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Email this5:27 pm
Citz have dropped to 2.50% Citi is still at 2.75%, not much more but it appears that Citz doesn't want to save my business - so I am moving it to Citi.
12:08 pm
December 12, 2009
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There's a problem to all this new account opening and moving money around every month just to get an extra 0.25% for a couple extra weeks before the new bank lowers rates to match the competition. Not only do you end up with umpteen accounts with umpteen different institutions, each time you open an account, particularly with an online "virtual" bank where credit bureau reports are mandatory to comply with provincial and federal AML legislation, it is an enquiry or "hit" on your credit report. Enquiries remain on your file for a minimum of three years and a minimum of five enquiries are always retained on your file. Plus, each "enquiry" lowers your overall credit score slightly.
Do what you wish, but it's only a matter of two to three weeks before Citibank Canada too lowers its interest rates to match the competition. 🙂
Cheers,
Doug
4:24 pm
Doug, I thought that the "credit checks/hit" on opening a bank account was a "soft hit" thus had no impact on your credit score?
Mike
9:31 pm
December 12, 2009
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As I understand it, it doesn't have a large impact as say applying for a line of credit or a credit card would but it does marginally affect it, perhaps one or two points. The only items on your credit bureau that aren't disclosed to credit granting institutions are things like companies requesting an updated credit report on you for address verification. However, when you actually open an account, a full credit bureau is pulled on you it shows up as an enquiry and does impact your credit score.
Cheers,
Doug
3:05 pm
I'm not sure that banks pull credit reports when a customer opens a savings account. I've got six savings accounts with various online banks at the moment, and none of them have requested my credit info (I've pulled my own credit reports from Equifax and TransUnion for an unrelated matter). I doubt that even a request to open a chequing account would trigger a credit check (unless overdraft protection was requested, which is really just a very expensive short-term loan).
I've found that having multiple online savings accounts is quite useful to take advantage of all the competition going on. It's a fairly easy matter to move money in and out of accounts not only to take advantage of the highest rate, but to take advantage of the various promotions that come out. Of course, if you're only moving a few hundred or even a few thousand dollars between acocunts, you might not come out that far ahead. But if you have a lot of cash reserves, I think having multiple savings accounts is worthwhile. Of course, this applies only as long as online transfers continue to be free (which I think they will)...
8:36 pm
December 12, 2009
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Craig, you can always request a credit bureau not be pulled. However, then the banks will generally hold all of your deposits made in-branch or by ABM for five to six business days to allow funds to clear. If you want no holds on your deposits (sometimes called "Cash Back" at various institutions), then a credit bureau is pulled regardless if it's a chequing or savings account. As well, if you're opening accounts online, pursuant to Know Your Customer and Anti-Money Laundering procedures, I believe all "virtual" banks pull credit bureaus as a way of verifying the customer, among other methods.
Cheers,
Doug
9:07 am
December 12, 2008
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Exactly. Agreed Doug.
I just dont understand why people would be reluctant to open up bank accounts just because they do not want a soft inquiry in their credit report. These inquirys have very little effect on your score (maybe they would if you were opening up like 5 accounts within a 6 month period), but even so, give it a couple months and your score will bounce back.
As long as you pay your bills ontime (loans, lines of credit, credit cards, etc), a couple of soft inquiries to your credit report will have very little effect.
It is also definently worth it for the sake of having your deposit limits raised/released.
djino
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