TFSA: Peoples Trust vs Canadian Direct Financial | Tax Free Savings Accounts | Discussion forum

Negotiating position for money in a TFSA savings account is not as strong because of the transfer fees. The financial institutions know that.

Peoples Trust's Tax-Free Savings Account is currently 1.75%.

There is not as much rate history for Alterna Bank's TFSA eSavings Account. But, it is currently 1.95%.

Peoples Trust has 1-year GIC at 2.05%. If I buy GICs in a TFSA I like them to mature in December so if I want I can move the money out when it matures and then redeposit it to a TFSA (non-GIC) wherever I choose in January, or else just leave it there and renew again if I still like their GIC rates.

superd said
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Norman1: Thanks for the reply! I was wondering which transfer fees are you referring to? I've been able to transfer TFSA funds without any fees between 3 different institutions so far. So I suspect it's something with these smaller institutions?

I'm referring to possible TFSA transfer-out fees.

Yes, it depends on the financial institution. There are still some that don't charge for transfers or for withdrawals.

Some will charge for TFSA transfers, but not for TFSA withdrawals. I think Alterna Bank is an example: TFSA withdrawals are currently free. But, a TFSA transfer is $50.

Yes, careful distinctions need to be made between "transfers", which are official transactions which go into CRA's computer, and simple withdrawals. Generally there is no fee for withdrawals, but most financial institutions do have fees for transfers. Peoples does not have a transfer out fee, and neither does Hubert. Alterna does. I don't know about CDF. Fees can change at any time.

The Hubert 1-year GIC can be cashed at any time, but you will only get the interest up to the end of the most recent quarter. The interest is graduated, which rewards you for keeping the money there longer.

I agree with Bill about arranging any GICs to mature in December, but, in practice, this is difficult since deposits are typically made in January. So far, my best idea is to buy the Hubert one year GIC in January, cash it after 3 quarters in September and moved it over to their savings account, currently at 1.7%. Then, next December, you can do what you like with it, and in January start all over again.

If you followed my Hubert strategy, your rates would be:
The first three months: 1.90%
Months four to six: 2.00%
Months seven to nine: 2.10%
Months ten through twelve (assuming no rate changes) 1.7%

The average rate would be about 1.9%, which is better than Peoples and is guaranteed for up to a year, depending on how long you keep the GIC. Next December, if you choose, you can reinvest for another full year and get the full rate as long as you don't need the cash, or you can move the money or invest it for a longer term.
This is not quite as good as Alterna's 1.95, but Alterna's rate is not guaranteed at all. It could go down to 1.7 in, say, February - and I would not be too surprised if it did, all things considered, the way things are going; and then you'd have to pay $50 to move it!

If Hubert's one year rate goes up during the year, which it sometimes does, you have the option of cashing out and reinvesting at the better rate, although this is usually only beneficial if it happens after the first 3 month period. This would not be a "transfer", just a change of investment within the institution.

This guarantees you the rate for the first nine months, and you can always withdraw as needed. Another way to minimize risk is by taking up to 4 smaller GICs and then you only have to withdraw a partial amount if that's all you need. There is a minimum of $1000 per GIC for this special annual rate.

Hubert has been offering the special one year rate for a couple of years now. I think they will keep it, although rate may change. It has apparently been very popular as long as rates are low and people are hoping they will improve.

If you can't or won't consider a GIC, then I woulld go with Peoples. They were the rate leader for years on TFSAs. Their rate has gone down, but they still don't charge transfer fees. I suspect Alterna's rate may not hold, although they have been good so far. They just haven't been around long enough to have established a firm reputation.

that said, I am not fond of Peoples. They had an annoying security breach a few years ago, and many of us are still feeling the effects every time we apply for credit or for a new account. I also don't like the fact that it's a privately held bank run entirely by men. I think women have a lot to offer in the board room as they are often found to be more frugal and cautious. This is one of the reasons I prefer credit unions, as they typically have more women in management. But those are my personal opinions and may not matter to you.

A have a number of TFSA accounts, some with just a couple of dollars left in them as I've withdrawn the rest when their rates were no longer competitive. That way if they come up with an unexpected good rate the accounts are still there to be used then. Never been charged fees on withdrawals.

Loonie said "women.......are often found to be more frugal and cautious" - than men, I guess. I didn't know that.