High interest rates for savings, GICs and MMFs (2017)

Banking and Saving strategies, maximizing interest rates, budgeting, GICs, HISAs.
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adrian2
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by adrian2 »

CROCKD wrote: 10 Apr 2017 14:49 Most months the interest is only in the order of $1-$2 little enough I know. I was not paid any interest for March. When I enquired I was told that as it was less than $0.75 they don't pay interest. (I calculated it as $0.63)
I have challenged them to show me where on their documentation it states this limitation on interest paid. So far I have not received a call back.
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TD Waterhouse, on margin accounts, does not pay or charge interest when the monthly interest is less than $5.
They do pay even a few cents in registered accounts (no margin allowed there).

On the other side of the coin, the balance in my Tangerine US$ account was so low that the monthly interest was below one cent.
However, internally they were calculating with a higher precision so every so many months they would pay a penny accumulated from many fractions.
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by Pickles »

adrian2 wrote: 10 Apr 2017 15:19
TD Waterhouse, on margin accounts, does not pay or charge interest when the monthly interest is less than $5.
They do pay even a few cents in registered accounts (no margin allowed there).
BMOIL does not pay interest out on its HISA accounts unless it is $5 or more.
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by gsp_ »

Street Capital Bank, a new Schedule I bank is offering above market GIC rates. Seem to only be available through deposit brokers, CDIC insured.

1yr 2.15%
2yr 2.25%
3yr 2.40%
4yr 2.45%
5yr 2.55%

Street Capital Bank of Canada Commences Operations.

https://streetcapital.ca/GICs
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by amphitryon »

Oaken just published:

''As part of our commitment to making customers the first to know about our rate changes, please note that effective Tuesday, April 25, 2017, we'll be increasing our interest rates for the following terms:

Long-term GICs (registered and non-registered)

1 Year GIC – 2.00% (currently 1.85%)
18 Month GIC – 2.10% (currently 1.95%)
2 Year GIC – 2.20% (currently 2.00%)
3 Year GIC – 2.30% (currently 2.05%)
4 Year GIC – 2.40% (currently 2.15%)
5 Year GIC – 2.50% (currently 2.25%)

Short-term GICs

30-59 Days – 1.75% (currently 1.50%)
60-89 Days – 1.75% (currently 1.50%)
90-119 Days – 1.85% (currently 1.60%)
120-179 Days – 1.90% (currently 1.65%)
180-269 Days – 1.95% (currently 1.70%)
270-365 Days – 1.95% (currently 1.70%)

1 Year Cashable GICs

After 30 Days – 1.75% (currently 1.50%)
After 90 Days – 1.85% (currently 1.65%)

Oaken Savings Account

1.75% (currently 1.50%)

These new rates will be applied automatically for all GICs booked on April 14, 2017 or later.

All other Oaken rates remain unchanged.''
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by iluvnascar »

It would appear that Oaken's troubles with the regulator (i.e. Home Trust) are having an impact.
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by skepticus »

Would anyone deposit/keep their money in Oaken, given recent unfavourable revelations?
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by SoninlawofGus »

skepticus wrote: 24 Apr 2017 18:19 Would anyone deposit/keep their money in Oaken, given recent unfavourable revelations?
I took my cash out on the off-chance that something could occur quickly and tie up my cash -- but I can do better elsewhere anyway. I have a modest-sized GIC in an RRSP that I cannot sell, but I am not concerned because it is backed by CDIC. I can't see how any new deposit would be affected until/unless CDIC removes their backing before that deposit is made -- which prompts the question of where/how do they remove backing, and would new customers see that immediately? I would assume that CDIC must have some criteria for saying "no" to an FI.

Added: Home Trust and Home Back are both listed on the CDIC site. It might pay to check regularly for any new deposits to institutions having issues.
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by Okanagan »

skepticus wrote: 24 Apr 2017 18:19 Would anyone deposit/keep their money in Oaken, given recent unfavourable revelations?
I don't think there should be a problem as long as you keep under the 100K CDIC limit.....I am locked in for a 5 yr GIC so I have no choice but would still put additional funds in within CDIC limits.
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by NorthernRaven »

SoninlawofGus wrote: 24 Apr 2017 19:40 ... I am not concerned because it is backed by CDIC. I can't see how any new deposit would be affected until/unless CDIC removes their backing before that deposit is made -- which prompts the question of where/how do they remove backing, and would new customers see that immediately? I would assume that CDIC must have some criteria for saying "no" to an FI.
You'd have to check the legislation, but I suspect CDIC membership is mandatory for bank and trust companies, and CDIC certainly isn't going to be "removing their coverage". OSFI is the main regulator, and I'm sure they're keeping an eye on things, but there's been no indication that Home's underlying business is in particularly worse shape than, say, Equitable, assuming, of course they can continue with funding and originations.
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by deaddog »

