Add Equity Credit Union to Rate Comparison Charts? | Page 2 | GIC discussions | Discussion forum

First of all, whether it's CDIC or DICO insured, the limits are the limits for investments. If you choose to invest the maximum insurable amount ($100,000 or $250,000 as the case may be), the accrued interest, in the case of an FI's failure, would not be covered by the insurance as it would be in excess of the maximum allowed.

Second, if you want to get your interest payments monthly, if the FI allows that, your interest rate would likely be lowered. See Oaken Financial's investment rate schedule as an example.
https://www.oaken.com/gic-rates/

Loonie said
I would not be confident that a small CU like this would even do auto-transfers to an external account, but one could ask.

While it's true that Oaken does decrease the rate for more frequent withdrawals, this is clearly stated when you look at their website.

I would consider it disingenuous if the FI only offered you the options of a reduced rate for monthly withdrawals or putting all the interest at possible risk while still claiming their interest rate was credible and sound.

I suspect they haven't thought this through.

The rate no longer appears on either their website or their facebook page. It's either top secret or gone.  

Yes they can do everything electronically - no need to go to the branch.
I doubt they expect to attract "the masses" who buy one $1000 GIC; perhaps $250K from 5 or 10 or 15 people will meet their current needs. The offer was available yesterday and there was no wide advertising. Maybe there are enough Equity CU clients in Ajax and surrounding area to be aware of this. I think saying they haven't thought it through may not be true - they may know exactly what they want. (Probably they don't want to do a load of $1000 GICs and they feel they can get 5 or 10 or 15 clients who will invest $250K.)

gicjunkie said

I think that Oaken is the exception rather than the rule. Most FIs don't offer the interest payment options that Oaken does. Usually one is offered interest annually, either compounded or paid out on the anniversary date. The advertised GIC interest rates for all companies is for one of these 2 options. Any other frequency of payment would adjust the rate offered, and that is to be expected, IMHO.

Because of deposit insurance limits, many investors only invest an amount that, when added to the annual accrued interest, equals the insured limits. That would be a problem in the Equity situation where they expect you to max out your insurance coverage on the principal to get a special rate, thus forgoing insurance on the annual interest. Maybe, if one were really interested in the $250,000.00 investment, Equity would allow you the special rate if you only invested $243,546, earning $6,454 interest annually for a total commitment of $250,000, all being insured. Never hurts to ask.  

The answer was NO for a "special rate"
The answer was NO for monthly interest.
They got what they wanted so the promo will be closed or has now been closed - there will be a new promo with the same principal but with a fair drop in interest rate.
Actually very efficient from a business point of view - labour effort is low but attracts significant funds in one shot so it keeps the overhead down for this small CU. Apparently they have been in business for 40 years, have established their niche and are good at it. (They are not an Oaken)
But I do find it strange about the uninsured interest component - must be something in it for them - perhaps it reduces the premiums they need to pay to DICO. Perhaps Doug who I believe worked at a CU has the knowledge as to why this CU would issue a GIC at full 250K allowing no insurance coverage of the interest component. There has to be a reason otherwise they could accept $243K to provide the depositor with that safety cushion.