Luminus Financial Promo 3.5% | Page 2 | General comparisons | Discussion forum

Does anyone think it's safe to put more than $400K into the savings account, taking into account of only $100K being insured if anything happens?

Their financial report and their size makes me uneasy, but I will only need to keep it in savings until November.

okfire said

Does anyone think it's safe to put more than $400K into the savings account, taking into account of only $100K being insured if anything happens?

Their financial report and their size makes me uneasy, but I will only need to keep it in savings until November.

Honesly, I wouldn't. I agree they look too small and Financials are not that great. A bigger Credit Union like Meridian Credit Union or something, I wouldn't hesitate as the time is small only upto Sep 15 and members are more and Financials are better.

But maybe you can have a Single account, your spouse a Single separate Account from yours and 1 Joint Account for both of you, if they allow that, so you can have upto $ 300,000 DICO coverage.

They probably allow 1 Single + 1 Joint , not sure if they allow 1 Single (you) + 1 Single ( spouse) + 1 Joint ( both of you )

Norman1 said

I wouldn't either.

If one did, one would end up with earning 3.5% instead of the 2.29% one would get by placing

1. $100,000 with Luminus for 3.5%,
2. $100,000 with EQ Bank for 2.25%, and
3. $200,000 with Hubert for 1.70%.

3.5% - 2.29% = 1.21% extra per annum. September 15 is about two months away. So, that ends up being 1.21% * 2/12 = 0.202% extra.

For risking 75% of principal, the reward is just an extra 0.2% over the two months. The reward is not adequate for the risk.

Thanks for doing the math and your recommendation.

okfire said

Why not Alterna instead of Hubert for 1.95%?

Forgot about CDIC member Alterna Bank and their 1.95% eSavings account!

1. $100,000 with Luminus for 3.5%,
2. $100,000 with EQ Bank for 2.25%,
3. $100,000 with Alterna Bank for 1.95%, and
4. $100,000 with Hubert for 1.70%.

Net rate of 2.35% instead of 2.29%.

That narrows the difference to 3.5% - 2.35% = 1.15 % extra per annum. September 15 is about two months away. So, that ends up being 1.15% * 2/12 = 0.192% extra.

I can't verify your calculations, Saver-Mom, as I am not sure what is your point of comparison.
It may be more predictable than the stock market, but I am still cautious. Just when you think nothing can go wrong is when you are most vulnerable, it seems to me.
In my mind, it's similar to investing in dividend-producing stocks and then saying that you never have to worry about it again as you will just collect the dividends forever and never worry about the stock value, which may mean turning a blind eye to reality.

While the majority seem to feel that our financial institutions are generally quite stable, there are also those who think otherwise. It might be worth your while to look at the dissenting opinions before coming to a firm conclusion. And, of course, there will be specific issues with specific institutions. That means a lot of research, and more of your time.
While it's nice to have the extra returns, I would ask myself how badly I really need it and do I want to take the risk for it. My own answer is usually "no".

However, my perspective is probably of limited appeal. I accept (unwillingly) the fact that the banking system, in cooperation with the tax system and most purveyors of financial advice, is not designed to allow me to "get ahead". It's designed to give me a choice between losing purchasing power and taking more risks - the more the better.

In contrast, I believe that, at a minimum, we should all have the right to hang on to our money at a rate that enables us to have the same value after inflation and taxes. In other words, we should not be made to lose purchasing power. On the taxation side, I would scrap the TFSA and allow all investment returns tax-free up to the rate of inflation but with no carry-over.
VOTE FOR ME! (Oh, sorry; I'm not running.)

I also think "excl QC" should not be allowed. It just gives Quebecois another reason to resent the rest of us. And who needs that? We need to find ways to accommodate each other.

Saver-Mom said

Totally agree with your wise words, Loonie. I was using the increased rate as calculated by Norman. …

I think the point is that one would be putting $300,000 of the $400,000 at risk for an extra $768. That is not a habit one should develop.

That extra $768 is worth it only if one will also get all of the original $400,000 back too.

