LBC reduces its HISA rate to 1.5% | LBC Digital | Discussion forum

My money is already on its way to Peoples Bank.

AltaRed said

Could you explain how that is relevant to this LBC Digital thread? Are you transferring from LBC Digital?  

I think that's exactly what she/he meant. (transferring money out of LBC)
And my money is now on its way to WealthOne bank.

I can't imagine worrying about a $500k tier but to each their own.

picassocat said

Could you explain how that is relevant to this LBC Digital thread?  

I can answer that

LBC has a tired interest rate above 500k

That is what he was referring to because I said Motive does not have this tiered rate.

I always believe I have offended someone on this forum, henceforth the aggressive response, it turns of he/she is just someone that is aggressive and abrasive for some reason.

It is best not to judge other people's financial decision, they may have a several million dollars of liquid assets, which means keeping half a million of cash around may not be unreasonable (although it is too conservative in my opinion).

AltaRed said

The latest from S&P on Laurentian

S&P Global Ratings affirmed its BBB rating on Laurentian Bank of Canada, on expectations that its capital ratios will provide enough cushion to offset the abrupt downturn caused by the COVID-19 pandemic.

The outlook remains negative, reflecting the possibility for "substantially lower" profitability.

The rating agency noted that the bank's allowance ratio of 0.44% is weaker than the average 0.78% for domestic systemically important banks, which could lead to further credit loss provisions and weaker profitability in 2020.

  

Re BBB rating on Laurentian and Equitable/EQ. How does that compare to ratings on Motive/CWB and Peoples?

Rating agencies do have some differences for various institutions, e.g. DBRS vs Moodys vs S&P.

I suspect companies like Peoples Trust are not rated because they don't issue bonds or debentures or preferred shares in the open market, nor have common equity traded on the stock market. They also primarily operate in the consumer and small business markets. The only way to know how healthy they may be is from their financial reports and the trends thereof.

It is also a reason why the brokerages typically will generally not carry their GICs in their product mix. When I go to buy a GIC at a discount brokerage like Scotia iTrade, they generally list the credit ratings of the issuer. In a few cases, they might carry a few "not rated" issuers like Home Equity or Canadian Tire Bank, the latter of which might be because CT Financial Services is a sub of CT which IS credit rated.

Generally speaking, I will only buy GICs from issuers with a published credit rating of BBB or higher. I have stooped to as low as Home Trust which I think is still at BB+ (non-investment grade) and I broke this rule just this past week by buying a GIC from Home Equity (no credit rating) but is CDIC insured.

Added: I agree that Deposit Insurance coverage is the primary indicator for the retail consumer to use to commit their money to GICs and HISAs. Most do not understand the implications of credit ratings or that they can change in short order (e.g. Home Capital in 2017), nor can they interpret financial reports that well. Thus reliance on Deposit Insurance AND generally keeping within Deposit Insurance limits in most cases.

I acknowledge my response above regarding LBC's second tier threshold was crass or blunt. I need to temper my responses. I just couldn't imagine why anyone would have that much money committed to a low credit rated financial institution. Royal Bank - no question. LBC or EQ Bank.... not a chance.

topgun said

… I deal with iTrade as well. My only concern was are they insured by CDIC. I picked the highest rates for some 2,3,4 and 5 year GIC's. They were competitive rates. Today I do not consider them competitive for 5 year rates. When a couple GIC's mature next month I plan on moving money elsewhere. .50% more at a MB CU makes sense to me. iTrade charges .9% for the GIC's issued by third parties. I do not pay this but it shows on my annual fee and performance statement at yearend.

I'm curious, is that 0.9% in total or 0.9% per annum?

That's quite hefty if it is 0.9% per year of the GIC. The customary GIC brokerage commission is ¼% for each year of the GIC's term. For a five year GIC, the customary brokerage commission would be 1¼%.

Norman1 said

topgun said

… I deal with iTrade as well. My only concern was are they insured by CDIC. I picked the highest rates for some 2,3,4 and 5 year GIC's. They were competitive rates. Today I do not consider them competitive for 5 year rates. When a couple GIC's mature next month I plan on moving money elsewhere. .50% more at a MB CU makes sense to me. iTrade charges .9% for the GIC's issued by third parties. I do not pay this but it shows on my annual fee and performance statement at yearend.

I'm curious, is that 0.9% in total or 0.9% per annum?

That's quite hefty if it is 0.9% per year of the GIC. The customary GIC brokerage commission is ¼% for each year of the GIC's term. For a five year GIC, the customary brokerage commission would be 1¼%.  

That is a one time charge. You purchase a 2 to 5 year GIC at iTrade. iTrade charges the third party .9%. Invest $1,000 iTrade charges the issuer $9. iTrade sells GIC's for 2-5 years. It is not worth selling 1 year GIC since the fee to issuer would be too high.