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Advantages of TFSA withdrawals in December

If you are planning to move your TFSA funds from one financial institution to another, withdrawing funds from your current TFSA in December and then depositing them in the new financial institution in January has some advantages.

Most institutions charge a transfer fee for moving TFSA money elsewhere, and there is also the added inconvenience of completing the forms to arrange the actual transfer. However, withdrawing money (that is not locked in, such as in a GIC) from a TFSA to a chequing or savings account at the same institution is free. Any withdrawal that you make will open up contribution room for the following year, but if you don’t have excess TFSA contribution room, you still have to wait for the following calendar year to re-contribute. Make a withdrawal as late in December as possible in order to minimize the number of days the funds are outside of the TFSA for that year. Then, do a normal transfer to the other financial institution and deposit the funds into a TFSA once 2018 has arrived!

An interesting point to keep in mind, especially during the rest of the year, is that some financial institutions will cover the cost of the transfer fee depending on the size of the account.
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Lastly, the 2018 TFSA contribution limit has been announced. It will remain at $5500.

GIC rate increases: a refreshing race to the top

We haven’t seen big increases in regular savings account and TFSA interest rates lately, but GIC rates have seen some impressive increases.

Motive Financial was briefly leading the pack with a 5 year GIC rate of 3.02% which was covered in the Savers Roundup November 2017. This rate is now slightly reduced to 2.97%, which is still attractive.

In the meantime, Accelerate Financial, Implicity Financial, Hubert Financial, and Oaken Financial have become the best options with 5-year GIC rates of 3.00%, subject to change of course.

Outlook Financial and Maxa Financial have also increased their GIC rates and are quite competitive as well.

While we’re on the topic of GICs, be careful about “escalator” GICs that often tout a very high rate in the last year — it’s important to average out the rates in order to do a proper comparison against GICs that offer the same rate for each year in the term. (See an escalator GIC example from Luminus Financial.)

Also worth mentioning is that when choosing a GIC with a specific financial institution, first check their posted rate and compare it with the rate posted through your online or discount broker, which might offer a better rate for the same GIC.

BMO World Elite Mastercard changes, mostly worse

Just announced are some significant upcoming changes to the BMO World Elite Mastercard as of January 15, 2018. Currently, 100 points earned on the card gets you $1 in travel rebates. As of January 15, 2018, that changes to 140 points for $1 in travel rebates, which is a 40% decrease in the purchasing power of the rewards.

According to its website, BMO promises to offset this change for points you’ve already accumulated by increasing your existing points balance accordingly.

There are some positives. You will soon be able to earn 3 BMO Rewards Points — instead of 2 — for every $1 spent on eligible travel, dining, and entertainment purchases. Overall, this makes the redemption rate slightly better for purchases made in those categories, but much worse for other purchases. Also, some gift card rewards, as well as BMO financial contributions, will require fewer points. And BMO Rewards will be able to used as a general statement credit, although undoubtedly at a lower rate than travel redemptions.

Simplii Financial applications for snowbirds

Snowbirds who want to open an account with the recently rebranded Simplii Financial, especially to take advantage of its 3.00% promo — on new deposits into any savings account until February 28, 2018 — should take note of Simplii’s requirement to show personal identification at a Canada Post outlet. This is of course tricky for someone in Florida for the winter. One workaround is to have Simplii Financial mail you a signature card. Then, sign it with and send it back with a $25 cheque with your printed name and address from your other bank.

Northern Credit Union 4.00% promo (which is now over)

Northern Credit Union recently came out with a savings account promo offering a 4.00% rate… for only 1 month of deposits. You had to open an account by November 27, so this was a short-lived promotion with a short effective time frame but this was the first promo in recent memory with such a high savings account interest rate.

Other interest rate changes for savers

The Canadian Tire Financial TFSA interest rate recently went up from 1.50% to 1.80%; will it stay there for long into 2018? Between 2009 and 2012, Canadian Tire Financial would have a higher rate to start the year, only to drop it a few months later. Since TFSA funds are typically less liquid than normal savings account funds (due to transfer fees and contribution room effects on withdrawals), this made quite a few savers mad back in the day. This is the first rate increase at Canadian Tire Financial we’ve seen since then.

Only a month after we added Wealth One Bank of Canada to our comparison chart, it decreased its regular savings account interest rate from 2.50% to 2.00%. This has sparked a recurring general discussion about how fair this is, and whether it should have been advertised as a promotional rate.

Update: Just after we published this article, Alterna Savings increased its regular savings account interest rate from 1.90% to 1.95%, and increased its TFSA from 1.90% to 2.05%.

