Rather pathetic from EQ - 3% HISA offer | EQ Bank | Discussion forum

I also got the same email (probably) with the subject "...to boost something...".
I did not even bothered to open that email or completely read full subject, just deleted without thinking, as soon as I saw it's from EQ.
I have so much respect for EQ, ha-ha.

I think EQ is simply choosing to attract deposits through the brokerage channel @ 4.65%.

pooreva said

Do you have ANY idea how many people keep their money at Big 5 which pay 0 or close to 0% interest since they do not believe and/or do not trust virtual banks without thick brick walls and glass doors?  

That ⬆, plus . . .

- They're just simply not aware of the better choices (the biggest reason?).
- They don't have enough $$$ in their SAs, to make it worth their while.
- And finally ... they just don't care.

.
The Big Banks love those people, and make Huge profits off them every year.

Dean

It wasn't long ago that EQ Bank consistently had the best (or at least competitive with the best) interest rate for a savings account.

Kirk said

It wasn't long ago that EQ Bank consistently had the best (or at least competitive with the best) interest rate for a savings account.  

It's all part of the normal Ebb & Flow of High Interest Savings Account interest rates.

EQ will most likely be competitive again ... it's just a matter of time.

Meanwhile, we can park our Savings Account $$$ elsewhere.

Dean

The smaller banks are riskier. That's not because of their size but because of the kinds of loans they fund and how they raise deposits.

As well, deposit insurance doesn't guarantee the deposit and interest will be paid on time. Globe & Mail columnist Rob Carrick explained it in 2017 when Home Trust almost failed and was offering market leading GIC rates.

If one can tolerate one's five-year compounding GIC being paid late in five year's time, then, by all means, buy an Oaken 5-year compounding GIC. One will receive the principal and interest eventually because of the deposit insurance.

But, if one needs the GIC interest to be paid out monthly to pay one's nursing home bill and other expenses, then don't be tempted. The consequences of having a monthy interest payment or two delayed isn't worth it.

EQ doesn't need the short-term deposits, they offer higher for GIC's.
I know someone with 150K in a low-interest major bank savings account, and they won't move it, even to make $750 a month in interest from it.
Que Será, Será

AltaRed said
I think EQ is simply choosing to attract deposits through the brokerage channel @ 4.65%.  

I don't think it's that so much, no. Well, sort of. Their deposit strategy seems to be two-fold, one for their direct channel (EQ Bank) and one for the brokerage channel. For the direct channel, they want to focus on customer growth, with smaller total deposit balances of $25,000 or less per customer, as that presents less liquidity risk to the bank, but also on both growing and shifting their demand deposits in the direct channel to fixed-term deposits. Their annual reports bare this out. For the brokerage channel, it's basically a source of quick, higher cost liquidity and funding (i.e., "we'll take it, but we prefer our direct business").

As well, we also need to consider the benefits the EQ Bank Savings Plus Account provides. Other than not being able to write paper-based cheques, it's effectively also a day-to-day banking/chequing account. What other bank pays you 2.5% interest on your chequing account balances (3% with recurring payroll or pension income deposit)? In this way, I think it's consistent with their strategy to get more people with $1,000-5,000 balances. And for me, $5,000 earning 2.5-3.0% is not that much different than $5,000 earning 3.5-4.0%. For my larger deposits, absolutely, I'll go with an ISA.

And for EQ Bank, though it may require more marketing spending, it's a good strategy. If you can attract 500,000 and, eventually, 1 million direct clients with average balances of $25,000 each (some will have more, some will have less, yes), isn't that better than, say, 10,000 clients with $100,000-250,000 balances? ($25 billion in direct deposits versus $2.5 billion in direct deposits, based on the high end of the estimates.)

Two facts stand out to me, in terms of the credit unions' virtual divisions: no credit union virtual banking and deposits division has managed to crack the $1 billion mark in direct deposits, and no credit union virtual banking and deposits division has managed to crack 10,000 active direct clients. (And yes, I'm generously including Alterna Bank as a credit union virtual division, even though it's technically a chartered bank subsidiary of Alterna Savings.)

Cheers,
Doug