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Savings accounts are flat; GIC rates continue to rise

Over the past month, we’ve seen no notable savings account interest rate changes for the financial institutions we track. The savings account interest rate leaders are still EQ Bank (2.30%), Hubert Financial (2.10%), AcceleRate Financial (2.05%) and Alterna Bank (2.05%). The TFSA leaders are similar: Hubert Financial (2.10%), Alterna Bank (2.10%) and AcceleRate Financial (2.05%). The Bank of Canada kept its key interest rate unchanged on April 18, although with inflation rates consistently above 2.0% this year (among other factors), we’ll be watching for the next interest rate announcements on May 30 and July 11.

However, we’ve seen plenty of interest rate increases on our GIC rates comparison chart. Motive Financial raised most of its GIC rates 4 times over the past 1 month, is the current 5-year GIC leader at 3.47% (although note that Meridian Credit Union currently has a 3.50% 5-year GIC promo for new deposits only), and along with Oaken Financial, has all of its 2- to 5-year rates at or above 3.00%. Oaken Financial is the current 1-year GIC leader at 2.80%. Peoples Trust, Implicity Financial, Tangerine Bank have all increased their rates as well since the middle of April.

Check our promos page for additional GIC rates, including a 3.00% 1-year GIC from Ontario-only Omnia Direct.

Alterna Bank unlimited Interac e-Transfers

Starting on June 1, 2018, Alterna Bank’s no-fee chequing account will offer unlimited Interac e-Transfers. Its chequing and savings accounts previously came with 2 tree Interac e-Transfers.

Is this becoming a welcome trend? Unlimited Interac e-Transfers was a key feature of the Simplii Financial launch back in November, and EQ Bank offers 5 free e-Transfers per month.

Other than that, it’s been relatively quiet for savers lately! Here are some of the stories we’re tracking:

• Tangerine Bank: targeted net new deposits savings account promotion extended through November 30
• Rogers World Elite Mastercard coming soon: no annual fee, 4% back on forex purchases, 1.75% back on other purchases; better than recently devalued Rogers Platinum Mastercard but with higher income requirement
• Simplii Financial GIC rates improving, including 2.50% 1-year GIC

Ideal Savings: short-lived stint at the top

On March 15, 2018, Ideal Savings made its 2.50% savings account promo somewhat permanent, guaranteeing its savings account interest rate until the end of 2018. That made it the Canadian leader for both its regular savings and TFSA interest rates… but for just less than 1 month! On April 13, Ideal Savings then lowered both its savings account and TFSA interest rates to 2.00%. Accounts that had been opened by April 13, 2018 will continue to receive 2.50% until the end December 31, 2018. This was somewhat reminiscent of when Ideal Savings first opened at the end of 2016 with a rate that dropped by 0.75% in less than 1 month. It’s getting hard to keep up with all their rate changes, but those who got in at the right time are enjoying a great rate.

EQ Bank is back to being the regular savings account leader on our comparison chart at 2.30%. Alterna Bank and Hubert Financial are tied for the TFSA lead at 2.10%.

Wealthsimple launches a savings account

Online investment management service Wealthsimple recently launched a high interest savings account in partnership with EQ Bank, offering a 1.70% interest rate. For those who have more than $100,000 to put in the savings account, Wealthsimple will automatically split the deposits between different CDIC members to insure up to $900,000. You can of course get a better interest rate at most of the financial institutions on our comparison chart, including directly with EQ Bank, but the Wealthsimple account provides some additional convenience for customers who use its investment services.

GIC competition continues

While savings account interest rates continue to remain flat for the time being, it’s currently a race to the top for GICs. The current leaders on our GIC comparison chart for non-redeemable rates are:

• 5-year GIC: Motive Financial at 3.30%
• 4-year GIC: Hubert Financial at 3.25%
• 3-year GIC: Oaken Financial at 3.15%
• 2-year GIC: Oaken Financial at 3.10%
• 1-year GIC: Oaken Financial at 2.75%

Some promotions offer even higher rates, including a 3.50% 5-year GIC at Meridian Credit Union on new money only and an Ontario-only 4.00% 5-year GIC at Ganaraska Credit Union that we mentioned last month.

Scotiabank Momentum PLUS Savings Account promo: read the details very carefully

Scotiabank is currently advertising up to a 2.65% interest rate on net new deposits if you leave the money in a Scotiabank Momentum PLUS Savings Account for up to 360 days. But it’s much more accurate to say it’s up to 1.80% on net new deposits, and an additional 0.85% during the period before June 29, 2018. Over the entire period, the maximum rate is closer to 2.0% or lower. Once you read the promotion details carefully, you might consider a savings account with a higher regular rate or a cashable GIC from elsewhere.

Tangerine’s creative and never-ending promos

Scotiabank-owned Tangerine Bank’s latest promotion is even more targeted than usual. Some savers have received a phone call from Tangerine’s marketing department offering 2.75% for 270 days — essentially 9 months — on the entire balance.

Tax time: tax on interest and automated filing

It’s tax time again; remember that non-registered and non-TFSA savings interest and GICs are taxed as income, whereas eligible dividends and capital gains receive some tax breaks. One forum member feels that this punishes savers, although their call for an alliance to represent the interests of savings investors was met with crickets!