For those playing the promotion game, stay tuned to see whether Tangerine will have another net new deposits promo in January! In the meantime, have a happy and safe rest of 2017!

Simplii Financial, formerly known as PC Financial

On November 1, 2017, PC Financial officially re-launched as Simplii Financial. The Simplii Financial rebrand was a result of CIBC and PC Financial officially ending their banking partnership, with CIBC taking over PC Financial’s banking customers.

Customers were assured that day-to-day banking would be largely the same, at least to start. There were 2 main positives in terms of new “features” as well: free Interac e-transfers and a 3.00% net new deposits promo.

There were still some reported glitches and complaints that nothing material had changed. Simplii Financial’s regular savings account and TFSA interest rate remains at a paltry 1.00%, in lock step with Tangerine. We don’t expect that to change, but it’s encouraging to see them trying to differentiate in other ways, such as with free e-transfers.

Motive Financial branding change follow-up from Canadian Direct Financial

It has been 7 months since Canadian Direct Financial re-branded to be Motive Financial. This was related to its parent company’s (Canadian Western Bank) sale of Canadian Direct Insurance 2 years prior. Motive Financial has so far appeared to be no different than Canadian Direct Financial, except for its name, appearance, and some additional marketing lingo. There have been no new account offerings, and its online interface is the same.

Motive Financial’s regular savings and TFSA rates have not changed since 2015; while it was once a leader on our comparison chart, it is now closer to the middle or bottom. However, in spite of the loss of the 0.25% GIC rate bonus for Canadian Direct Insurance customers, its GIC rates have rocketed to be close to the best or the best in the industry. Its current 5-year GIC rate of 3.02% (for non-registered, RRSP, and TFSA accounts) is unmatched against any publicly listed rate — in fact, its 2, 3, and 4-year GIC rates also beat any other publicly listed rate.

Is there more brewing at Motive Financial? We’ll see whether it can start to differentiate itself again in 2018.

Wealth One Bank of Canada: added to our comparison chart

We covered Wealth One in last month’s roundup. This month, after many requests from forum members, we’ve added it to our comparison chart! Its regular savings interest rate of 2.50% is the top non-promo rate in the country, whereas its TFSA interest rate of 0.85% is the lowest on our chart.

More new deposit promos

In addition to Tangerine’s quarterly, targeted net new deposits promo and Simplii Financial’s launch promo (mentioned above), there are a few other current new deposit promos:

• Ideal Savings, 2.50% until April 30, 2018
• DUCA Credit Union, 2.75% until December 15, 2017
• TD Canada Trust (targeted), 2.50% on balances of $10,000 and more until March 31, 2018

These are all listed on our Promos page.

More savings account interest rate increases

We’ve also seen a few more savings account interest rate increases in November:

• AcceleRate Financial increases its regular savings account and TFSA interest rates from 1.85% to 1.90%
• Ideal Savings increases its TFSA interest rate from 2.00% to 2.25%
• Canadian Tire Financial increases its regular savings account interest rate from 1.30% to 1.50%
• MAXA Financial increases its regular savings account and TFSA interest rates from 1.85% to 1.90%

Rate movements: Some increases, some surprising drops

It has been interesting to see the impact of the Bank of Canada’s key interest rate hikes (amounting to a total of 0.50%) from July and September. Outlook Financial, Implicity Financial, AcceleRate Financial, Hubert Financial, MAXA Financial, and Achieva Financial have all increased their regular savings and TFSA interest rates by 0.15%. Ideal Savings increased its regular savings and TFSA interest rates by 0.25%.

Oddly, Oaken Financial decreased its regular savings interest rate by 0.25%; Peoples Trust dropped its TFSA rate by 0.10%; and Meridian Credit Union decreased its regular savings and TFSA rates by 0.10% just before the July key interest rate hike and hasn’t change them since!

Even with the increases, it doesn’t seem like savers are seeing much benefit from the key interest rate hikes despite all of the competition!

You can view a list of the changes in our news digest and view current rates in our comparison chart.

Wealth One High Interest Savings Account: 2.50%

A discussion about Wealth One began in the forum about 1 year ago when the bank first opened. Wealth One currently has branches in North York, Markham, and Vancouver and is available to all Canadians outside of Quebec, with a particular focus on Chinese-Canadians. While the verdict is still out on its customer service, Wealth One is a member of the Canadian Deposit Insurance Corporation (CDIC).

Wealth One currently offers an attractive High Interest Savings Account rate of 2.5% with no monthly fee and no minimum balance. While its TFSA rate of 0.85% is not that competitive, its regular savings rate would make it the top one on our comparison chart. Wealth One also has RRSP accounts, GICs, mortgages, loans, lines of credit, a business savings account, and business GICs.

