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Bank of Canada rate increase, finally

After the Bank of Canada kept its key interest rate unchanged at the end of January, it made a much anticipated interest rate increase at the beginning of March. This was a rather modest 0.25% increase to 0.50%, although more increases are expected to come this year. This was its first rate increase since 2018, following several decreases totalling 1.50% in 2020.

Continuous upward march of GIC rates

GIC rates have been trending upwards so much that many people were skeptical about locking in to a recent 3.25% 5-year GIC promo at CIBC.

EQ Bank and Wealth One Bank of Canada are currently tied for the highest 2- through 5-year GIC rates on our GIC comparison chart, with the 5-year rate for both at 3.15%. Tangerine Bank has the highest 1-year rate at 2.25%, and you can get up to 2.87% on a 1-year rate through some GIC brokers.

EQ Bank’s promo of 2.05% for a 3- or 6-month GIC has been attracting quite a bit of attention as well.

Savings account rate increases continue

In general for financial institutions on our savings account comparison chart, savings account interest rates have been increasing since November.

The most recent ones have been at merger partners AcceleRate Financial and Hubert Financial, which both sit at 1.40% now.

Wyth Financial is still the leader at 1.55%. It’s interesting to note that the same company will soon hold the funds for 3 of our rate leaders — Wyth Financial, Neo Financial, and EQ Bank — following Equitable Bank’s purchase of Concentra Bank.

Tangerine Bank and Simplii Financial have some juicy promo rates

For years, we’ve been following the rolling promos at Tangerine Bank and Simplii Financial, although their current ones stand out more than usual given just how high they are. For existing customers, Simplii Financial’s latest targeted new deposit promo is for 2.75% between March 1 and June 30, 2022, while Tangerine Bank’s latest targeted new deposit promo is 2.80% until July 31.

For new customers, Simplii Financial is offering 2.20% in a savings account until April 30 (and up to a $350 bonus in a chequing account), and Tangerine Bank is offering 2.50% for the first 5 months (and up to a $300 bonus in a chequing account).

How to improve the TFSA?

We’ve now released the full results of our 2022 TFSA survey, which received 455 responses. One of the questions we asked was about how the TFSA could be improved. The first answer was rather predictable, but the top 6 answers might contain some surprises:

1. Increase the contribution limit.
2. Allow re-contributions within the same year, and/or allow easier transfers between financial institutions.
3. Improve the CRA’s accuracy and timeliness of reporting on TFSA contributions.
4. Better educate Canadians about the TFSA. Perhaps call it a TFIA (Tax Free Investment Account)?
5. Expand what investments can be put in a TFSA, such as a business, or a property, or metals
6. Make USD dividends tax exempt in a TFSA, just like they are in an RRSP.

AcceleRate Financial and Hubert Financial vote to merge

The proposed merger between Access Credit Union (the parent of AcceleRate Financial), Noventis Credit Union, and Sunova Credit Union (the parent of Hubert Financial) has been approved. Whatever changes are coming to AcceleRate Financial and Hubert Financial will take place after July 2022.

For comparison, the parent companies of Implicity Financial and Outlook Financial agreed to merge last August, with the merger becoming official on January 1, 2022. Their interest rates have been nearly the same for years, and the Implicity Financial website now directs everybody who is interested in opening an account to go to Outlook Financial.

EQ Bank and Wyth Financial to merge

Continuing the consolidation momentum, just last week Equitable Bank (parent of EQ Bank) announced the acquisition of Concentra Bank (parent of Wyth Financial). It was only in December that we added Wyth Financial to our savings account comparison chart, a chart it now leads with an interest rate of 1.55%. EQ Bank’s rate is still competitive at 1.25%. The official news release states that “at closing, EQ Bank will become the sole digital platform, replacing Wyth” but the exact details are anyone’s guess!

TFSA survey results: Are you one of the 14% who have over-contributed to their TFSA?

Over the past month, we ran a TFSA survey and got 455 responses. Thanks to all who participated! Here are some quick results:

• 98% of respondents have a TFSA; 85% have an RRSP or RRIF.
• 95% intend to contribute to a TFSA this year; of those eligible for an RRSP, 46% intend to contribute.
• 76% max out their TFSA contribution room every year, whereas only 39% max out their RRSP contribution room every year.
• 63% hold more than just savings accounts or GICs in their TFSA, while 4% didn’t even know this was possible!
• 64% consider the primary use of their TFSA to be retirement or long term savings.
• 14% have over-contributed to their TFSA.

