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New year, new TFSA contribution room

If you turn 18 or older this year, you received an additional $6,000 of TFSA contribution room on January 1, 2020. Remember that you can use a TFSA for investments other than a savings account. If you choose to use a savings account, there is no shortage of financial institutions with short-term TFSA promotions to start the year. Be sure to take into account what the regular interest rate is after the promo has expired, as well as any transfer-out fees should you wish to move your money elsewhere. Compare these offers against the regular rates on our comparison chart. If you decide to leave your money in the account all year, you might be better off forgoing a higher promo rate in favour of a decent regular rate.

For example, CIBC has a 2.75% TFSA promo until March 31, 2020. After the promo period has ended, the regular rate is 1.00%. That averages out to less than 1.50% in interest if you leave your money in for the entire year, which is worse than the regular rate for all of the financial institutions on our chart. There is also a $100 transfer-out fee should you wish to directly transfer your TFSA funds to another financial institution.

The first 60 days of 2020 also represent your last chance to apply RRSP contributions against your 2019 tax return, and some of the TFSA promos (including the CIBC one mentioned above) also apply to RRSPs.

Manulife Bank is offering 3.00% in a TFSA or RRSP until April 30, 2020 on new deposits made before March 13, 2020. Its regular rate is 1.20% and it currently has no transfer-out fee.

Meridian Credit Union has a 1% bonus promo for transfers (minimum $10,000) from other financial institutions into an RRSP or TFSA, which can stack with a 3.00% offer for 4 months in your first account. Its regular rate is 1.30% and it has a $75 transfer-out fee.

If you’re an existing Tangerine customer, its next round of targeted promos has been reported as being between 2.50% and 2.75% on new deposits made between January 6 and May 31, 2020. New clients can get 2.75% for 5 months. Both of these offers apply to regular savings accounts, TFSAs, RRSPs, RRIFs, and US dollar savings accounts. Tangerine’s regular interest rate for the regular savings account, RRSP, and TFSA is 1.05%, and there is a $50 transfer-out fee for registered accounts.

LBC Digital is the only widely available 3.30% savings account remaining

After only a few months, B2B Bank’s 3.30% savings accounts can no longer be opened directly by consumers, and requires a relationship with a financial advisor or deposit broker. However, LBC Digital still remains available to everybody with the same 3.30% savings account interest rate. How long this rate will last remains to be seen!

Take your pick for GICs

On our GIC comparison chart, Peoples Trust has the highest 1-year GIC at 3.00%, while Oaken Financial is the leader for all the longer terms, the highest being 2.90% for a 5-year GIC.

There is no shortage of other GIC promos elsewhere (especially at Ontario Credit Unions), including:

• RCU Credit Union (Ontario only), with a 2.80% 1-year GIC
• Parama Credit Union (Ontario only), with a 2.75% 1-year GIC
• Omnia Direct (Ontario only), with a 2.60% 1-year GIC, a 2.70% 2-year GIC, and a 2.80% 5-year GIC
• Ganaraska Credit Union (Ontario only), with a 3.00% 3-year GIC
• DUCA Credit Union (Ontario only), with a 3.00% 5-year cashable GIC
• Weyburn Credit Union (Saskatchewan only), with a 3.35% 54-month (4.5 years) GIC

Check out our continuously updated promotions page for more!

Cash back and more news

• Meridian Credit Union and motusbank now have a Price Drop feature in their mobile apps, where you submit receipts and they alert you (and sometimes refund the price difference) if your purchase is cheaper elsewhere
• $110 cash back (for the rest of January from High Interest Savings), and 10% cash back on all purchases for the first 3 months with the Scotiabank Momentum Visa Infinite Card
• $45 cash back (for the rest of January from High Interest Savings) and 4% in Money-Back rewards in up to 3 categories for the first 3 months with the Tangerine World Mastercard and Tangerine Money-Back Credit Card

LBC Digital: A second 3.30% savings account from Laurentian Bank

Just a few months after unveiling B2B Bank with a 3.30% savings account interest rate, Laurentian Bank has now launched LBC Digital with yet another 3.30% savings account, as well as a no-fee chequing account. LBC Digital has separate CDIC coverage from B2B Bank. The 2 financial institutions are quite similar, although LBC Digital is not officially available in Quebec yet, whereas B2B Bank is. (People have reported that you can still open an LBC Digital account in Quebec if you register through its English site.) If you already have a B2B Bank account, you must use a different e-mail address to sign up with LBC Digital.

Some forum members have had a smooth experience with LBC Digital so far, but others have reported problems logging in, errors in the online interface and features, and struggles to even open an account. For the time being at least, the bottom line is that both B2B Bank and LBC Digital offer a 3.30% interest rate that tops our comparison chart and beats all of the numerous new deposit and new account promos we track. Read more about other people’s experiences (and share yours) with LBC Digital on our forum.