Oaken increasing rates today. Savings up to 1.75 % from 1.50%
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by skepticus »

Okanagan wrote: 24 Apr 2017 20:13
skepticus wrote: 24 Apr 2017 18:19 Would anyone deposit/keep their money in Oaken, given recent unfavourable revelations?
I don't think there should be a problem as long as you keep under the 100K CDIC limit.....I am locked in for a 5 yr GIC so I have no choice but would still put additional funds in within CDIC limits.
Hi Okanagan,

In the event of Oaken going bust...if an investor needed the money right away I recall Bruce Cohen mentioning several years ago that his banking institution failed, and it took CDIC many months to return Bruce's money to him. Presumably no interest was paid out during this period, so it was a lost earning opportunity.

Too bad that you're locked in. Still, I'll bet your getting a decent interest rate for these five years.
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by AltaRed »

I would not have a problem with GICs in Home Trust/Oaken either, within CDIC limits of course. Both my spouse and ex have them in their RRSPs. But I wouldn't leave HISA cash there because by definition, HISA funds are intended to be highly liquid, quickly available to be used elsewhere.
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by SoninlawofGus »

NorthernRaven wrote: 24 Apr 2017 20:29 CDIC certainly isn't going to be "removing their coverage".
I was referring only to new deposits. You might be correct that the coverage is mandatory for any bank/trust. Seems logical. Dues are payable to CDIC; not sure how that plays into it. In any case, I agree any deposits made under existing coverage would be good to go.

skepticus wrote: 25 Apr 2017 00:19 Hi Okanagan,

In the event of Oaken going bust...if an investor needed the money right away I recall Bruce Cohen mentioning several years ago that his banking institution failed, and it took CDIC many months to return Bruce's money to him. Presumably no interest was paid out during this period, so it was a lost earning opportunity.
Coverage includes interest, though I suspect the waiting period could be, as you write, a lost opportunity -- though short. I believe the target is to pay out within two months, though I could find only a second-hand reference to that.
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by NorthernRaven »

SoninlawofGus wrote: 25 Apr 2017 08:03
NorthernRaven wrote: 24 Apr 2017 20:29 CDIC certainly isn't going to be "removing their coverage".
I was referring only to new deposits. You might be correct that the coverage is mandatory for any bank/trust. Seems logical. Dues are payable to CDIC; not sure how that plays into it. In any case, I agree any deposits made under existing coverage would be good to go.
If CDIC believes that a member institution is in breach of any CDIC by- laws, or is in breach of any condition of CDIC’s policy of deposit insurance, and the institution fails to demonstrate satisfactory progress in remedying the situation, CDIC may terminate the institution’s deposit insurance policy. The Canada Deposit Insurance Corporation Act governs the process and timing of the termination. Deposits cannot be accepted after termination, so this will ultimately lead to the failure of the member institution.

Anything bad enough to cause CDIC to pull their policy would also have OSFI descending in force, and effectively before this time they would be in resolution mode to sell the institution off, wind it up, or whatever.

Again, there's no real indication that the basic business model of Home (which is presumably pretty much the same as Equitable) isn't sustainable. So you have confusion in the C-suites, and possible confidence issues in deposit gathering. A very big loss in their deposit-gathering capability might force them into being acquired or broken up, but there doesn't seem to be anything that would cause them anywhere near insolvency. For liquidity, I suspect the Bank of Canada and the regulators would act as lender of last resort to a fairly significant degree (I imagine they have a goodly chunk of CMHC mortgage bonds among their assets, for instance), as letting them go under for short-term funding problems would be a huge blow to the alt mortgage market.
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by NorthernRaven »

CDIC resolution:
In certain cases, a failed bank is closed and insured deposits are reimbursed to depositors. The assets of the failed bank are distributed to the bank's depositors and other creditors through a court-supervised liquidation process.

In liquidation, the failed bank ceases to operate, all contracts are terminated and its critical financial services are no longer available, including access to accounts. CDIC automatically and rapidly reimburses insured deposits up to $100,000 (including interest) per insurance category. Depositors do not have to file a claim. CDIC aims to reimburse most accounts within three business days. Due to their complexity, deposits such as trusts and registered accounts could take longer.
Emphasis added. They haven't done this for real in 20 years, so there might be burps in the systems.
Last edited by NorthernRaven on 25 Apr 2017 11:41, edited 1 time in total.
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by SoninlawofGus »

Great info, NR, thanks.
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Re: High interest rates for savings, GICs and MMFs (2017)

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Re: High interest rates for savings, GICs and MMFs (2017)

Post by StuBee »

I have a 5 year Home Bank GIC for 10K$ in a spousal RRSP and a 1 year Home trust GIC for 20K$ in my RRSP. Both of these are held by institutions under Home Capital Group (TSX:HCG).

