eSavings and TFSA down to 1.80% | Alterna Bank | Discussion forum

picassocat said
Sign of the times  

Generally yes, as we all know.

However in addition, for those of us who look at such things in order to guess where to place funds in the future, its a consistent continuation of a rate setting/changing pattern relative to others. That fact got me almost all out of their TFSA last December, which has been a big benefit. In short, they want to be slightly behind on rates.

Doug may have another opinion, but I think they like to be in second position because it makes their deposits more stable. Some people move large amounts of money around so as to get the highest rate, and do it regularly. The bank hopes to avoid that volatility.

Laertes said
I see they are now down to 1.69%.

Doug, why would they want to be slightly behind? What advantage is there? (In case it sounds like I'm being argumentative, I'm not. I just don't understand the logic. I'm a longtime lurker and first time poster....)  

Simple really, pay less out and increase profits. Loonie is right as well, more stability in the level of total deposits. However the downside is they don't have as much in deposits.

It depends on a bank's need for funds at any given time. My comment about Alterna was more because they are very consistent over the years by not quite offering what is available elsewhere and drop their rates first. Some other banks that are consistent pay a bit more, and some banks go for promotions and/or highly competitive rates and then back away from that.