Tangerine: new interface, Q4 retention and new client promos

Tangerine redesigned its online interface in September, and so far reviews in the forum have not been favorable. Many people have found the new site confusing, with the general consensus being that the old site didn’t need to be changed. However, over time we’ll see whether people get used to the new interface; it might simply have a steeper learning curve than usual.

In the meantime, current clients are dithering over the October / Q4 2017 retention offers. Like clockwork, net new deposit offers appeared to some clients on the 3rd business day of the quarter. This time, the rates seem to range from 2.00% to 2.75%. For those who did not receive an offer, some people have had success calling Tangerine to ask for a custom offer.

To continue the party, Tangerine is putting forth their usual bonus offerings around new mutual accounts; new savings, TFSA, or RRSP accounts; and advanced deposits for a 2018 TFSA.

Remaining credit cards that waive the 2.5% foreign currency exchange fee: Rogers, Fido, Home Trust, and HSBC

The Marriott Rewards Visa has followed the Amazon Visa by no longer accepting new applications. While existing Marriott Rewards Visa cardholder accounts remain open for now, this leaves the Rogers Platinum Mastercard, the Fido Mastercard, the Home Trust Preferred Visa, and the HSBC Premier World Elite Mastercard as the only cards that effectively waive the 2.5% foreign currency exchange fee. For some consumers who do a lot of cross border shopping (online or at brick and mortar stores) this can really add up.

The Rogers Platinum Mastercard and Fido Mastercards give you 4% cash back rewards for purchases made in foreign currencies — minus the 2.5% foreign currency exchange fee that’s effectively 1.5% back in rewards. The Rogers credit card gives you 1.75% cash back rewards on purchases made in Canadian dollars and comes with a $29 annual fee. The Fido credit card has no annual fee but gives you 1.50% cash back rewards on purchases made in Canadian dollars. The respective cards advertise that rewards can be applied to a variety of Rogers and Fido services, although you can also get the “cash back” as statement credits.

The HSBC Premier World Elite Mastercard and Home Trust Preferred Visa do not charge you the 2.5% foreign currency exchange up front. The HSBC Premier World Elite Mastercard has quite a comprehensive list of travel benefits but requires you to be an HSBC Premier client (which has its own set of requirements) and has an $149 annual fee ($50 of which is oddly waived for HSBC Premier clients — technically you could no longer qualify as an HSBC Premier client after 1 year but still have the credit card). The Home Trust Preferred Visa is much simpler with no annual fee and a straight 1% cash back rewards rate.

PC Financial transition to Simplii

As of November 1st CIBC will cut ties with President’s Choice and unveil their own digital bank called Simplii Financial, rebranding from what was previously known as PC Financial. There has not been a great deal of discussion about the changes so far. The biggest change other than the name is that the physical PC Financial banking pavilions will be closed. Other than that, the official messaging has been that account features, account numbers, and ATM access will stay the same.

Expect the “big” unveiling of the Simplii Financial website on November 1 to be rather uneventful. It will be interesting to see if Simplii will provide any meaningful changes, or whether the changeover will be similar to Canadian Direct Financial’s rebranding to Motive Financial, which has so far been a ho hum experience.

Amazon Visa discontinued

Some people who make a lot of purchases across the border have found great value in the Amazon Visa. Although it only provides a mediocre 1% cash back rewards system, it does not charge foreign currency exchange fees that usually amount to 2.5%. However, as of early April 2017, you can no longer apply for this card. It’s unclear whether it is being permanently discontinued, but for the time being, this leaves the Marriott Visa and the Rogers/Fido MasterCards as the only credit cards that effectively don’t charge foreign transaction fees. Of course, if you happen to have a lot of US cash, you can always apply for a US dollar credit card so there is no conversion to Canadian dollars at all.

Tangerine MasterCard gets much worse

In the high interest savings forums, the bigger news is that the Tangerine MasterCard gets much worse starting on April 29, 2017. Although you still get 2% cash back in up to 3 merchant categories, all other purchases get 0.5% cash back instead of 1.0% cash back. Also, the foreign currency exchange fee, which was previously at 1.5%, goes back to the industry standard 2.5%. This was a well-received card when it first came out 1.5 years ago, but this latest news has significantly lowered its appeal.

Tangerine’s quarterly offer

Despite sinking profits, a less appealing credit card offering, and savings account interest rates so non-competitive that it no longer appears on our comparison chart, Tangerine is still heavily discussed on this site. This is partially because of its net new deposits promo of up to 3.25% every quarter.

