Scotiabank MomentumPLUS Savings Account

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tightwad
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Scotiabank MomentumPLUS Savings Account

Post by tightwad » 02 Sep 2017 13:40

This account was reviewed recently by Rob Carrick in The Globe and Mail: Strange but true: A big bank savings account with decent rates

I'd like to know what members think of this particular product. It appears to be very flexible in that it can be configured to suit the needs of the client. Up to five periods of 90-, 180-, 270-, and 360-day duration can be created in any combination. The base rate is subject to change but the premium rate is locked in for the duration of a period. Multiple deposits into a period is allowed and the funds are not locked in. Considering its relatively low base rate, it is somewhat less competitive than a HISA for very short-term investments but is more competitive for longer terms. (HISAs are currently paying ~0.85%.) I think this savings account is quite innovative. What do you think?

For more information: Scotiabank MomentumPLUS Savings Account

Rates as at Sep 1, 2017

Code: Select all

			Regular	Premium	Total
		      Interest Interest Interest
			Rate	Rate	Rate
MomentumPLUS 		0.700% 	N/A 	0.700%
90-Day Premium Period 	0.700% 	0.750% 	1.450%
180-Day Premium Period 	0.700% 	0.800% 	1.500%
270-Day Premium Period 	0.700% 	0.850% 	1.550%
360-Day Premium Period 	0.700% 	0.900% 	1.600%
The following are comparative rates for short-term, non-redeemable GICS at the same institution.

Code: Select all

Term		Annual Interest Rate (Paid at Maturity)
30-59 days		0.0500%
60-89 days		0.1500%
90-119 days		0.2500%
120-149 days		0.3000%
150-179 days		0.3000%
180-269 days		0.3500%
270-364 days		0.4000%

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IdOp
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Re: Scotiabank MomentumPLUS Savings Account

Post by IdOp » 02 Sep 2017 15:47

When the Carrick article came out I took a quick look at it. I was unable to understand how it really worked. Probably some deeper digging around the Scotia website is necessary, but at that point I gave up, as it wasn't a priority. I'd also be interested to see what people who've looked at it more carefully than I did think. Is it good, or is it another complex structured product designed to benefit the bank under many conditions?

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Re: Scotiabank MomentumPLUS Savings Account

Post by brucecohen » 03 Sep 2017 10:43

I haven't looked at it but a quick google search turned up this. The deal seems pretty inflexible.

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Re: Scotiabank MomentumPLUS Savings Account

Post by IdOp » 03 Sep 2017 11:22

Thanks brucecohen, so it looks a bit like a cashable GIC. Except it's multiple cashable GICs under one umbrella if you make regular deposits I suppose. That could be a confusing way to handle a lot of small deposits.

Another question I had is what happens when the selected term is up? Since it's billed as a savings account, presumably the money stays there. But what rate does it earn, especially if you forget about it and don't select a new term, which I assume you must do? Does it default to the lowest rate, or to the same term as before? Either way it could work against someone who wasn't right on top of their many cashable GICs.

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Re: Scotiabank MomentumPLUS Savings Account

Post by BRIAN5000 » 03 Sep 2017 11:27

I'd like to know what members think
I deal with BNS but not for this, Peoples Trust and Oaken have the same or better rates no rules and I'm pretty sure other institutions do as well. BNS brings out new accounts and promotes them every once in awhile. They are sometimes good for a while them they turn to crap. Better just to set up some simple HISA at other institutions.

Sample Oaken Rates

Cashable GICs
Term
After 30 Days 1.75
After 90 Days 1.85

Short-term GICs
Term (Days)
30‐59 - 2%
60‐89 - 2%
90‐119 - 2.10%
120‐179 - 2.15%
180‐269 - 2.30%
270‐364 - 2.4%
Paid at maturity
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little bit longer and wish you would’ve sold early - this is just part of the game.” - Frank Zorilla via Abnormal Returns

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Re: Scotiabank MomentumPLUS Savings Account

Post by AltaRed » 03 Sep 2017 12:04

I think all the big banks are now playing with various types of accounts, with promotional periods, or different constraints, to see what sticks. They now know they have to compete* for HISA type money given the inroads being made with digital/online banking. I am with Scotia and have seen their attempts (Power Savings 2-3 years ago I think and now Momentum). I took advantage of the Power Savings a few years back but balance has been 0 in that account for at least a few years since the promtional efforts disappeared. They made it easy (a few clicks) to open it. I have yet to bite on Momentum given their deposit constraints/hold periods but remain on my radar. CIBC is now ih the game with Simplii? (formerly PCF) going on stream shortly. BMO has its Savings Builder which fits nicely with holding my BMO IL cash.

The big 5 (or 6) will find ways to arrest the bleed. I prefer to keep everything as simple as possible.

I simply don't have enough cash to screw around with accounts with 'other' HISA insitutions although my primary cash holding remains in Zag and my Motive Financial account remains open for optionality. I've closed everything else.

