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The Bank of Canada just made another 25 basis points increase to its key interest rate, which now sits at 5.00%. This is the highest it’s been in over 20 years. We were just catching up from a similar increase in June…

The best rates for savers are in short-term GICs

Short-term GIC rates are the highest they’ve been in years. On our GIC comparison chart, both LBC Digital and Motive Financial are offering a 1-year GIC at 5.60%. Tangerine Bank has an 18-month GIC at 5.50%. This continues a trend where the longer terms have lower rates.

Bank of Canada interest rate decisions: savings accounts are still catching up

Suffice it to say, savings account interest rate increases have not kept pace with the Bank of Canada’s increases. As an example, Achieva Financial just increased its regular savings account interest rate from 3.50% to 3.60%, following an increase of 0.10% last month as well. EQ Bank’s current 2.50% rate has not changed since October 2022, and Alterna Bank’s current 2.25% rate is actually down from where it was last December!

That said, savings account interest rates are still going up in general, and we should expect to see more rate increases in the coming weeks. Motive Financial still leads our savings account comparison chart with a regular savings account and TFSA interest rate of 4.10%. You can get even better rates through a brokerage investment savings account.

Not a promo rate if you have $1 million

If you have over $1 million, you can get 5.25% at Simplii Financial as a non-promotional rate. But, if you have under that amount, you will get 1.00% or less.

Back the land of promotions for the rest of us, Tangerine’s latest targeted 5-month new deposit promo for existing customers is now at 5.50% between July 4 and November 30, 2023.

BMO is also getting in on the action. Its new account promo is now for up to $450 when you open a Performance Chequing Account, and a 5.00% promotional interest rate when you add the Savings Amplifier Account. (Conditions apply.)

Boos

• Plastk Visa Credit card holders are out thousands of dollars
• DUCA Credit Union has quietly introduced a $4 monthly charge or a $1,000 minimum balance to its “no-fee” chequing account
• Laurentian Bank has started a strategic review that might lead to a sale of the bank! That is likely the cause of LBC Digital recently shutting off new sign-ups.

The rate hikes are back. In January the Bank of Canada decided to “pause and assess”, saying that it was a conditional pause:

If new evidence begins to accumulate that inflation is not declining in line with our forecast, we are prepared to raise our policy rate further.

Now we know that the Bank of Canada did not like what it saw in its assessment (including the rate of inflation turning back up), because last week it raised the key interest rate once again.

Savings account interest rates were starting to decrease, but now rate hikes are back in savings account land too. Outlook Financial increased its regular savings account and TFSA interest rate from 3.40% to 3.55%, and Achieva Financial (from 3.40% to 3.50%) and Peoples Trust (from 3.00% to 3.15%) had a similar increase. Other financial institutions on our savings account comparison chart might soon follow.

Competition is slowly heating up again for GICs, mostly in shorter terms, where Peoples Trust currently leads for a 1- or 2-year term at 5.25%. If you’re a Canadian business, keep an eye on fintech upstart Vault, which is now offering business GICs, including a 5.10% 2-year rate.

Promos give you 5.00% or more

5.00% is still the standard for savings account promos.

Manulife Bank is now offering 5.00% for 120 days in a new, non-registered Advantage Account opened between May 24 and July 31, 2023. Some existing customers have reported a similar promo for new deposits on existing accounts as well.

New Tangerine Bank or Simplii Financial customers can get 5.25% for 5 months in a savings account. The latest targeted promo for existing customers at Tangerine Bank is 5.25% between June 7 and October 31, 2023.

Closing time, decreasing support, and direct deposit error

• LBC Digital is no longer accepting new account sign-ups. If this is permanent, this marked less than 4 years since LBC Digital launched.
• Last year, Hubert Financial dropped customer support on Sundays. In a couple of weeks, there will be no more Saturday support either.
• What happens when a CRA direct deposit is to the wrong account?

Motive Financial already had the top regular savings account interest rate on our comparison chart but widened its lead even further on April 17 with an increase from 3.80% to 4.10%.

Elsewhere, we’ve seen only decreases, which marks a definite trend:

• MAXA Financial from 3.35% to 2.95%
• Saven Financial from 3.75% to 3.50%
• AcceleRate Financial and Hubert Financial from 3.35% to 3.30% (and from 3.45% to 3.35% for their TFSAs)
• Ideal Savings TFSA from 3.75% to 3.55%, although that’s still the highest TFSA interest rate on our chart

Promo rates are still holding up, where the usual two-some of Simplii Financial and Tangerine Financial continue to offer 5.00% or more to a select group of Canadians.