With some sleuthing on the Tangerine site and an analysis of past promos (for 6 straight quarters now), people have been able to predict within days when a net new deposit promo is coming. A few days before the next quarterly promo starts, savers transfer their money to another financial institution or even to a Tangerine chequing account, and then transfer their money back to Tangerine savings after the promo starts. Not everybody is eligible for the promotion, though, and it remains a mystery as to who gets targeted and for what rate. If you’re not targeted, you can always contact Tangerine and ask for a better rate.

Canadian Direct Financial rebrands to Motive Financial

After a moderate amount of hoopla including an announcement video, Canadian Direct Financial rebranded to Motive Financial. Despite some marketing words about “recognizing and rewarding savers” so far nothing has changed in terms of account offerings, features, rates, or even website functionality. Savers are now waiting to see whether the rebrand actually means anything for them.

Ideal Savings arrives on the scene

Ideal Savings, a division of Carpathia Credit Union in Winnipeg, burst onto the scene with an attractive 2.50% savings account and TFSA interest rate on November 18, 2016. The kicker was that the rate was guaranteed until the end of 2017! It took only 11 days, though, for the rate to drop to 2.30%, and less than a month for a further drop to 1.75%, where it has stayed until now. (Note that savers who got in early still benefit from the guaranteed original rate.) Those were unprecedented initial rate drops, even compared to the 3 months it took for EQ Bank‘s initial drop from 3.00% to 2.00%. Regardless, Ideal Savings is a welcome addition and provides yet another option for savers.

Trouble at Home Capital Group and concern for Oaken Financial

Bad news, including improperly handled financial disclosure and the need to receive a $2 billion loan, has hit Home Capital Group recently and caused massive stock drops of over 80% over the course of 1 year, and a dramatic 65% drop in 1 day. What does this have to do with savers? Potentially nothing. But it is the parent of Oaken Financial, its CDIC insured deposit arm. (Technically, Home Capital Group is the parent to Home Trust, which is best known for offering mortgages, but takes deposits through Oaken.)

All this trouble at Home Capital Group has some savers anxious. While the debate rages on about how reasonable the concern is, one undoubtedly material effect is that Oaken raised its savings account interest rate from 1.50% to 1.75% on April 25, 2017!

In January 2016, EQ Bank launched to great fanfare. After years of seeing continuously dropping high interest savings account rates, were things turning around for Canadian savers? EQ Bank made a splash with a 3% interest rate, and quieted some skeptics when it boldly stated that it “is not a promotional rate; it is our current everyday rate”.

It took only 3 months for that 3.00% rate to drop to 2.25%, and in August it dropped further to 2.00%.

In addition to dropping its rate, EQ Bank has received mixed reviews, closed off new registrations for weeks, has no TFSA account, is not available in Quebec, and has no transit number (so that transfers cannot be initiated outside of EQ). It also removed its $25 birthday bonus, leaving one of our forum members to lament that the bloom is off the EQ rose.

However, EQ Bank got a lot of customers, got a lot of publicity, and still has the highest interest rate on our comparison chart.

Another recent addition to our chart is Alterna Bank, which has in some ways been an anti-EQ offering. Alterna is available to Quebec residents, added a TFSA option in July, and quietly became the only Canadian financial institution to increase its rate in 2016 (at least among those that we track). It now sits #2 on our chart just 0.05% below EQ, yet you hear almost nothing about Alterna in the media.

For those chasing the highest rates, new deposit and retention promos continue to be the story at PC Financial and Tangerine. PC Financial’s latest promo is 2.25% on new deposits until December 31, 2016. Tangerine’s current new deposit promo expires on September 30, and offers somewhere between 1.75% and 3.25%. No one has yet discovered what Tangerine uses to determine what rate it will offer you. But many people have learned to play the game of withdrawing their money before a promo ends in order to maximize their return on the next new deposit promo. And for those who don’t want to move their money around, they’ve learned that Tangerine will often give you a higher rate… if you ask. Add savings account interest rates to the list of things you need to negotiate these days, along with mortgage rates and TV, internet, and cell phone bills.

All of this song and dance around PC Financial and Tangerine is necessary because their base rates are a paltry 0.80%. This puts them so far off the chart that we have completely dropped them off the page. Not everybody in our forums agree that those banks should have been dropped — after all, there is more to an account than an interest rate — but for now you’ll have to find them on the promos page.

And speaking of promos, many other banks have gotten into the game, especially around new deposits and new accounts. DUCA, Meridian Credit Union, Luminus Financial, and BC credit unions are among those with current promotions.

In other news, if you’re looking for a free chequing account, our long-time forum member Doug has done a huge update to the free chequing account comparison chart. Be sure to check that out, and thank Doug for his hard work!