Getting the extra $768 of interest and getting back only $100,000 of the original $400,000 principal won't look that good in hindsight.

I am in the process of closing my account with Luminus and was warned of the following:

"Please also make a note that if the account remains inactive or dormant for more than 1 year, this may result in a fee of $100 and or closure of the membership."

For those chasing their special and maybe keeping the account open after the special term expires, be forewarned !

Dormancy fee should not come as a surprise, as it is clearly itemized on their website - https://www.luminusfinancial.com/Personal/BecomingAMember/ServiceFees/InactiveOrDormantAccounts/

Accounts closed within 90 days are charged $25 - similar to other FIs and lower than many. A bank draft costs $7 - cheaper than most FIs. https://www.luminusfinancial.com/Personal/BecomingAMember/ServiceFees/OtherServiceFees/
An in-branch withdrawal from savings costs 65 cents, but you would not want to use this for large amounts.

These fees are all within normal range except the dormancy fee, which kicks in sooner and higher than most, but is clearly declared.

They are not likely to attract large amounts from members of this forum in dormant accounts at their regular rates, so why worry?
They are, however, making it clear that they are not interested in people leaving accounts open indefinitely while not using them. That's their right.

So, realistically, it might cost you $7 to get your money out after the 3 months you were planning on leaving it there. Big deal.
I would conclude that in most cases it's not suitable for accounts under 5 figures. Otherwise, no, it won't kill your promo interest at all.

However, the promo interest ends Sept 15 regardless, so it's a bit late for most people who have not already signed up. The major financial loss will be from not taking advantage earlier, not from fees.

Yes, I think your last critique is realistic, Brian, as a critique of institutional policy from the point of view of someone who is chasing rates.

I suspect though that it may work quite well for the majority of those who do in fact sign up. Most will be happy with 1.75 at the end of the promo as there are very few options for a higher rate, and, off the top of my head, I'm not sure if any of them offer bricks and mortar and other services.

This is a small community credit union that is trying to grow its base accordingly. The offer makes sense from that point of view. It should be attractive to those who have been dealing with the Big Banks up til now and are interested in a local alternative.
It would be nice if they offered me-to-me etc., and maybe they will in due course. On the other hand, they may be wary of rate chasers and not want to enable them. It's hard to imagine that, as an investor/owner, you would support a corporate policy which encouraged rate hopping. For a small CU, people who move 500K in one month and remove it 3 months later are not really a desirable asset.

I realize it's very late now for this promo, but I just noticed today that the wording now says, in Italics, that the 3.5% promo is only available to "current members". I don't know how long ago it was changed but am pretty sure it didn't say this at the beginning.

As with much of their earlier communication, it is not entirely clear what this means. At what point in time would one have to be "current" in order to qualify? It's not clear whether joining would make you "current" or whether you would have had to have belonged before the promo started or at some unspecified date when they changed the wording.

It sounds like they put this in in order to reduce or eliminate rate chasers who have no intention of staying with them, from the get-go, and who would likely be joining for the sole purpose of getting the promo rate.

I can't blame them for this, as the rate was very high, but they should have thought of this in the first place.

However, anyone who did join specifically for this promo should perhaps check with Luminus to make sure they are still getting it, due to this unclear wording. Only my spouse, who was already a member, signed up for it, so I don't know the answer.

I don't chase rates to the point where I would hop in and then close an account a few months later, especially with a small CU. I don't think it's fair to them.
Spouse may keep the savings account but the RSP is gone. They had no strategy to retain RSP business, and it took literally weeks (maybe even a month) to get the answer from them that they were not interested in being competitive. I guess they just hope everyone will forgetaboutit and let it roll over.

I don't open or close accounts lightly, and I wouldn't open them with the expectation of closing them. However, because of the repeated communication issues, I don't think either of us will want to continue a relationship with this CU.
Another more minor issue that kind of annoys me that one of the things they are proud of is that they offer free money transfers to the Philippines. The Philippines?? I have no idea why they do this. Sorry, but that doesn't match with anything that is important to me and I can't think of any reason why I would want my CU to subsidize this. It makes me feel that I am not their audience. So be it.