• Simplii Financial new customers: Earn 5.25% interest for 5 months on your first Simplii Financial High Interest Savings Account
• Simplii Financial’s targeted 5-month new TFSA deposit promo for existing customers: 5.00% between May 1 and August 31, 2023
• Tangerine Bank new customers: 5.00% savings account interest rate for the first 5 months if you also open a chequing account with the promo code “EARNMORE”
• Tangerine targeted 5-month deposit promo (new or all deposits, depending on the offer) for existing customers: 5.00-5.25% between April 13 and August 31, 2023

DUCA Credit Union (Ontario-only) is offering a 4.75% new deposit promo on its Earn More Savings Account until August 31.

On our GIC comparison chart the shorter terms are still offering a higher rate than the longer terms. The highest 1-year GIC rate is currently 5.15% at Wealth One Bank of Canada or 5.50% through a GIC broker. The highest 5-year GIC rate is currently 4.72% at Motive Financial or 5.32% through a GIC broker.

Lastly, the personal income tax filing deadline has passed, but are you still waiting on your CRA refund? You’re not alone!

Back down we go

Yesterday, the Bank of Canada announced its second straight interest rate pause. There is much debate about where rates will go for the rest of the year, but they’re already decreasing for savers.

At the end of March, Outlook Financial made a modest decrease to both its regular savings account and TFSA interest rates, from 3.50% to 3.45%. And yesterday, merger partners AcceleRate Financial and Hubert Financial decreased both their regular savings account interest rates (from 3.40% to 3.35%) and TFSA interest rates (from 3.55% to 3.45%). These were the first decreases for any of the financial institutions on our savings account comparison chart in over a year.

Motive Financial remains the regular savings account interest rate leader at 3.80%. Ideal Savings leads the TFSA chart at 3.75%.

You can still get 5.00% or higher in your savings account via several promotions, or over 4.00% via brokerage investment savings accounts.

Over in GIC land, you can no longer get 5.00% for 3- through 5-year rates at any of the financial institutions we track, although you can still get over 5.00% for all terms at a GIC broker.

Tax time

As always, personal income taxes are due on April 30 (technically May 1 this year since April 30 is a Sunday). If the pattern holds from our Canadian income tax survey from a few years ago, more than half of readers have filed their taxes already. So far, about 94% of those who have filed their returns in 2023 have filed electronically.

Our forum has plenty of income tax related discussions, including:

• What software to use
• Details around capital gains reporting
• Taxation of US dollar returns

The demise of a prepaid credit card

Back in November, the STACK Prepaid Mastercard got significantly worse by adding a monthly fee (if you don’t spent at least $350 in a month) and reinstating foreign currency exchange fees. Now another prepaid credit card is shutting down altogether: the Mogo Prepaid Visa is closing on June 6.

National Bank chequing accounts for students and newcomers

If you’re a student or new to Canada, National Bank’s chequing accounts are worth investigating. If you’re 24 or younger, you’ll pay no monthly fees for their chequing accounts; if you’re a newcomer, you’ll pay no monthly fees for at least 1 year.

After saying in January that it was going to “pause and assess”, the Bank of Canada followed through with its first interest rate pause (on March 8) since it started increasing rates in March 2022. This signaled a divergence from the interest rate policy in the US. One of the effects has been a sizeable strengthening of the US dollar against the Canadian dollar.

The dramatic collapse of the 16th largest bank in the US just a few days ago has caught the attention of many, and has affected Canadian firms both directly and indirectly. A main contributor to Silicon Valley Bank’s failure was the rapid increase in interest rates. There is much debate over how this will affect further central bank interest rate decisions.

It’s worth noting that deposit insurance in the US is $250,000 USD per depositor, per insured bank, for each account ownership category (versus $100,000 CAD in Canada). US regulators announced over the weekend that all deposits at Silicon Valley Bank, even those above the insurance limit, would be made whole.

Motive Financial is back in the lead

In the less dramatic land of savings accounts, Motive Financial has the highest interest rate of any savings account on our chart. Motive Financial doesn’t change its savings account rates as much as its competitors, but decided to bring its regular savings account interest rate up from 3.00% to 3.80% on February 14. Its TFSA usually offers the same rate, but has so far remained at 3.00%. Ideal Savings remains the TFSA interest rate leader after increasing its rate from 3.60% to 3.75% (and curiously leaving its regular savings account interest rate at 1.01%).

Fines, reviews, and bonuses

• FINTRAC imposes a $676,500 administrative penalty on Wealth One Bank of Canada
• The Office of the Superintendent of Financial Institutions (OSFI) is reviewing cash ETFs
• Some new promotions include a couple of $400 sign-up offers and 5.25% in a savings account