Question #1 Are they affected by the ongoing situation concerning HCG?
Question #2 They are CDIC insured. Does that mean insured for capital and interest or only capital?
Question #3 If Home trust becomes insolvent and CDIC becomes involved, how long can it take for the GIC holder to receive their capital/interest?

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Re: High interest rates for savings, GICs and MMFs (2017)

Post by NorthernRaven »

StuBee wrote: 26 Apr 2017 15:14 I have a 5 year Home Bank GIC for 10K$ in a spousal RRSP and a 1 year Home trust GIC for 20K$ in my RRSP. Both of these are held by institutions under Home Capital Group (TSX:HCG).

Question #1 Are they affected by the ongoing situation concerning HCG?
Question #2 They are CDIC insured. Does that mean insured for capital and interest or only capital?
Question #3 If Home trust becomes insolvent and CDIC becomes involved, how long can it take for the GIC holder to receive their capital/interest?
Just three posts up you will see that CDIC reimburses for $100K of principal+interest, and aims for reimbursement for most accounts within 3 business days.
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by StuBee »

Thanks! Somehow, though I reviewed this thread, I overlooked your quote. I think I only read the non-quoted part of your post.

It is reassuring to know that CDIC acts relatively quickly. I have tried to match my assets to my liabilities so it is important that the cash becomes available about when the liability will take place (give or take one or two trimesters...)
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by Hammerer »

Hrmmmm, at what point should holders of funds at a credit union start worrying...

Not being public companies, it's hard to see how they're faring on a minute by minute basis.

I'm sure CDIC and the various provincial insurers hold similarly pitiful amounts in their insurance funds (Ontario is ~0.8 cents on the dollar).

I guess it might be time to ensure I can make a quick exit if necessary into a chartered, or hard-cash.

This reminds me, a family member has some US$ thousands deposited (=uninsured). Timing to convert that is getting better.

Anyone have any experience with a provincial deposit insurer?
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by Hogwild »

Well, with all the excitement and intrigue going on with Home Capital Group, I thought I'd take a peek at the webpage of one of their rivals-Equitable Bank. Equitable is a deposit institution but also a mortgage lender on the spread.

EQB100 and EQB200 fundserv HISA accounts raised their yields today by 50 basis points! Anyone know if this is just to assuage the market, or if there is something else going on?

https://www.equitablebank.ca/hisa

Historical HISA Rates

Date Series A EQB 100 Series F EQB 200
April 27, 2017 1.50% 1.75%
April 26, 2017 1.00% 1.25%
October 3, 2016 0.90% 1.15%
February 1, 2016 1.05% 1.30%
July 23, 2015 1.30% 1.55%
March 4, 2015 1.45% 1.70%
September 24, 2013 1.50% 1.75%


Darn! Is there no way to change fonts here or to post HTML instead of plain text so formatting is retained? Alternatively, can I create
a table somehow?
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by Profit not Prophet »

I've set a couple hisa accounts up for my non sheltered money and squeezing a little bit more. I've got a bit of dough spread across rrsp and tfsa at TD broker using the house product tdb5180(?pretty sure that's it) at 0.0075.

Any suggestions on something they might have available prior to chatting up a telephone rep?

Thanks a bunch.
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Re: High interest rates for savings, GICs and MMFs (2017)

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Hogwild wrote: 27 Apr 2017 14:35 Historical HISA Rates

Date Series A EQB 100 Series F EQB 200
April 27, 2017 1.50% 1.75%
April 26, 2017 1.00% 1.25%
October 3, 2016 0.90% 1.15%
February 1, 2016 1.05% 1.30%
July 23, 2015 1.30% 1.55%
March 4, 2015 1.45% 1.70%
September 24, 2013 1.50% 1.75%


Darn! Is there no way to change fonts here or to post HTML instead of plain text so formatting is retained? Alternatively, can I create
a table somehow?
Use [ code ]

Code: Select all

This uses fixed a width font:
123   ABC   000
8.8   iii   1.1
Not the prettiest, but it aligns numbers in columns.
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by Hogwild »

Adrian:

I get the first part, but where have you/do you specify the font or whatever else? Can you be more explicit (not removing clothes, just with this) :D
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