Big Canadian banks: why do your interest rates suck so hard? And what to do about it
Here's something post that Growth, Nancy
and just about any Canadian should care about: a quick look at the
current status of interest rates paid for small cash investments.
Let's see how three banks measure up on 1 year GICs, as of right now:
TD Canada Trust: 2.05% or 3% (poorly defined money market version)
ING Direct: 3.75%
HSBC: 2.30%
I didn't do an exhaustive search because there are charts available at baystreet.ca and redflagdeals.com, among, no doubt, a few other places too that do the job for you.
I figure banks must have decided that people are so sufficiently lazy that they'll take whatever product they're offering instead of moving their cash over to another bank.
Only that can explain the over roughly 2% difference between the lower TD rate and the over 4% rates on redflag.
What I like about redflag's site is that you can sort by any column, making it easy to identify who gives the best 1-year or 5-year rate. I had trouble confirming the 4.4% rate offered by PCCU, but seeing as how I don't live in Saskatechewan it might be hard to bank there in the first place.
Then again, maybe you can.
Achieva is another credit union, this one in Manitoba, offering even higher rates than ING, 4% for their GIC and 3.85% for their savings account. Their FAQ doesn't mention, however, whether you need to live in Manitoba to bank with them. It'd be nice if they just told you, rather than making you wonder and google for an answer.
Sounds like you can definitely use them even if you live outside Manitoba. A shame they don't make that more obvious.
Unless things have changed in the last three and a half years, the Manitoban Credit Union option has a major drawback - online transfers aren't as sophisticated as at ING and other banks. And there are fees involved for doing various types of transactions. But the interest rates are best.
The "straight" rates, anyway.
Once your savings program has hit a point where you can swing around $5000 or more - congratulations to you on your diligent saving - don't forget that those abysmal rates at the Big Banks are negotiable.
How to get the best interest rate on your investment.
If I'm ever going to offer some valuable free advice, it's this: print out the list of rates from whichever online bank appeals to you, and go down to your local bank branch, and say, "entice me to keep my money here."
If you have more than one branch to choose from, you live in a town of more than 10,000 people.
Good.
Now once the first bank you've gone to has matched (ha!) or beat (good start) the competing rate, get the offer in writing - they'll usually promise it for a few days or more - and go to the competition.
Oh yes, capitalism can work for you.
Repeat the exercise until you get bored or have completed the exercise of canvassing your street.
Take your cash to whoever has offered you the best rate.
In case of ties, select the most convenient bank with the lowest fees, best service and cutest staff. This will, of course, vary according to your locale. And the deal you're offered will, of course, be most generous the more cash you pile on, so try and get all your pennies in one big bundle before you start on this exercise. If you have less than five grand, this exercise won't be as effective - you're better off using one of those high interest daily savings accounts until you reach the sweet over-five spot.
Have fun.
Bonus Advanced tip: if you're a Telus Mobility subscriber you may get a perk to use a concierge service for free. If you're feeling particularly crafty, explain your plan to them and have them call a few banks for you.
Concierge services are fun that way.
By phoning around instead of walking into branches, though, the "cutest staff" test is unavailable.
Whichever method you choose, good luck.