GIC leaders and non-standard GIC terms

With its latest across-the-board GIC rate increases, Oaken Financial is the current outright leader on our GIC chart for 1-year (2.55%), 2-year (2.65%), 3-year (2.70%), 4-year (2.80%), and 5-year (2.90%) terms. It also has a 2.60% 18-month GIC.
If you live in Ontario, you might want to look into Buduchnist Credit Union, which has the only GIC promos that beat the Oaken Financial rates, albeit for some non-standard terms: 11 months (2.50%), 23 months (2.70%), and 44 months (2.85%) if you open the GICs before January 11, 2020.

Holiday reading: TFSA limit, Amazon.ca Mastercard, more free Interac e-Transfers

• The 2020 TFSA contribution limit will once again be $6,000. That’s a cumulative total of $69,500 in contribution room if you turned 18 or older in 2009.
• In case you are considering transferring TFSA funds between financial institutions, this is your annual reminder to consider withdrawing the funds near the end of the year to be re-deposited elsewhere in January. This might save you some transfer fees and administrative hassle.
• After a bumpy launch and then unlaunch a few months ago, looks like the Amazon.ca Mastercard is open to applications again.
• Do you feel comfortable entering your online bank username and password when setting up bank account external links? Join the discussion.
• Tangerine Bank now has free Interac e-Transfers. It joins quite a few financial institutions (including but not limited to Alterna Bank, B2B Bank, EQ Bank, LBC Digital, Motive Financial, and Simplii Financial) that have free Interac e-Transfers without requiring a minimum balance in your account.

Work for your GIC deals

We’ve seen very little movement on our GIC chart over the past month. The spread between the best 1- and 5-year rates is only between 2.50% and 2.85%.

Look a little closer at some lesser-known financial institutions, and there are some better deals to be had, such as the following:

• Energy CU, with branches in the GTA, has a 3-year 3.40% GIC
• 1Q Bank has a unique 36-month GIC where you can earn up to 3.00%, although it involves setting and achieving deposit goals over the term
• Talka Credit Union (Hamilton, Ontario) has a 3.00% 5-year GIC

Savings account interest rates beat GICs?

Look even closer, and in some cases, keeping your money liquid might offer you a better rate than a GIC.

We have now added B2B Bank to our comparison chart. It tops the regular savings account chart at 3.30% — a rate that it has kept since B2B Bank first appeared on our radar on August 12, 2019. Note that it does not have registered accounts, at least not yet. If you’ve had any issues opening an account with B2B Bank, check out other people’s experiences in our forum. The next highest rate on our chart is Motive Financial 2.80%, then MAXA Financial (2.45%), Ideal Savings (2.40%), and Outlook Financial (2.40%).

For a TFSA account, MAXA Financial still leads our chart at 2.45%, followed by Ideal Savings, Motive Financial, and Outlook Financial at 2.40%.

Elsewhere, Alterna Bank has decreased its regular savings and TFSA interest rates from 2.30% to 2.25%.

There are quite a few active deposit promotions, including:

• Simplii Financial new deposit promo for 6 months: 2.80% between November 1, 2019 and April 30, 2020. Existing clients need to register for the offer.
• If you had a Tangerine Bank promo that recently ended, check to see whether you received the latest offer, for 2.50% on new deposits until April 30, 2020
• RBC’s new account promo (2.50% interest for 3 months when you open your first RBC High Interest eSavings Account) has been extended to January 31, 2020 (previously December 13, 2019)
• La Capitale’s (Quebec only) new deposit promo is 3.00% in High-Interest Savings Accounts between October 17, 2019 and January 31, 2020; and 3.00% in TFSAs between October 17, 2019 and February 28, 2020
• DUCA Credit Union (Ontario only): 2.30% on new deposits to an Earn More Savings Account until March 31, 2020

Credit card cash back offers and a free personal finance course

On our cash back site for the rest of November, you can get $80 if you successfully sign up for one of a few Scotiabank credit cards: the Scotiabank Momentum Visa Infinite Card, Scotiabank Passport Visa Infinite Card, and Scotiabank Gold American Express Card.

Need to improve your personal finance knowledge? McGill University is offering a free online personal finance course!

In other news, if you have the Home Trust Preferred Visa, starting in 2020, it will still waive the foreign currency transaction fee, but will no longer give you 1% cash back for such purchases. (Other purchases will continue to earn 1% cash back.)

B2B Bank still has a 3.30% savings account

The only change on our comparison chart over the past month is that Peoples Trust has decreased its TFSA interest rate from 2.25% to 2.10%.

