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The slow but steady downward march for interest rates

Relative to previous months, it’s been quiet for savings account interest rate changes lately. Over the past month, we’ve seen savings account interest rate decreases at Alterna Savings, Ideal Savings, Motive Financial, motusbank, and Wealth One Bank of Canada. There was even an increase in rates at Canadian Tire Bank.

Our comparison chart still has 13 out of 17 financial institutions with rates of 2.00% or more.

Frequent GIC rate leader Oaken Financial decreased its GIC rates several times over the past few weeks. In general, the spreads between a given financial institution’s 1-year and 5-year GIC rates have been getting smaller. The current top rate on our GIC comparison chart for a 1-year term is 2.15% at Hubert Financial, and the 5-year term leaders are Peoples Trust and Oaken Financial, both at 2.40%.

Luminus Financial actually has better GIC rates across the board than any other bank on our chart, but be sure to review their fees, which are reportedly higher than others.

Promotions to get you through the next few months

If you don’t mind moving your money around, you might find these short-term promotions tempting:

• Manulife Bank: 2.60% for the first 5 months if you open an Advantage Account before May 22, 2020. Unlike other financial institution savings account promos, the 2.60% rate is not guaranteed, and will drop if their base rate drops.
• RBC Royal Bank: 2.25% for the first 3 months in a new RBC High Interest eSavings account
• Existing Tangerine Bank customers: Targeted 2.50% new deposit promo for 5 months starting May 1, 2020
• New Tangerine Bank customers: 2.80% savings account interest rate for the first 5 months
• Scotiabank: up to $300 cash for opening an Ultimate Package or Preferred Package chequing account

More news: your taxes are almost due; coming soon for Hubert Financial; a caution on Credit Verify

• The delayed personal income tax filing deadline of June 1, 2020 (with September 1, 2020 as the deadline to pay any amounts owing) is fast approaching. If you still haven’t done your taxes, you might be interested in our 2019 survey of Canadian personal income tax filing habits, and review of free Canadian income tax software options
• Hubert Financial has unveiled its customer roadmap: two-factor authentication and online user interface improvements (including setting GIC maturity instructions online) are coming; no plans for chequing accounts or Interac e-Transfers
• Beware of using Credit Verify to check your credit score

Savings account interest rates are still holding up

After decreasing the key interest rate by 1.00% in the first 2 weeks of March, the Bank of Canada lowered it one more time by 0.50% to rest at 0.25%, where it has stayed through the April 15 scheduled rate announcement. Although we have seen related decreases to high interest savings account rates across our comparison chart, financial institutions have not yet passed on the full rate decrease via the savings accounts, at least not yet. See this graph tracking the key interest rate against 2 of the more consistent financial institutions for savers over the past 9.5 years (Hubert Financial and Achieva Financial), and how the gap has widened:

Last month, we were musing that we would be lucky to make it out of March with a 2.00% savings account, but 15 of 17 financial institutions on our chart currently have regular savings account interest rates of at least 2.00%. LBC Digital leads the pack at 2.25%, while Motive Financial has the highest TFSA rate at 2.20%. Peoples Trust has even increased its regular savings account and TFSA interest rates from 1.80% to 2.00%, reversing an equivalent decrease from March 6.

Some GIC rates actually increased, if only temporarily

Although GIC rates have generally dropped, several financial institutions increased their rates last month.

Tangerine Bank provided some shocking GIC rate increases by as much as 1.70%, with their 5-year GIC peaking at 3.20%, only to drop back to the middle of the pack a week later.

Oaken Financial had increased most of its GIC rates for about 1 month before decreasing them a bit, settling for what are currently the highest rates on our GIC comparison chart, with a 1-year GIC at 2.50% and 2- through 5-year GICs all at 2.65%. Remember that you can see a financial institution’s GIC rate history by clicking on the links in the “Updated” column on our chart. [Oaken Financial announced GIC rate decreases, effective 5 days after this article was published.]

