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Email this10:48 am
February 24, 2015
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Kidd said
i'm on hold right now with tangerine, i bought into this offer.WARNING. this is SIMPLE interest, it's not COMPOUNDED and that makes one hell of a difference over the years. i hope it's just an error on their end with the calculation.
I disagree that it makes a big difference over 3 years. If you buy a compounded GIC, you will need to pay taxes on the annual interest that you have not received or have access to. If you buy an annual pay GIC, you have the $13,500 interest on $450K to use as you wish, including paying income tax.
10:58 am
March 27, 2020
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Thanks to the OP for sharing this surprising rate hike.
I can confirm that when applying online, you are prompted to choose either annual or compound interest. I went with compound, but I appreciate (and am further surprised) that Tang is offering the same rate for either option. Typically, there's a reduction if you want annual.
Here's what the confirmation email (sent to your Tang inbox, not your regular email inbox) looks like:
Thanks for opening a new Tangerine GIC. Your GIC ######## opened on March 30, 2020, with an initial investment amount of $$$$$$$ and a fixed annual interest rate of 3.20% for a 5 year term. Interest on this GIC is calculated daily, compounded annually, and paid at maturity to your Tangerine Savings Account #########. Upon maturity of your GIC on March 30, 2025, the principal amount and interest earned will redeem to your Tangerine Savings Account #########.
Italics added.
12:07 pm
August 17, 2010
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Yes mine said the same as happy avocado.
12:42 pm
December 12, 2009
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andied20 said
I do like Doug's thoughts on why GIC rates are increasing, but I also wonder if the banks are concerned there may be panic withdrawals in the future and they are attempting to mitigate this issue by locking up funds for a considerable time.
That is part of it, @andied20, in that fixed term deposits allows the banks to match with maturities of their loans and mortgages. They could raise deposits by increasing the HISA rate, but there's nothing to tie people in.
With the corporate credit markets having seized up, the bond markets, which fund most of the mortgages, are less available to the banks, so they're having—out of necessity—to offer higher rates. I suspect this GIC rate rising while be temporary, at least until normalcy is restored to the credit markets.
In fact, it wouldn't surprise me to see the HISA rates drop another 50-100 bps (remember, some previous BoC rate drops aren't fully priced in) and GIC rates to increase further near-term.
Cheers,
Doug
12:43 pm
April 2, 2018
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Kidd said
compounded this should result, $491,727.17 NOT $490,500.00
$450,000 for 3 years at 3%
You are quite a gambler; giving somebody almost 1/2 million when they insure only 100K.
2:11 pm
April 28, 2017
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pooreva said
You are quite a gambler; giving somebody almost 1/2 million when they insure only 100K.
Tangerine is Scotia...the security is golden given all big 5 were and are super safe.
BTW, I did the same and gambler I am not.
2:12 pm
March 27, 2020
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pooreva said
You are quite a gambler; giving somebody almost 1/2 million when they insure only 100K.
While I think it's always a good idea to stay within CDIC limits (or DICO in Ontario), I think there's a scale when it comes to going beyond it. For example, I think a lot safer giving Tang or Simplii $500k than it is Joe's Credit Union and Bar-B-Que Emporium (free grill spatula with every new account).
Or to put it differently, if we get to a point where FI's like Tang and Simplii are going off a cliff and there isn't a crush of other FI's racing in to pick up the pieces, then as a country we probably have bigger problems than dead FIs...we're probably at war or being invaded by aliens. 
With this being said (and not to freak anyone out), history is full of folks who thought they were betting on a sure thing and lost that bet. For this reason, I personally don't go beyond CDIC limits.
2:51 pm
April 2, 2018
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happyavocado said
...we're probably at war or being invaded by aliens.
We are not far away. Idiotic moron with fake hairdo is already massing troupes close to our border.
If it is HISA, I do not mind and I did go way beyond CDIC when they had good promos. But GIC... 3 years... way too long for my taste.
3:13 pm
December 12, 2009
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ReX said
Tangerine is Scotia...the security is golden given all big 5 were and are super safe.
BTW, I did the same and gambler I am not.
Scotiabank may effectively guarantee its subsidiaries deposits, yes, but it's still not CDIC insurance equivalency, as @pooreva noted.
In many respects, purchasing a Scotiabank or Tangerine uninsured deposit (that is, a deposit which is, wholly or in part, above your CDIC deposit insurance limit) is roughly the same risk as purchasing a Scotiabank investment grade corporate bond (not insured by CDIC) and holding said bond to maturity. Certainly, selling a bond prior to maturity on the secondary market may incur a capital loss (or a capital gain) as it's dependent on market conditions; however, if held to maturity, it is roughly the same.
Cheers,
Doug
4:49 pm
October 21, 2013
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Good point, Doug. That gives a framework in which to consider how much to deposit.
Re: #27 above. Tangerine and Simplii are not in the same situation. Simplii is covered under CIBC's CDIC insurance; Tang stands alone. Some feel this makes Simplii more reiable.
5:20 pm
December 12, 2009
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Loonie said
Good point, Doug. That gives a framework in which to consider how much to deposit.Re: #27 above. Tangerine and Simplii are not in the same situation. Simplii is covered under CIBC's CDIC insurance; Tang stands alone. Some feel this makes Simplii more reliable.
Good point as well, Loonie, regarding the distinction between Simplii Financial and CIBC and Tangerine Bank/Scotiabank. It can be confusing for people, so is helpful to re-remind regularly. I've corrected the typo to "more reliable" in the quoted text, should you wish to correct the original. 
