If I had to choose one bank which one would it be? | General financial discussion | Discussion forum

I have to agree with kanaka. If there were one clear winner, we'd all be there and the rest of them would all go broke!

They all pick and choose which areas in which they want to be competitive. If we want the best deals in all categories, we have to be nimble. I think you're doing well to be dealing only with 2 of them.

Another important factor is where you live - which province, and whether urban or not. People in urban centres have more local options.

That said, some accounts need less tending than others. RRSPs may only need your attention once a year, so you can afford to put that in an institution you don't use much otherwise, if it's to your advantage. Also, you will eventually hit the CDIC $100,000 limit with your RRSP at PC, and will have to consider other options.

Perhaps you can find one with a shorter hold time than Implicity. It's not an issue for me, so I am not up-to-date on this issue, but 10 days seems like a long time.

I would be inclined to assess the problem in terms of where I am having to spend the most of my banking time, and which institutions are making that time easiest for me to deal with, and go from there.

I also wouldn't rule out a BigBank account, for the breadth of services, although you seem to be managing OK without it right now. I think their hold periods aren't as long.

Also consider Accelerate and Oaken for RRSP, RRIF, TFSA and non registered GICs. Depending on your age also consider only dealing with a financial institution that has both RRSP and RRIF and not RRSP only. For a TFSA savings account consider People's Trust.

I do not recommend Outlook Financial as their service and system is poor.

I know I have really never said this before but the likes of PC running off of the back bone of one of the big 5 and is or isn't CDIC combined or separate. I know what I am saying is not going to be too popular but, personally, I would stay away from PC.

Loonie...there was a clear winner.....but closed....Citizens Bank of Canada owned by VanCity Credit Union.

I don't like PC either, but have never dealt with them, so I thought that if gbdigital is happy with them, then that's up to him/her.
My understanding is that PC is under the CIBC umbrella for CDIC (deposit insurance) purposes, as kanaka suggests, and that is one reason I don't like them, because in my mind it's not really honest to have two banks with only one set of insurance coverage, as most consumers would never notice this problem and could have money in both places. In addition, figuring out who actually owns them is a convoluted path. They are wholly owned by Loblaw, which in turn is owned by George Weston, neither of which is CIBC bank. If I want to know how they are doing on the stock exchange, should I be looking at CIBC, Loblaw, or George Weston? - each of whom has their own ticker. Too confusing.

The limitation with Hubert is that they don't offer chequing or RESP, which you are getting from PC. The places that offer the best rates either don't offer chequing or offer it at a price that is a bit high. If you rarely write them, it shouldn't be a problem to use Accelerate.

It sounds like you are really just looking for a home for your RRSP and RESP. I agree with kanaka that interest rates are likely to change in the next several weeks, and they will almost certainly go down. So, it depends on whether you are looking at just a savings-type account or GICs for your RRSP and RESP. If you are not going to need these funds in the next few years, you might be considering GICs. If so, you shouldn't wait, because those rates are likely to go down soon. For RRSP, Hubert is the best bet right now, but they don't offer RESP.

For RESP, if you are in Ontario, you could consider DUCA credit union - rates are better than PC at least. It can be hard to find institutions with better rates that do offer RESPs. Meridian credit union, also Ontario, has a daily interest RESP, currently at 1.75%.

Loonie said
Also, you will eventually hit the CDIC $100,000 limit with your RRSP at PC, and will have to consider other options.

That statement may be a little misleading. It is assuming that the investments in the RRSP are only being held in interest bearing or otherwise CDIC insurable products. CDIC doesn't for instance insure mutual funds, stock holdings, ETFs, etc..

That may or may not be the case for the OP now or perhaps in the future. It's important to recognize that fact. CIPF coverage for those other investments would be another topic...

kanaka said

Back in the 60's when I went to high school I had a teacher that explained his theory was; for example to have your transmission repaired at a specialist transmission shop not a garage or to buy a suit at a men's shop not a department store. That has always stuck with me and has proven good results over the years....so why bank at a super market???? And even though I am not fond to shop for groceries there.....one thing I continue to notice.....no one working there ever smiles....and that a a huge sign of poor management.

You echo the sentiments of Oaken in an earlier campaign, where they mocked the "grocery bank", the "fruit bank" and I think one other. I found it amusing, regardless of what one might think of these various banks. I also suspect it was effective.

Yes, I did briefly mention Meridian at the end of #7 above in regards to RESPs, precisely because so few of the better-rate institutions offer it.

I have never used them, but they seem to be in a big advertising campaign at the moment, so they must be trying to expand. I have no reason to think there is necessarily anything wrong with them. If you become a member, you would have the right to raise the question about the chequing account and see if you can persuade them to set up another arrangement. Looks like you can get up to 15 cheques/mo. for $5., which isn't too bad.

However, their savings account interest rate is only 1.6%. It's better than PC, but not as good as Implicity, currently at 1.85%.

I think what this comes down to, now that you have given us a bit more info, setting aside the issue of the chequing account for now, is that you will have to decide which is more important to you: getting a higher rate of return or the convenience of one-stop shopping? It sounds like you are leaning towards the latter.