We’ll release the full results on the HighInterestSavings.ca website later this month!

If you’re looking for promotions, you’ve come to the right place

There have been so many savings account and GIC promos recently, both registered and unregistered, that we could dedicate an entire newsletter to them. Instead, we’ve listed a few of them below, and encourage you to check our promos page for the full list.

• CIBC 5-year GIC promo is down from 3.25% to 3.00%
• AcceleRate Financial: 2.25% GIC for 18 Months
• Wealth One Bank of Canada GIC promos include a 3.18% 5-year GIC until March 1, 2022
• EQ Bank: 2.00% for a 1-year GIC; 2.50% for a 2-year GIC
• motusbank: 2.25% for 122 days in your first TFSA savings account

More personal finance news

• TD joins the no-commission online brokerage party… sort of
• A mild surprise: the Bank of Canada keeps key interest rate unchanged
• Canadian Tire Bank to decrease its regular savings account and TFSA interest rate from 1.25% to 1.10% on February 17
• Oaken Financial increases its regular savings account and TFSA interest rate from 1.25% to 1.32%
• Simplii Financial new customers: get up to $350 by opening a chequing account and setting up an eligible direct deposit of at least $100 a month for 3 straight months

A big bank is a GIC rate leader

CIBC currently has a 3.25% 5-year GIC, which applies to a non-registered, TFSA, or RRSP GIC. That beats the best 5-year rate on our GIC comparison chart (3.00% at Hubert Financial) and it’s unusual for a big bank to be a rate leader.

Despite this market-leading rate, some of our forum members are being cautious. Are other banks (big banks or not) going to match the rate? And with the Bank of Canada’s key interest rate expected to increase this year, will there be further GIC rate increases? Or should you just stick to a GIC laddering strategy?

Wyth Financial takes the outright lead for a savings account interest rate

It’s the new kids on the block Wyth Financial (1.55%), Ontario-only Saven Financial (1.50%), and Neo Financial (1.30%) leading our high interest savings comparison chart to start 2022. Rate leaders at the beginning of each of the previous 5 years were Canadian Tire Bank (in 2021), Motive Financial (in 2020 and 2019), and EQ Bank (in 2018 and 2017).

After launching in November with a 1.40% rate, Wyth Financial increased its savings account interest rate to 1.55% in mid-December.

None of Wyth Financial, Saven Financial, and Neo Financial offer a TFSA, though. Wealth One Bank of Canada continues to have the highest non-promotional TFSA interest rate on our chart at 1.50%, followed by a 4-way tie at 1.25%.

What’s your TFSA plan?

Are you going to max out your $6,000 in additional TFSA contribution room this year? If so, that would put you in a small minority of Canadians.

For those who have a TFSA at all (of any size), are you aware that you can use it for more than a savings account? According to a 2020 BMO study, 41 per cent of those with a TFSA use it for mutual funds or stocks. Almost a quarter of respondents were unsure of what could go in a TFSA.

What are your TFSA plans for 2022? Take our short TFSA survey for a chance to win one of 6 x $50 cash prizes!

If you’re going to choose to put some or all of your TFSA funds in a savings account or GIC, be sure to check out our promotions page, which currently includes the following:

• Tangerine Bank: 2.15% for a 3-year registered (TFSA/RRSP/RRIF) GIC
• EQ Bank: 2.00% for a 3-month TFSA or RRSP GIC until January 20, 2022
• motusbank: 2.25% for 122 days in your first TFSA savings account

Featured cash back offers

• HSBC World Elite Mastercard: up to 100,000 bonus points, no annual fee for the first year, no foreign currency exchange fee, plus $105 cash back
• Tangerine Money-Back Credit Card: Earn an extra 15% back (up to $150) when you spend up to $1,000 in everyday purchases within your first 2 months, plus $45 cash back or a $50 Amazon.ca gift card
• Scotiabank SCENE Visa Card: no annual fee, plus $50 cash back

Wyth Financial is here with a top rate outside of Ontario

Wyth Financial’s high interest savings account is open to the public now (except for Quebec, unfortunately) with a 1.40% interest rate. Wyth Financial is the new brand name for Concentra Bank, and its savings account was previously available only to those who held its GICs.

