00%. Today, we don’t even have a 5-year GIC at 2.00%. Although, you might not feel the impact of fluctuating rates as much if you’ve set up a GIC ladder.

But there is hope around rates, and not just for those who are in the market for a mortgage!

EQ Bank’s recently launched TFSA (and RRSP) offers the best rate around at 2.30%. They are also offering that rate for a TFSA or RRSP 3-month GIC. Even if you’re skeptical of how long the rate will last at 2.30%, EQ Bank doesn’t yet have any transfer-out fees.

Tangerine Bank continues to play the promo game, with January’s targeted new deposit promo offering 1.75% until May 31, 2021. Our promotions page features some other usual suspects such as Simplii Financial and CIBC, as well as a 1% transfer-in bonus from Meridian Credit Union for TFSA and RRSP funds.

Lots more personal finance news

• If you were a Simplii Financial client in May 2018 and were affected by a data breach, you might be entitled to receive some compensation
• Two-step authentication is coming to the Tangerine Bank login process
• StudioTax is no longer free, but there are other options if you want to get a jump start on this year’s income taxes
• What qualifies as excessive trading in a TFSA?
• Our cash back offers for the Scotiabank Momentum Visa Infinite Card, Scotiabank Gold American Express Card, and Scotiabank Passport Visa Infinite Card have been increased to $100

Canadian Tire Bank is still on top

We might end the year with Canadian Tire Bank still atop our savings account comparison chart with an interest rate of 1.80% — a rate that it has maintained since April 2020. It has led our chart since August 21, 2020 amidst consistent interest rate drops at all other financial institutions. Over just the past month, there have been decreases at Peoples Trust (from 1.35% to 1.30%), Outlook Financial (from 1.30% to 1.20%), AcceleRate Financial (from 1.30% to 1.20%), Implicity Financial (from 1.35% to 1.20%), and Ideal Savings (from 1.21% to 1.01%).

Canadian Tire Bank has, however, given up its lead for a TFSA to EQ Bank…

Registered accounts have arrived at EQ Bank

Just in time for the end of the year, EQ Bank has launched TFSA and RRSP savings accounts with a 2.30% interest rate. Both the TFSA and RRSP flavours currently have a 3-month GIC offer at 2.50%, which is higher than EQ Bank’s own 10-year GIC rate and all of the GIC rates on our comparison chart.

EQ’s splashy TFSA and RRSP rates are likely teaser / promo rates. In case you are planning your next move after a potential rate drop, for now their registered accounts don’t appear to have any transfer fees.

The TFSA December manoeuvre

The upcoming new year also comes with new TFSA contribution room for Canadian adults, and the 2021 limit will once again be $6,000. As always, if you’re looking to transfer existing funds, consider what we like to call the TFSA December manoeuvre, which involves withdrawing TFSA funds at the end of a calendar year to open up contribution room on January 1. That way you avoid the administrative hassle and potential fees of a direct TFSA transfer between financial institutions.

Personal finance is like a box of chocolates

• Some Oaken Financial clients get a free box of chocolates every year
• Remember to review our Promotions page regularly, which currently lists net new deposit promos at CIBC, Tangerine Bank, and Simplii Financial
• Check out our interview from last month on Bruce Sellery’s Moolala Podcast
• Tax planning in a questionable future tax environment

Neo Financial’s 1.70% savings account is on the way?

Canadian fintech startup Neo Financial is advertising a 1.70%, CDIC-backed savings account. It appears to be a hybrid account where you can pay bills and send Interac e-Transfers, but not write cheques. Although applications appear to be open for Neo Financial’s credit card, the savings account is still awaiting general launch, but when it does, its interest rate would rank just behind Canadian Tire Bank on our comparison chart.

TFSA and RRSP accounts coming to EQ Bank

Speaking of hybrid accounts, EQ Bank is on the verge of expanding its ever-growing product offerings to include TFSA and RRSP accounts by the beginning of 2021.

A very small savings account interest rate increase

Continuing the 2020 trend, more steady savings account interest rate decreases have hit several of the financial institutions we track, including Wealth One Bank of Canada (from 1.60% to 1.50%), Hubert Financial (from 1.40% to 1.30%), Peoples Trust (from 1.50% to 1.35%), and Ideal Savings (from 1.31% to 1.21%). Bucking this trend, ever so slightly, was Implicity Financial, which increased its savings account interest rate last week from 1.30% to 1.35%.

The news isn’t any better with GICs, as there is only one 5-year GIC remaining on our chart with a 2.00% rate. Talka Credit Union (Ontario-only) is currently offering a 4-year 2.00% GIC and a 5-year 2.10% GIC.

Online options for sending money internationally

Are the Scotiabank and EQ Bank international money transfer options worth a look, given that they can both be done entirely online? One advertises no fees and the other claims to calculate the currency exchange using the mid-market rate. Those are two sides of the same coin — at the end of the day, no matter what they advertise you’re going to pay something to transfer money internationally. Our latest article breaks down the numbers of just how much money arrives in the destination account.

Promos and more reading

• Tangerine Bank has a targeted 2.00% new deposit promo between November 4, 2020 and March 31, 2021
• Innovation Credit Union has a $300 sign-up bonus (if you meet certain conditions) for their no-fee chequing account if you open an account by November 30, 2020 (offer ended early on November 13)
• TFSA transfer charges do not count as a withdrawal and cannot be re-contributed the following calendar year?
• The new BMO eclipse Visa Infinite credit card gives you 5x the points on groceries, restaurants, gas, and transit purchases, but be sure to calculate the value of a point carefully