To some extent, this may depend on how much money you have. A difference of 25 basis points (1/4 of 1 per cent) doesn't have a lot of impact on, for example, $10,000, i.e. $25/yr, so that the convenience aspect may be the most important. If you have $100,000 in total, it could make a difference of $250/yr., which can add up after a few years.

However, this still may not be significant enough for you to want to deal with 2 institutions.

I think that since you are really telling us that what you need is a lot of flexibility to be able to get at all your money, then there is another route that you should look at, as follows.

There are a few institutions that offer GICs of 1 year to 18 months which are completely cashable without penalty, and also offer significantly better rates.

Two that come to mind immediately are Hubert credit union's 1 year GIC and Luminus credit union's 18 month GIC. Luminus is in Toronto. Hubert is in Manitoba, like Implicity.

Hubert: https://www.happysavings.ca/11new-page.aspx offers a rate which escalates during the one-year period from 2.2 to 2.5%, averaging out at 2.35% if you leave it in for the whole year. You can withdraw the money at any time during the year, but you only get the interest up to the most recent quarter, i.e. the last interest payment, so timing of withdrawals does matter. I know one person personally who took advantage of this offer quite a while ago, and all is well.

Luminus: https://www.luminusfinancial.com/Personal/Rates/ offers a straight 2.35%, but it is for 18 months and totally cashable with interest to date at any time. This offer is good until March 31, they say. I know 2 people who have taken advantage of this offer in person and both said they had a positive experience.

I think you can sign up for both of these online. Please verify the details for yourself. Never take anything here as gospel truth!

At 2.35%, the difference from Meridian's 1.6% is potentially more significant. In addition, you are guaranteed the rate of 2.35%, but the 1.6% is subject to change. The difference then becomes 75 basis points, or 3 times the above calculations. If you had $100,000, it would be worth $750/yr extra. With Luminus being an 18 month GIC, the difference on $100,000 would be about $1125, assuming a constant rate at Meridian.

You may not feel that this is worthwhile for you until you have more money, but it's something to think about. If you do decide to go this route, I suggest you do it very soon, as both offers could be withdrawn, and one will be for sure in a month. I also recommend, if you do this, especially for non-registered savings, that you consider putting the money in several smaller GICs at the same rate. That way, if you need the money, you don't have to lose the entire investment return, just cash in the amount you require. This can be more complicated with registered funds, as there may be a withdrawal or transfer fee for each separate GIC.

Something else to consider: I would be very nervous that Meridian might reduce their daily interest rate in the near future, which would make the spread to 1.85% or 2.35% even more significant. They are in the midst of a major advertising campaign, including TV ads. Typically, with all institutions, rates go down when that is over. Second, in my opinion they are more or less on a par with DUCA credit union or Alterna credit union in terms of the services offered, market and so on. DUCA and Alterna both offer lower rates. DUCA's daily interest is currently 1.45%, and I think Alterna's might be even lower, not sure. Other Ontario credit unions generally offer even worse rates!

It really depends on how much money you have, the likelihood of needing the various segments of it, and the balance you are seeking between convenience and returns.

Does anyone else have any other ideas?

Keep in mind the few places that offer early redemption of a GIC comes with a penalty which will equate, if you are lucky, with a whopping earning of 1 %. But do consider portion of your funds in a GIC with a term that loosely matches your time frame. Also consider the 2.5% TFSA savings account at People's Trust as you could put in 30000 if you have not used your contribution room. Withdrawal from that costs you nothing and the only hitch is that you cannot re-contribute till the next year....and think of this....the 2.5% is tax free....so you may be making the equivalent of 3% in a taxable account.

Loonie said

...
Hubert: https://www.happysavings.ca/11new-page.aspx offers a rate which escalates during the one-year period from 2.2 to 2.5%, averaging out at 2.35% if you leave it in for the whole year. You can withdraw the money at any time during the year, but you only get the interest up to the most recent quarter, i.e. the last interest payment, so timing of withdrawals does matter. I know one person personally who took advantage of this offer quite a while ago, and all is well.
...

I'm not sure if Hubert's escalating 1-year term deposit is cashable anytime. This wording on their page suggests that it's cashable only on the three, six, and nine months dates:

The good news? You’re not locked in for the entire year – you can redeem your term after three, six or nine months. The even better news? If you sign up for the term special and keep your funds in place for the entire year, you’ll earn an average rate of 2.35% for the year. Not too shabby, is it?

kanaka said

Keep in mind the few places that offer early redemption of a GIC comes with a penalty which will equate, if you are lucky, with a whopping earning of 1 %. But do consider portion of your funds in a GIC with a term that loosely matches your time frame. Also consider the 2.5% TFSA savings account at People's Trust as you could put in 30000 if you have not used your contribution room. Withdrawal from that costs you nothing and the only hitch is that you cannot re-contribute till the next year....and think of this....the 2.5% is tax free....so you may be making the equivalent of 3% in a taxable account.

According to email correspondence, Hubert and Luminus do not penalize early withdrawals. Some other institutions do, however, just as kanaka says, and so I did not mention them. However, you should seek your own confirmation on this important consideration.