New client offer - earn 6.25% for 153 days | Simplii Financial | Discussion forum

fixed rate or subject to change a la DUCA?

MAC99 said

I’ve just called and was that:

The rate is fixed and won’t change during the offer period.

Their online terms indicate otherwise though: “Regular and Promotional Interest rates may change at any time without prior notice.” **

Actually, the terms confirm what the CSR said: the special rate (6.25%) is fixed:
"Any change to the Regular Interest rate (or the applicable interest rate tier) will result in a corresponding change to the Promotional Interest rate so that the special annual interest rate will remain constant for the Promotional Rate Period."

I am taking advantage of this offer, so I will keep an eye on the rate. If anything changes, I will report it. Since I have opened a joint account it took a bit longer ... but I still have quite a bit left from the 153 days. This is much better than the 5.5% for 3 months offer which I had from Tangerine. At least, it appears to be at this time.

Loonie said

I have to wonder though, what is the back story? Why are they making such an offer, well above other available promos, at a time when rates are falling? What is going on?
Comments?

… We are still in rate inversion, but that doesn't seem like much of an explanation.

It's a promotion to attract new clients for Simplii.

Simplii is also offering $500 to those who become a Simplii client after January 31, open a Simplii chequing account now, and start certain direct deposits to the new chequing account.

I suspect Simplii does need to offer something like 6.25% to get people to try them out.

5% or 5.75% is not exciting enough for people to go through the onboarding when people may already have access to a 5.5% savings account offer reported here.

Online-only offerings like Simplii don't compete with full-service offerings like RBC Royal Bank or TD Canada Trust. Different set of customers.

When CIBC partnered with Loblaw for PC Financial consumer banking in 1996, some people thought that would crater the market for traditional full service consumer banking and its service fees. That would including CIBC's own traditional consumer banking business.

Decades later, nothing like that happened. Over that time, RBC Royal Bank actually raised the fee on its Signature banking package from around $12/month to $16.

The 6.25% for 153 days is generous. At the same time, only certain people can take advantage of the rate. Only those who open the Simplii HISA within 60 days of becoming a Simplii client, by opening any Simplii product, can qualify:

2. Eligibility

To be eligible for this HISA Offer, you must:

1. Be a new client with no prior relationship with Simplii Financial (a “New Simplii Client”). To become a Simplii Financial client, you must apply and be approved for a Simplii Financial product. When you apply for your first Simplii Financial product, we will create a unique client identification number for you (your “Client Number”); and
2. Open a HISA for the first time as the primary accountholder during the Offer Period and within 60 days after your Client Number was created (“Eligible HISA”).

…

Full-service branch banking CIBC is not going send people to their online-only no-monthly-fee Simplii division. Just like Empire's flagship Sobey stores aren't going to send people to Empire's discount Fresh Co stores.

Attracting short-term deposits isn't a big challenge for CIBC. The Simplii no-fee chequing and savings accounts help bring clients in. Hopefully, the new clients will also apply for their credit card, apply for a loan, apply for a mortgage, or invest in their mutual funds.

Yes, CIBC is very hopeful as most of the people who try out Simplii won't end up applying for their Simplii credit card or investing in their Simplii mutual funds.

Better to let competitors have pay the 4.25%+ for five-year deposits, for example, than CIBC, which can pay just 3.7% to 3.8% for five-year deposits. That extra cost to competitors hobbles the competitors' feet!

You'll receive promotional interest for 153 days from the day the Simplii HISA is opened:

1. Promotional Rate Period

If you meet the eligibility criteria and other conditions described in these Terms, the balance of your Eligible HISA (up to $1,000,000) will earn Promotional Interest (defined below) for 153 days (which is about 5 months) from the date the HISA was opened (the "Promotional Rate Period").

The "Promotional Rate Period" is not the same as the "Offer Period" (August 1, 2024 12:00 am UTC to October 31, 2024 11:59 pm UTC).

Simplii reserves the right to cancel the offer any time. So, the offer may not be still around to accept should one wait until October 15:

4. Restrictions
…
… Simplii Financial reserves the right to cancel or change the terms of the HISA Offer at any time, for any reason, without notice and revoke the HISA Offer for any customer who appears to be manipulating or abusing the HISA Offer, or is engaged in any suspicious/fraudulent activity. …

Competitors have not been hobbled. It seems more likely that CIBC now sees them as a threat, so Simplii is trying to lure their customers with this unusual offer.
CIBC had to join their ranks with the invention of Simplii, GICs or not. However, I think CIBC sees no value to them in people like me putting money in Simplii, even though it's very obvious that I'm not going to put it into CIBC per se. Maybe they'll figure it out one of these days but they probably prefer the lower hanging fruit They frequently push their credit cards etc at me. I imagine people with credit scores over 850 are hard to come by.

Loonie said
Competitors have not been hobbled. It seems more likely that CIBC now sees them as a threat, so Simplii is trying to lure their customers with this unusual offer.
CIBC had to join their ranks with the invention of Simplii, GICs or not. …

The competitors have been hobbled. The higher deposit rates competitors, like Home Trust, pay force them, to focus on non-prime mortgages that the banks, like CIBC, have turned down. There isn't enough of a spread on prime mortgages to make it worth Home Trust's while.

Simplii is what remains after Loblaw ended their banking joint venture with CIBC. Bank of Montreal had a similar banking venture with Sobey's. But, BMO decided not to keep it going after the venture ended.

There's no consequences for the large branch financial institutions to not bother with the online-only banking channel. Desjardins closed online-only Zag Bank with no consequences. Royal Bank closed the online-only Ally with no consequences after it acquired Ally Canada for its auto financing business.

The Simplii offer is just normal marketing activity. Just like RBC Royal Bank is offering a free Apple iPad if one is willing try out their $16.95/month or $30/month banking package until at least September 30, 2025.

Norman1: Ally (GMAC/Resmor) was never an online-only bank. I don't even know if they had an online interface when they first appeared. But I always dealt with them over the phone and they were great - and they never mentioned online service, let alone trying to force me to it.

Ally always answered the phone without a wait, and their agents were knowledgeable and careful to make sure I and they understood matters correctly. And they offered the same rates to everyone, without trickery or teasers.

Their Canadian operations were definitely bought out by Royal Bank of Canada to put them out of business, though they'd been hit badly by a major Ponzi fraud and weakened. Other parts of Ally continue without the Canadian retail banking.

RBC took over and respected the terms of my Ally holdings, but they tried their darnedest to force me into fee-paid accounts or withdrawal fees, even repeatedly denying that free pre-authorized withdrawals exited until I had my other FI call them and summon the amount.

I do miss them. Particularly for their monthly compounding and interest-payout (which allowed me to keep a 5-year term just under the CDIC insurance limit), and of course their great no-haggle rates.