Regarding post # 27 specifically, while Tangerine Bank is indeed a separate CDIC issuer, I wouldn't say it's materially "less safe" than CIBC/Simplii Financial. Ultimately, should Tangerine Bank fail, as the sole owner of Tangerine, whether Scotiabank has guaranteed the deposits of Tangerine or not, ultimately, CDIC can ultimately compel Scotiabank to put up the required capital to cover any shortfall in funds not on deposit (unlikely this would ever happen, as the banks maintain strict internal controls to separate client funds from the bank's own funds) or any losses on Tangerine's mortgages. It's perhaps a little clearer with Simplii Financial in that the way it is set up, it is essentially a virtual branch transit of CIBC, just as Motive Financial is the virtual branch of Canadian Western Bank and LBC Digital is the virtual branch of Laurentian Bank. Some users, including you, have expressed concern post-death whereby the branch of domicile is in a province other than the client...I don't share that view, but if that's a concern, users should note that Simplii Financial is domiciled in Toronto, Ontario (specifically, Scarborough neighbourhood), so if they live outside Ontario, there is no local Simplii Financial branch to which they can attend and CIBC branches do not provide any service to Simplii Financial clients (other than picking up Simplii Financial bank drafts).
Peoples Trust Company and Peoples Bank of Canada follow the Scotiabank/Tangerine Bank structure, with each being separate subsidiaries of non-regulated Peoples Group that is, in turn, owned by Triple Five Group of Companies.
Equitable Bank owns Equitable Trust, the latter of which has yet to finalize its provincial-level trust company approvals and is not taking business, and Home Trust Company owns Home Bank. So, they too follow the Scotiabank/Tangerine Bank model.
Cheers,
Doug
5:33 pm
December 26, 2018
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I have no option other than wait. Bought 3months GIC with EQ bank 2 weeks ago. Definitely no one was expecting these rates from tangerine.
5:54 pm
April 6, 2013
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Doug said
…
Ultimately, should Tangerine Bank fail, as the sole owner of Tangerine, whether Scotiabank has guaranteed the deposits of Tangerine or not, ultimately, CDIC can ultimately compel Scotiabank to put up the required capital to cover any shortfall in funds not on deposit (unlikely this would ever happen, as the banks maintain strict internal controls to separate client funds from the bank's own funds) or any losses on Tangerine's mortgages.…
CDIC has no such power. That's a misinterpretation of CDIC's power to require more capital to be injected into a financial institution.
CDIC cannot force a shareholder to provide more capital. What CDIC can do is threaten the shareholder to either provide more capital or lose control of the financial institution. The shareholder can just walk away and let CDIC take control.
Tangerine deposits are not deposits with ScotiaBank. They are deposits with Tangerine Bank, a separate bank that owned by ScotiaBank. That's very different than Simplii Financial deposits which are rebranded deposits with CIBC.
6:29 pm
March 27, 2020
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I am aware that Tang and Simplii are not in the same situation. I paired them because, let's be practical here, it's not as if Scotiabank would sit on the sidelines and let Tang vaporize. The reputation damage would be fatal -- it's not even conceivable that they would let that happen.
The point I made seems pretty obvious: if we're in a situation where Tang or Simplii are going under and there is no other bank or FI racing to pick up that piece of the market share puzzle, then as a country we are in really, really big trouble -- like raving gangs breaking into your house to steal your food trouble.
I don't personally live in a prepper's (anti) paradise, and I wouldn't lose any sleep if I had more than $100k at either Tang or Simplii...or even both. But there's just no need. Except for right now, I can't remember the last time when Tang or Simplii were on top of the GIC pyramid. And even now, the spread between Tang and Oaken isn't massive. I'm happy to give up a few points to stay within CDIC, just for the extra extra peace of mind.
Now, if Tang or Simplii offered something at 4% (which is not going to happen), then that would change things...
6:30 pm
February 20, 2018
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What is more secure being over the cdic limit at a big 5 bank or being under the limit with a manitoba credit union
6:58 pm
October 21, 2013
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The world is full of things that were never supposed to happen. Like here and now, for instance. Or Australia a few short months ago. Everyone can evaluate these as they wish.
Bud, I don't see the comparison as MB has unlimited insurance.
8:10 pm
June 3, 2015
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Dean said
WOW ❗❗❗
Whoda thought Tangerine (of all places) would do that ⬆
Dean...Best Bank ever!
Tangerine....Canada's best bank. LBC.............Canada's 2nd best bank.
Hubert.....worst bank in Canada.
3:40 am
February 24, 2015
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pooreva said
happyavocado said
...we're probably at war or being invaded by aliens.We are not far away. Idiotic moron with fake hairdo is already massing troupes close to our border...
Thanks, I had a good laugh and feel a lot better now about pending invasions.
noun: troupe; plural noun: troupes
a group of dancers, actors, or other entertainers who tour to different venues.
"a dance troupe"
7:20 am
February 20, 2018
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Has anyone tried to get better than the rates offered
7:25 am
November 8, 2018
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Doug said
...I'm now shifting my recommendation from 1-3 year GIC maturities to fully 5 year maturities ...
I will be tactically shifting my large cash position into secure equities later this year when my Coast GIC matures and next year when my Concentra GIC matures. I'll probably take my cash position down to as little as $25,000.
Doug,
What we see these days is Canadian government printing money and spending it like there is no tomorrow (perhaps, they know something we don't).
Are you not concerned that this "free money" could cause inflation and hyperinflation down the road?
Maybe not this year, but what if two-three years from now the average annual deposit interest is over 10% and mortgage is 20%? Buying into 3% interest rate GIC sounds great today, but I don't have guts to lock my money in 5 years term.
Would love to hear your reasoning why does 5 year GIC make sense. Serious question.
Thanks.
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