Although we have not yet listed it on our chart, B2B Bank has kept its non-registered savings account interest rate of 3.30% for about 2 months now. Users on our website have reported mixed reviews on the account opening process; regardless, B2B’s 3.30% rate tops chart leader Motive Financial’s 2.80% rate.

Protection from low GIC rates

ICICI Bank of Canada made it back onto our GIC comparison chart, held the lead on 5-year GIC rates at 3.00%, and someone even reported getting an additional 0.10%. It only topped our chart for a few weeks, though, as ICICI introduced some steep rate decreases, such as a new 5-year GIC rate of 2.50%. With the Peoples Trust 3.00% 15-month GIC promo now down to 2.50%, there are no current reported GIC rates of 3.00%. Oaken Financial leads the 2- through 5-year rates, including 2.85% for a 5-year GIC, while AcceleRate Financial has the highest 1-year rate at 2.55%.

To attract savers who don’t know whether to wait for rates to go up again, Meridian Credit Union has a new type of GIC called a “Raise the Rate GIC”, available on 3- and 5-year terms, which works roughly as follows: if a similar term GIC goes up while you hold the GIC, you can match that higher rate once for a 3-year GIC and twice for a 5-year GIC. Its current rates are 2.60% for the 3-year GIC and 2.70% for the 5-year GIC.

Sign-up bonuses and whether it’s worth keeping minimum balances in chequing accounts

New on our promotions page is another iteration of National Bank’s new deposit promo: 2.75% in High Interest Savings Accounts between October 1 and December 30, 2019.

If you previously participated in one of this year’s Manulife Advantage Account interest rate promotions, the base rate has dropped again. This means that if your 6-month new deposit rate was initially 3.25%, it is now 2.95% after the latest 0.05% drop.

As was reported last month, several of the Canadian big banks have new deposit promotions on their savings accounts. Almost all of them have sign-up bonuses on their chequing accounts as well. For example, the new Scotiabank Ultimate Package chequing account has an up to $350 bonus (if you meet certain terms). It has a $30.95 monthly fee that is waived if you have $5,000 balance in account or $30,000 combined in chequing and savings accounts. Features include a maximum credit card annual fee rebate of $139, free cheques, free Interac e-Transfers, free global ATM withdrawals, free overdraft protection, and a 0.10% bonus on the savings account interest rate. Are the Scotiabank Ultimate Package features worth the forgone interest if you keep the minimum monthly balance in a 0.00% chequing account? Read our analysis.

Secure Interac e-Transfers with Autodeposit and Request Money

The security of Interac e-Transfers is lower if you choose weak transfer passwords. Two ways to eliminate the need for Interac e-Transfer passwords is to set up Autodeposits and use the Request Money feature. Motive Financial recently introduced support for both features. With Autodeposits, you can configure any Interac e-Transfers you receive at certain e-mail addresses to go immediately into a specific account. One way to describe the Request Money feature is that it’s the “Send Interac e-Transfer” feature in reverse, where the recipient starts the payment process by sending out a request. Once the sender responds to that request, the money is immediately deposited into the account the recipient originally specified. If the recipient uses an account that has free Interac e-Transfers (such as the Motive Financial Cha-Ching Chequing Account), the sender might not pay a fee.

More news: Weathsimple buys SimpleTax; Tangerine fees; and Tangerine cash back

You have plenty of time before you need to file next year’s personal income tax return. However, some recent news might affect how you prepare your return: investment management service Wealthsimple has purchased SimpleTax.

Tangerine Bank features in the remainder of our news this month:

• As a follow-up to our article on how to avoid NSF charges, we documented how to apply for overdraft protection at Tangerine Bank, which is free if you cover the overdraft by 9:00pm Pacific time / 12:00am Eastern time on the night that your account is overdrawn.
• Tangerine is increasing many of its fees starting January 1, 2020, including $50 for a book of 50 cheques (after the first free one on each chequing account).
• Our cash back offer for the Tangerine Money-Back Credit Card (with no annual fee and 4% Money-Back Rewards on purchases in up to 3 Money-Back Categories for the first 3 months) has increased to $60 for the rest of October.

Scotiabank recently launched its Ultimate Package chequing account, with a whopping $30.95 monthly fee (or $371.40 per year). This fee is waived if you keep at least a $5,000 minimum daily closing balance in the chequing account, or a combined balance of $30,000 between the chequing account and the Scotiabank MomentumPLUS Savings Account. Instead of comparing the value of the account against the monthly fee (which the bank could have set at any amount), let’s presume that you have the cash to meet one of the minimum account balances to waive this monthly fee. We can easily price out whether it’s worth it over the long-term considering forgone interest.