If you’re looking at the short term, there are at least 2 current 2.45% 90-day GIC offers, from EQ Bank and Oaken Financial. [EQ Bank’s 90-day GIC rate dropped to 2.15% one day after this article was published.]

BC-only credit union Vancity has a promo for a 1-year 3.00% GIC. [Vancity ended this promo one day after this article was published.]

New deposit promos

If you have a Tangerine Bank account, check the online interface to see whether you have the latest 2.80% new deposit promo, which started April 3. They are offering the same 2.80% savings account interest rate for the first 5 months to new clients.

DUCA Credit Union (Ontario only) has a promo offer of 2.50% on new deposits to an Earn More Savings Account between April 2, 2020 and March 31, 2021. They also have a 1-year 2.75% GIC available until June 30, 2020 for customers who currently have funds in an Earn More WINTER Promo Savings Account.

As always, we have a dedicated page to track all known promotions.

Good news amidst the pandemic

• In case you missed it, the personal income tax filing deadline has been extended to June 1.
• US dollar deposits will be included in CDIC coverage starting April 30.
• You can donate your unused Dream Miles Air Miles to Kids Help Phone and Food Banks Canada.

Sub-2.00% savings accounts are soon to be the norm?

Only a couple of months ago, we were debating how long LBC Digital’s 3.30% savings account interest rate would last, and now we’ll be lucky to make it out of March if any of the financial institutions on our chart have a 2.00% savings account. On March 4, 2020, the Bank of Canada lowered its key interest rate by 0.50%, and less than 12 days later in an unscheduled rate decision, it lowered the rate by another 0.50%.

Most financial institutions have lowered their savings account interest rates, with the biggest drops from LBC Digital (from 2.80% to 2.25%) and Motive Financial (from 2.80% to 2.20%). Ideal Savings currently leads our chart at 2.31% for both the regular savings and TFSA accounts, but look for more changes on our chart in the coming days and weeks, if not by the time today is over. The Bank of Canada might still lower its rate further — consider that the US government just lowered its target rate for a third time in March. Some Canadian financial institutions haven’t even adjusted their rates after the first cut, and most of them haven’t yet reacted to the second cut.

The last time interest rates were this low, 1.75% was the top savings account interest rate (until EQ Bank launched), and Zag Bank was still a going concern.

Rare remaining higher rates

Targeted, limited-time higher rate offers, especially for net new deposits, started to become a hot topic of discussion on our site in 2013. 7 years later, this trend has continued. Tangerine Bank’s latest targeted new deposit promo (up to 3.00% for 4 months) started on March 2nd. Simplii Financial’s 2.80% offer ends on April 30, 2020, although someone has reported receiving an offer for 3.15%. DUCA Credit Union (Ontario only) has a 3.00% new deposit promo that recently got extended to June 30, 2020. All of these are listed on our promotions page. They also all appear to keep the total rate the same even if the base, non-promo rate drops. Be careful of other offers where the total rate can drop when the base, non-promo rate drops.

GIC rates have been dropping across the board, although not as deeply as savings accounts. This might be a good time to review whether you want to lock in any GIC rates before we see further rate drops. Oaken Financial and Wealth One Bank of Canada are at or near the top on our GIC chart for 1- through 5-year rates. The most recent round of Oaken Financial GIC rates decreases took effect on March 13, although they gave people 1 week of advance notice. EQ Bank is currently offering a 2.45% 3-month GIC, 2.45% being its previous savings account interest rate until it was decreased to 2.00%.

Good news: you might have uncashed cheques from the Government of Canada

The CRA online My Account area now has a section allowing you to see whether you have any uncashed cheques from the government. Be sure to switch to direct deposit in order to minimize your chance of future uncashed government cheques.