New this year from the CRA is an automated “File my Return” service for low- and fixed-income Canadians. Others with simple returns might also be interested in the “Auto-fill my return” feature available in many tax return software products that automatically reads tax information such as on a T4 that has been submitted to the CRA.

New GIC rate comparison table

Over the last month, none of the financial institutions that we track have changed their regular savings account interest rates. However, GICs are dominating the discussions in our forum.

As a result, we’ve launched a GIC rate comparison table that tracks all of the financial institutions that are on our main comparison chart. The new GIC chart is updated daily.

The chart does not track special terms or promotions from other banks, but we try to track them on the promotions page. GIC promos represent about half of our list of promotions, and we’ve seen continued rate increases to several financial institutions’ standard GIC rates over the past couple of weeks as well.

Ganaraska Credit Union (Ontario only) with the latest 4.00% GIC

We told you in the last Savers Roundup about a BC-only offer of a 4.00% annual return for a 33-month GIC at Coast Capital Savings, which is still valid until March 20, 2018. Now, Ganaraska Credit Union is offering a 4.00% 5-year GIC in Ontario only.

That’s much higher than the highest current 5-year GIC that we track at 3.26% from…

EQ Bank now offers GICs

2 years after the launch of its high interest savings account, EQ Bank now offers GICs with very impressive rates, including the aforementioned leading nationally-available (outside of Quebec) 5-year GIC. Its other rates rank in the top 3 on our GIC chart.

Brim Financial and Scotiabank launch no-forex fee credit cards

A not-so-niche category of credit cards is those that do not charge a 2.50% fee for foreign currency (such as US-dollar) charges. We’ve covered this quite a bit lately, and listed the options that remained since the Amazon and Marriott Visas from Chase were cancelled.

It didn’t take long for 2 new cards to fill the void: one from a completely new player and another that is the first of the big banks to eschew the foreign exchange fee. Both are surprising.

The previously unknown Brim Financial has started to accept — but not yet process — applications for 3 no-forex fee Mastercards, including one that doesn’t have an annual fee. Its rewards system and set of included insurance are unique, although Brim is of course unproven so far.

Scotiabank just added a Visa Infinite version of its “Passport” credit cards that has a $139 annual fee but no 2.50% foreign currency exchange fee. Among its other features is a set of 6 airport lounge passes to appeal to frequent travelers. It was long-speculated that all of the big bank credit cards would continue to charge the foreign currency exchange fee because they simply make so much money from that hidden charge; the landscape has now started to shift!

The new Brim Financial and Scotiabank cards are especially welcome news given that the Rogers and Fido Mastercards are getting worse starting on May 23, 2018. The rewards rate is going down from 4.00% to 3.00% on foreign currency purchases, making it effectively 0.50%. The earn rates on Canadian dollar purchases are both now 1.25%, down from 1.75% for the Rogers Mastercard and 1.50% for the Fido Mastercard. Note that there is also no more $29 annual fee for the Rogers Mastercard.

Simplii Financial promo extended for some, and at different rates

The Simplii Financial 3.00% new deposit promo expired at the end of February, but some savers got an extension of the offer through June 30, 2018. This time, however, it was not only targeted but the offer was also different rates: 1.75% for some, 2.50% for others, and no extension for everybody else.

More rate increases and a 4.00% GIC

Last month, we saw the Bank of Canada raise its key interest rate by 0.25%, and savers are slowly starting to see the benefits.

Outlook Financial, Achieva Financial, and Implicity Financial have all increased their regular savings and TFSA interest rates from 1.85% to 2.00%. AcceleRate Financial’s main accounts sit at 2.05%. Alterna Bank’s regular savings account is now at 2.05%, while its TFSA interest rate is now at 2.10%. Hubert Financial made 2 separate increases in the past month, and its regular savings and TFSA interest rates now sit at 2.10%.

EQ Bank is still the leader on our comparison chart with a 2.30% rate on a regular savings account. Ideal Savings is tops for a TFSA at 2.25%.

On the GIC side, Oaken Financial is the current leader with a 5-year GIC at 3.25%, and its other GIC rates are rumoured to increase again tomorrow, with every term 18 months or longer offering a rate of at least 3.00%.

If you’re in BC, Coast Capital Savings blows all GIC rates out of the water with a current promotion for a 4.00% 33-month GIC on new money of at least $500 until March 20.

Manitoba credit unions: why such consistently higher rates?

Our comparison chart is full of Manitoba credit unions, and whenever interest rates start to rise, more people start to ask why the province’s financial institutions consistently offer higher rates. Is it simply because they are more efficient? Follow the discussion here.

Other credit unions available to out-of-province applicants

Why don’t we see more credit unions operating nationally? Manitoba, Saskatchewan, and Ontario technically allow credit unions to accept out-of-province members, but those financial institutions aren’t allowed to operate or solicit business outside of their respective provinces. In fact, when Hubert Financial first launched, they got in trouble for advertising outside of Manitoba.