A natural comparison is to Neo Financial, whose Neo Savings account is provided by Concentra Bank. (In fact, if you have both Wyth Financial and Neo Financial savings accounts, your deposits are combined when calculating CDIC coverage limits.) The Neo Savings account has a 1.30% interest rate, so it’s not as appealing as a pure savings account. However, Wyth Financial has a few limitations indicative of a pure savings account: only one free e-Transfer per month (versus unlimited at Neo Financial) and no bill payments (whereas Neo Financial has bill payments). Lastly, Wyth Financial also offers mortgages and GICs, which Neo Financial does not.

More increases for savings account interest rates

Amidst a trend of general rate increases, last month Outlook Financial decreased its regular savings account and TFSA interest rate from 1.10% to 1.00%. However, we also saw Oaken Financial increase its regular savings account interest rate from 1.20% to 1.25% (after increasing it from 1.15% to 1.20% just a couple of weeks earlier). As well, Saven Financial (Ontario only) increased its regular savings account interest rate from 1.35% to 1.50%, putting it on the top of our comparison chart for those who are in Ontario.

Up to a 3.00% rate in promos

Tandia Credit Union (Ontario only) has a standout new deposit promo, although it expires on Friday, December 17: 3.00% in a savings account until March 31, 2022.

Our promotions page lists plenty of other offers, including these newest ones:

• BMO targeted offer for existing clients: 1.75% on new deposits in a Smart Saver Account between November 15, 2021 and March 15, 2022
• CIBC: 1.50% interest rate for 120 days when you open your first eAdvantage Savings Account
• Tangerine Bank targeted 2.00% new deposit promo for existing customers until April 30, 2022

GIC rates moving up

GIC rates are on the rise at many of the financial institutions on our GIC comparison chart. In particular, GIC rates at EQ Bank, Motive Financial, Oaken Financial, Wealth One Bank of Canada, and Wyth Financial have all shot up such that some combination of them share the lead for 1- through 5-year GICs:

• 1.80% for a 1-year GIC
• 2.05% for a 2-year GIC
• 2.30% for a 3-year GIC
• 2.40% for a 4-year GIC
• 2.60% for a 5-year GIC

We’re also tracking GIC broker rates at the bottom of our GIC comparison chart where you can get even better rates for 2- through 5-year GICs.

More headlines: TFSA contribution limit, Costco Mastercard, USD accounts at Wealthsimple

• The TFSA contribution limit for 2022 remains at $6,000
• The CIBC Costco Mastercard transition from the Capital One Costco Mastercard includes a 1% cash back base rate on all purchases instead of 0.5%, but fewer insurance benefits than before
• Wealthsimple to offer USD accounts, although with a $10 per month Plus subscription
• New to our cash back site is the HSBC World Elite Mastercard: up to 100,000 bonus points, no annual fee for the first year, no foreign currency exchange fee, and $105 cash back

TFSA promos are coming

With the end of the year approaching, expect TFSA promotions to show up such as this new one from motusbank: 2.25% for 122 days on your first TFSA savings account. You might want to have a plan for what you will do with the funds after the promo rate expires early in 2022. Check the non-promo TFSA rate: motusbank’s regular TFSA interest rate is currently 1.25%, which is quite competitive, ranking second on our comparison chart. And check whether there is a transfer out fee, in case you want to transfer TFSA funds mid-year (rather than executing the “December manoeuvre”): motusbank has a $50 fee for transferring money out of registered accounts.

We’ll be sure to track all TFSA promos on our promotions page.

Rate increases are also coming?

Last month, we noted that the couple of rare increases in savings account interest rates this year had since been reversed. However, 3 subsequent rate increases have occurred: for the Hubert Financial TFSA (from 1.00% to 1.10%), the Oaken Financial regular savings account (from 1.15% to 1.20%), and the motusbank TFSA (from 1.10% to 1.25%).

With inflation at a multi-decade high, and the Bank of Canada signalling that the key interest rate will rise some time between April and September 2022, we might see more upward movement on savings account interest rates.

More to compare with GICs

Per multiple reader requests, new to our GIC comparison chart is a table for GIC broker rates! Although there might be minimum deposit amounts and location-specific eligibility for some GIC broker rates, at the moment they handily beat all of the 1-year through 5-year GIC rates for the financial institutions we track.

Simplii Financial enters the USD account market

Simplii Financial has launched a USD account. It offers only a 0.10% interest rate, but it has a competitive exchange rate that could save you money if you’re transferring from Canadian dollars and not using a separate foreign exchange service (such as OFX).

Regarding the interest rate, you would still be better off with EQ Bank’s USD account (1.00%) or one of Tangerine Bank’s new customer (2.00%) or targeted existing customer (1.60%) promos.