Changes to credit cards and more

• The Rogers World Elite Mastercard and Rogers Platinum Mastercard are popular with those who make purchases in foreign currencies. The cash back earn rate for both cards is getting worse starting June 2, 2020.
• Discussion thread: what’s the best cash back credit card for any purchase?
• Have you started thinking about filing your income taxes yet? As per our survey last year, the average Canadian files in early April.
• We are currently offering $65 cash back if you open a Scotiabank Ultimate Package Chequing Account and $55 cash back if you open a Preferred Chequing Account

Wealthsimple, the 5-year old online investment service, has introduced Wealthsimple Cash, which is being branded as a hybrid chequing and savings account with a 2.40% interest rate.

Wealthsimple Cash is the evolution of Weathsimple Save (originally called Wealthsimple Smart Savings, launched in partnership with EQ Bank). It is technically, as of today, mostly a savings account with an updated interest rate, but promises that some key chequing account features are coming soon.

The interest rate would rank well on our high interest savings comparison chart; it would be tied with Outlook Financial behind LBC Digital (3.30%), Motive Financial (2.80%), EQ Bank (2.45%), and MAXA Financial (2.45%).

Note that Wealthsimple Cash cannot be held inside a TFSA or RRSP. It is also not CDIC insured, although the deposits are stored at 2 of the 6 Canadian Big Banks — Wealthsimple declines to mention which ones specifically — and are CIPF insured.

Hybrid account: is it chequing or savings? It’s both!

Once the chequing account features are added, Wealthsimple Cash will be a hybrid chequing and savings account — designed so that you can do all of your day-to-day banking and savings needs in one account. This way, you don’t have to manage cash flow between the chequing and savings accounts, or worry about holding large minimum balances in order to avoid chequing acccount fees.

Currently, the other main competitor in the “hybrid account” space is the EQ Bank Savings Plus Account, which was originally a Wealthsimple Save partner. EQ Bank not-so-coincidentally increased its hybrid account interest rate from 2.30% to 2.45% 2 days after the Wealthsimple Cash announcement, in order to top Wealthsimple Cash’s 2.40% interest rate by 0.05%.

Wealthsimple Cash is a no-fee account with no minimum account balance. It will soon include bill payments and free Interac e-Transfers. After that, there are some differences in features between Wealthsimple Cash and EQ Bank.

Weathsimple Cash supports joint accounts, which are apparently coming soon to EQ Bank.

You’ll be able to make purchases and ATM/ABM withdrawals (with ATM fee reimbursements) with Wealthsimple Cash’s Prepaid Visa card (made of tungsten, as it appears to be trendy to have metal cards) rather than a traditional debit card. It won’t charge you a foreign currency exchange transaction fee if you make purchases in US dollars for example. (It’s a Visa after all, and there are quite a few pure credit card options that also waive the forex fee.) Although not quite the same, EQ Bank has its own forex partnership with Wise (formerly TransferWise) for sending money internationally.

FinTech and why you should care

Wealthsimple has been touted as one of the great examples of FinTech in Canada. But is the definition of “financial technology” actually important to you? When EQ Bank talks about moving their core banking system to the cloud, is it as good as they say it is?

Wealthsimple Cash and the EQ Bank Savings Plus Account are branded as a different type of account. However, while EQ Bank is a Schedule I Bank, Wealthsimple is not. It’s up to you to decide whether the lack of technical CDIC coverage at Wealthsimple is a deal breaker.

What is clear is that FinTech is helping to accelerate innovation in personal banking. 91% of Canadians believe that “banking has become a lot more convenient because of new technologies”. Wealthsimple Cash’s Prepaid Visa will be implemented in partnership with Peoples Trust, using a similar setup that Peoples Trust already has with the KOHO Visa and Stack Mastercard. Both of those cards have an offering that waives foreign currency exchange fees, and offer rewards such as cash back. KOHO even has a 2.00% savings account that is not CDIC-insured and that is “offered by Canadian ShareOwner Investments Inc” — a company owned by Wealthsimple.

Wealthsimple has been steadily adding to its offerings, including its commission-free stock trading platform Wealthsimple Trade and its recent acquisition of SimpleTax, one of the most used tax return software. This is helping to make more Canadians aware of FinTech’s reach, even though the Big Banks play a part in some of the offerings and still hold 90% of assets.