What forgone interest? Well, the Scotiabank Ultimate Package pays 0.00% interest, and if you’re going to keep so much money in your chequing account, you certainly won’t be earning up to 2.80% (at Motive Financial) in one of the bank accounts in our comparison chart. Even if you earned 2.30% (currently offered at EQ Bank; 75% of financial institutions on our chart offer 2.30% or more), let’s do a quick calculation: to be safe, you keep $1,000 more than the $5,000 minimum balance in the Scotiabank Ultimate Package account for a total of $6,000. (If your end-of-day balance dips below the minimum balance even once, you have to pay that month’s $30.95 fee.) That earns $0 at Scotiabank, but $138 at EQ Bank. If you instead put $31,000 in the Scotiabank MomentumPLUS Savings Account, you’ll earn $341 per year at a base interest rate of 1.10%, but $730 at EQ Bank, for a forgone interest total of at least $389 (since this scenario puts nothing in the chequing account).

Are you going to get between $138 and $389 of value per year from the Scotiabank Ultimate Package? Let’s look at the features it provides:

• Unlimited debit transactions and unlimited Interac e-Transfer transactions: Many other financial institutions offer this, including Alterna Bank, Motive Financial, and Simplii Financial, which have free chequing accounts with no minimum balances. As well, Scotiabank’s own Basic Plus Bank Account, which has a monthly fee of $10.95 or $0 if you carry a minimum daily closing balance of $3,000, offers 25 free debit transactions and 10 free Interac e-Transfers per month.
• Up to $139 annual fee waiver each year on select credit cards: The applicable credit cards and their annual fees are Scotiabank Gold American Express ($120), Scotiabank Passport Visa Infinite ($139), Scotia Momentum Visa Infinite ($120 and currently first year free), and Scotiabank Value Visa ($29). Those are some decent credit cards, with the first 2 waiving the foreign currency exchange fee of 2.50% (and the first 3 currently available on our cash back site). Keep in mind, however, that only with 1 of those cards will you get the full $139 annual fee rebate value.
• 0.10% bonus on the MomentumPLUS Savings Account: The regular interest rate in this savings account is only 1.10%, so you will earn higher interest by putting your savings dollars in a different financial institution, although you would lose the convenience of easier cash flow management by keeping both chequing and savings accounts at Scotiabank.
• Unlimited free Global non-Scotiabank ABM withdrawals: This can be $5 per withdrawal, although note that the foreign bank or ABM/ATM operator might still charge you an additional fee.
• No monthly Overdraft Protection fee: This is $5 when used, although note that Scotiabank-owned Tangerine Bank currently offers this for free if you pay off an overdraft balance on the same day.
• “Ultimate” (higher) rates on select GICs: That’s currently 2- and 3-year GICs (2.25% and 2.26%); but you can most definitely get higher GIC rates elsewhere!
• 10 free equity trades at Scotia iTRADE in your first year (approximately $100 value) and 5 free equity trades every year after: This is good if you want to use Scotia iTRADE or a similar big bank investment account. There are, however, alternatives that offer commission-free trades.
• Free personalized cheques and drafts: You get 1 book of 100 cheques per year. Tangerine Bank gives you a free first cheque book, then $20 for each subsequent book of 50 cheques (going up to $50 in January 2020). The cost of bank drafts can add up. At Motive Financial, bank drafts cost $7.50 each.
• $55 safety deposit box annual fee waiver: If you need a safety deposit box, you definitely cannot get one at a branchless bank.
• No monthly account fee on a Scotia U.S. Dollar Daily Interest Account: The monthly fee on such an account is $1 per month, or $12 per year. Note, however, that Tangerine Bank offers a free US dollar account that currently offers 0.45% interest versus 0.15% with Scotiabank.

The features when taken as a whole can be compelling, but you must really take advantage of many of them in order to come out ahead. For example, if you want to carry the $139 annual fee Scotiabank Passport Visa Infinite, make several global ABM/ATM withdrawals in a year (3 x $5 savings), use overdraft protection frequently (3 x $5 savings), use Scotia iTRADE ($50 savings), need bank drafts (3 x $7.50 savings), go through many cheques in a year ($50 savings), and need a safety deposit box ($55 savings), that’s a total of $324 in savings plus whatever value you put on a big bank with lots of physical branches. You could also take a short-term view and take advantage of the up to $350 Scotiabank Ultimate Package sign-up bonus (if you meet certain conditions and open an account by the end of 2019), and the Scotiabank MomentumPLUS Savings Account promotion if you make a deposit before November 30, 2019.

If you’re only in it for the free Interac e-Transfers, write a few cheques in a year, and need bank drafts and international ATM access once in a blue moon, you have plenty of other cheaper options with better savings account and GIC interest rates. Be sure to do your homework and compare also against the BMO and TD “premium” chequing accounts with high monthly fees that can be waived with a minimum monthly balance.