* Whether they can ever offer fully competitive rates or not is questionable...given much of their competition uses HISA money to support their 'alternate' lending programs (like Equitable and Home Trust) that carry higher risk loans with higher interest rates. I think the big banks want to be just good enough to retain a portion of the mountains of cash that is sloshing around from place to place.
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Re: Scotiabank MomentumPLUS Savings Account

Post by tightwad » 03 Sep 2017 13:56

brucecohen wrote:
03 Sep 2017 10:43
I haven't looked at it but a quick google search turned up this. The deal seems pretty inflexible.
From the article:
The interest rates work on a graduated system, paying a base interest rate of 0.7 per cent, and adding a premium ranging from 0.75 per cent for a 90-day hold up to the additional 0.9 per cent if the cash is locked in for 360 days. Any withdrawal from the account resets the clock, nullifying the premium payout.
Just to clarify, each premium period is separate from any others that have been set up. Withdrawal from a period nullifies the premium interest for that period only; others in the account are unaffected. A new premium period of the same length commences on the day of the withdrawal with the remaining funds. Also note that the periods can be of any combination. Therefore it's possible to establish an investment ladder using a number of equal length periods.

Also from the article:
To boot, customers are unable to use the account at ATMs or for point-of-sale transactions, nor can they be set up for automated bill payments.
True but not a negative if the account is treated as a pure savings vehicle. The transactions mentioned can be handled through a chequing account.
IdOp wrote:
03 Sep 2017 11:22
it looks a bit like a cashable GIC. Except it's multiple cashable GICs under one umbrella if you make regular deposits I suppose. That could be a confusing way to handle a lot of small deposits.
Each period is in a sub-account with its own register. Monies have to be transfered between the individual 'buckets' in the account. The account differs from a GIC in that the, as mentioned before, the base rate floats - only the premium rate is locked in.
Another question I had is what happens when the selected term is up? Since it's billed as a savings account, presumably the money stays there. But what rate does it earn, especially if you forget about it and don't select a new term, which I assume you must do? Does it default to the lowest rate, or to the same term as before?
I was told the amount in the period will be rolled over for the same term at rates in effect at that time.
Either way it could work against someone who wasn't right on top of their many cashable GICs.
Wouldn't the result be the same if the person neglected his/her holdings, be it a GIC or account? In this case at least the funds will be earning interest during the period of neglect because of the automatic rollover.

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Re: Scotiabank MomentumPLUS Savings Account

Post by tightwad » 03 Sep 2017 13:57

I think this account is good as a replacement for existing accounts, at least for those at Scotia. Anything gained by using the premium periods would then be a bonus.

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Re: Scotiabank MomentumPLUS Savings Account

Post by BRIAN5000 » 03 Sep 2017 14:54

tightwad wrote:
03 Sep 2017 13:57
I think this account is good as a replacement for existing accounts, at least for those at Scotia. Anything gained by using the premium periods would then be a bonus.
IMO this ain't for me this does not follow the KISS principle at all once the bank manager went past about a 30 second explanation of this account I stopped him. I've moved more than $500 ish away from BNS because of their poor rates and unwillingness to match. They used to match for me the new bank manager is useless.
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little bit longer and wish you would’ve sold early - this is just part of the game.” - Frank Zorilla via Abnormal Returns

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Re: Scotiabank MomentumPLUS Savings Account

Post by IdOp » 03 Sep 2017 15:17

tightwad wrote:
03 Sep 2017 13:56
Each period is in a sub-account with its own register. Monies have to be transfered between the individual 'buckets' in the account.
Thanks for clarifying. I guess they would have to do something like that so that people would have a hope of following it in any but the simplest cases. Still it is complex.
I was told the amount in the period will be rolled over for the same term at rates in effect at that time.
Thanks also. I didn't see the answer to these types of questions in my quick look at their website.
Wouldn't the result be the same if the person neglected his/her holdings, be it a GIC or account? In this case at least the funds will be earning interest during the period of neglect because of the automatic rollover.
It depends. Here if it rolls over say for a year because you forgot about it, and you take it out after 2 months, you'll get a very low rate for that time. With something like a real savings account at EQ bank, there is no worry about that.

I'm sure for some people with some usage patterns this may be a helpful account, if they keep on top of it. Depending on their use of the account, keeping on top may be easy or complex. The way I use a savings account, I put money in when I have it and take it out when I need it. I don't want to be analyzing which of the pseudo-GICs I want to break, out of many that have been started at various times with new deposits. Just too complicated for me.

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Re: Scotiabank MomentumPLUS Savings Account

Post by tightwad » 03 Sep 2017 17:22

I agree, it's not a simple product. It took some time for me to get my head around it. Yet it is only as complex as you make it to be; it's just a simple savings account if you don't make use of the premium period feature.

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