Why are GIC rates lower in registered accounts with some institutions? | Page 2 | GIC discussions | Discussion forum

savemoresaveoften said

It is more like big banks can "attract" money with a lower yield than the smaller guys. Think credit quality/risk. Most if not all that are regular on this forum feel comfortable over the CDIC limit at the big6, not so much with the smaller guys..  

I view all banks with CDIC coverage as low risk places for savings accounts and GICs. The risk difference between the big6 banks and publicly traded smaller banks is very minor to me, and in most cases, do not justify the rate differential.

savemoresaveoften said

it may be to you, but obv big players have been able to source their funding at rates below the smaller guys, which is a fact. Just because a smaller player is publicly does not mean anything credit wise, the Home Bank/Trust fiasco the best example of recent memory.

Also when you say "CDIC coverage", that only covers you the first $100k, which is a tiny amount these days.  

It is easy to monitor financial status of publicly traded small banks by reviewing quarterly reports. If the small bank status worries me, I avoid them or withdraw money from savings account. I follow the, limit GICs at each bank to 100k rule. I evaluate the smaller banks based on risk of losing money in savings account/GICs.

savemoresaveoften said

What u said is what one can do. But that does not justify why a big bank needs to pay same rate as a smaller player when investors are willing to accept a lower yield for the piece of mind.
No different than when someone prefer CDIC protected GIC from a bank vs the bank’s shares, which offer a higher yield and preferential tax treatment too,  

I use banks, trust companies and credit unions for cash; cash consists of HISA & to a lesser extent, GICs. I use brokerages for investments. I do not like bank shares now. With financial monitoring, some of the publicly listed smaller banks with higher rates are significantly better than the larger banks for HISA & GICs.