To operate nationally, Ontario credit unions can either create a separate bank (such as Alterna Bank; also see Meridian Bank, rumoured to launch some time later this year) or adopt federal mandates for their existing financial institutions. There are reasons for them to not do the latter, including how provincial deposit insurance is higher than the 100K limit offered by the CDIC.

BC, Alberta, and Quebec don’t allow their credit unions to accept out-of-province members by default. However, Coast Capital Savings is making moves to become a federal credit union.

Hubert Financial referral promo: $25 for you, $25 for a friend or family member

For the month of February, Hubert Financial has a referral promotion offering $25 to open a new account, as well as $25 to the person who referred you. Looking for someone to refer you? Post a request in the forum thread.

More Tangerine promos

Didn’t get Tangerine’s net new deposits promo (2.50%) last month? You might have received one this month instead, so be sure to check your account! They’ve also essentially rolled over their new customer promotion, offering 2.50% for 6 months in a new savings account.

Speaking of promotions, the start of the year has seen quite a lot of them, so be sure to check our promotions page, especially if you’re currently taking part in Simplii Financial’s 3.00% net new deposits promo that is set to expire at the end of February.

Rising interest rates: how are savers affected?

The Bank of Canada raised its key interest rate on January 17, 2018 by 0.25%. It now sits at 1.25%.

10 years ago, the key interest rate was being lowered from 4.25% to 4.00%, down from its latest peak a few months earlier at 4.75%. The rate bottomed out at 0.50% in July 2015.

What does this all mean for savers? The key interest rate is now up 0.75% from the 2015 low, but our savings account comparison chart history shows that savings account interest savings are roughly where they were in 2015; where they’ve increased, such as with AcceleRate Financial, it’s been by a paltry 0.10%.

Will we see more savings account interest rate increases this year, especially with the key interest rate widely expected to increase again?

What we do know is that many mortgage rates increased in advance of the January 17, 2018 announcement, and GIC rates have increased across the board as well. The highest 5-year GIC rate is, at the time of this writing, 3.15% at Oaken Financial. We’d already seen a round of increases in December, when the highest advertised 5-year GIC was 3.00%.

It’s TFSA season again

It’s 2018, which means that if you turn 18 years of age or older this year, you have an additional TFSA contribution room of $5,500. If you were 18 in 2009 (when the TFSA was introduced) and have never contributed to a TFSA, you should have $57,500 of contribution room now.

Some common TFSA discussions are popping up again on our discussion forum, such as:

• Whether to prioritize TFSA or RRSP contributions
• What to put in your TFSA, remembering that it doesn’t necessarily have to be a “savings account”

Tangerine’s early 2018 net new deposits promo

Tangerine Bank has been running a targeted, quarterly net new deposits promo since 2015. Throughout 2017, the parameters around start date and a range of rate offers (different per person) were predictable. For January 2018, however, they changed up a few things:

• The promo started a day earlier than usual
• The rate period is for 5 months (until May 31) instead of 3 months
• Everybody who received the offer got the same 2.50% rate
• You have to activate the offer

It’s still a targeted offer, though, so if you have not already received an e-mail about it, be sure to log in to your Tangerine account and look under the “Insights” tab to see if you’ve received the offer. (And if you have received the offer, be sure to click the “Activate” button.)

The Tangerine offer overlaps with a couple of previously reported net new deposit promos: 3.00% at Simplii Financial until February 28, 2018 and 2.50% at Ideal Savings until April 30, 2018.

If you’re not yet a Tangerine customer, there is a separate promo if you open a chequing and savings account: you’ll get 2.40% in the savings account for 6 months.

More rate updates and promos

Last month, Alterna Savings increased its TFSA savings account interest rate from 1.90% to 2.05%. At the time, they did not indicate that this was a promo rate. However, they have since posted (thanks to some Twitter pressure) that the 2.05% rate is only good until March 31, 2018, at which point it is scheduled to decrease to 1.95%. 1.95% is still near the top of our comparison chart. Nevertheless, this serves as a good reminder that not only are regular savings account rates always subject to change, but you should be extra careful with TFSA contributions, since your funds are “stickier” inside a TFSA due to the contribution room rules and transfer fees.

Another promo, this time from CIBC: they have a net new deposits promo offering a 2.30% interest rate on regular savings, TFSA, and RRSP savings accounts between October 16, 2017 and March 31, 2018. Note that for the regular savings account, the balance must be over $5,000 for the promo to apply.

No more Amazon.ca Visa (and Marriott Visa), officially

The Amazon.ca Visa, best known for not charging a 2.5% foreign currency exchange fee, was closed to new applications in April 30, 2017. Existing accounts remained open… until now. As of March 15, 2018, all existing Amazon Visa and Marriott Visa (which also waived the foreign currency exchange fee) cards will be completely cancelled.

Current alternative cards that either don’t charge the foreign currency exchange fee or that provide an additional rebate on such purchases include:

• Rogers Platinum Mastercard
• Fido Mastercard
• Home Trust Preferred Visa
• HSBC Premier World Elite Mastercard (but you need to be an HSBC Premier member)
• Meridian Visa Platinum Travel Rewards and Meridian Visa Infinite Travel Rewards (but you need to be Meridian Credit Union member)