HISA | Financial Crooks

The Bank of Canada has begun the long, slow process of raising interest rates. While banks are fairly quick to also increase the interest rates they charge customers on lines of credit and some types of mortgages, they are slower in raising the interest rates they pay you for depositing your cash with them. Still, I’ve seen the amount I get paid each month increasing on some accounts even though I haven’t increased the amount on deposit, so I decided to quickly check what interest rate I’m earning for my cash and GICs at BMO InvestorLine, CIBC Investor’s Edge, RBC Direct Investing, Tangerine, Simplii Financial and EQ Bank to see if I’m getting the best, highest interest rate I can.

Where Can I Get the Best Interest Rate for My Short-term Cash Savings At EQ Bank, Oaken Financial, Simplii Financial or Tangerine?

OK, the first thing I’m going to do is look at the base interest rates without any special promotional short-term interest bonus rates.

For a Savings account,

EQ Bank is paying 2.3 %
Oaken Financial is paying 1.5 %
Tangerine is paying 1.1 %
Simplii Financial is paying 1 %

These rates are as of January 24, 2018.

There are some wild cards to consider though:

some Tangerine customers have been offered 2.5 % (like me) till the end of May 31 2018
some new Tangerine customers can get a promotional rate for their first 6 months of 2.4 % or 1.9 %
all Simplii Financial customers can get a rate of 3 % until February 28 2018.

That’s why we have accounts at all 4 banks and move our money around to earn the highest interest.

For a Chequing account,
both Tangerine and Simplii Financial are still using a tiered system where different amounts of money earn different rates of interest. The highest rate, though, is still much less than their Savings account rate so try not to keep your extra cash in your chequing account.

For reference, on January 24, 2018

Tangerine’s rates for a chequing account are:

0-50 000 0.15 %
50-100 000 0.55 %
100 000+ 0.65 %

and Simplii Financial’s rates are:

0 – 1 000    0.05 %
1-5 000    0.10 %
5-25 000    0.15 %
25 000 +    0.50 %

EQ Bank and Oaken Financial don’t offer a chequing account.

Where Can I Get the Best Interest Rate for My GIC Savings At EQ Bank, Oaken Financial, Simplii Financial or Tangerine?

Be sure to stay below the CDIC limits on total $$ and on length of term (usually 5 years max) to protect your investment at any institution!

Right now on January 24, 2018, the clear rate winner is Oaken Financial.

1 year GIC ~~2.25 %~~ 2.5% as of Friday January 26
2 year GIC ~~2.6 %~~ 2.85% as of Friday January 26
5 year GIC 3.15 % 3.25% as of Friday January 26

Tangerine offers the next best rates.

1 year GIC 2 %
2 year GIC 2.15 %
5 year GIC 2.6 %

Simplii Financial has the lowest rates on offer.

1 year GIC 1.687 %
2 year GIC 1.293 %
5 year GIC 2.228 %

EQ Bank does not issue GICs.

What Interest Rate Can I Get for My Parked Cash In My Online Discount Brokerage Account at BMO InvestorLine, CIBC Investor’s Edge and RBC Direct Investing?

Our portfolios include a large chunk of cash and other fixed income investments because we are very conservative. I like to keep some of this cash in our RRSPs and TFSAs partly in case I see something worth buying in a hurry because our contributions are maxed out each year by the end of January.

I also earn dividends in the accounts which I’m not always keen to re-invest immediately.

So I keep the money in high interest savings account mutual funds or in GICs.

This week, on January 24 2018, the following interest rates were available

At all three brokerages, the Canadian dollar high interest savings account mutual funds (AAT770; ATL5000; and RBF2010 respectively) were paying 0.95 %.

At all three brokerages, the US dollar high interest savings account mutual funds (AAT780; ATL5001; and RBF2014 respectively) were paying 0.70 %

The GIC rates were close but not identical. These are the rates on January 24, 2018.

For a 1-year GIC

BMO InvestorLine had the best offer at 2.1 %.
CIBC Investor’s Edge and RBC Direct Investing were tied at 2.05 % (from HSBC Bank.)

For a 2-year GIC

RBC Direct Investing had the best offer at 2.36 % from Home Trust Company.
BMO InvestorLine and CIBC Investor’s Edge were tied at 2.35 % from Equitable Bank.

For a 5-year GIC

RBC Direct Investing had the best offer at 2.86 % from Home Trust Company.
BMO InvestorLine and CIBC Investor’s Edge were tied at 2.85 % from Equitable Bank.

So it looks like I should re-start my monthly GIC ladder inside our RRSP as the difference between the HISA rate and the GIC rate is starting to be important in total dollars earned.

Overall, our money is in the best places to earn the most interest–for now. In future, I’ll have to keep an eye on the rates to make sure we don’t need to move our funds.

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Sometimes you don’t see anything you want to invest in for the US dollar side of your portfolio. Meanwhile, dividends and distributions keep rolling in and you start accumulating a stash of US cash. That’s been happening this year for me in my RRSP so I thought I’d better look at getting the best possible return for my US dollars while waiting to make an investment decision. Here’s how I parked my US dollar cash in a high interest savings account mutual fund at BMO InvestorLine.

What Fixed Income Investments Could I Park My US Dollars In at BMO InvestorLine?

There are two basic fixed investments commonly used for parking cash for the short term in a BMO InvestorLine account: cashable GICs and high interest ( ! their name not mine!) savings accounts.

High Interest Savings Accounts at BMO InvestorLine

BMO InvestorLine only offers two pseudo-high interest savings accounts, one in US dollars and one in Canadian dollars. They are actually run like mutual funds but with no fee to buy or sell units and no required minimum holding time.

The US dollar fund is called AAT780. You have to buy at least $1000 USD units of the fund initially. For subsequent purchases, you can invest in $50 USD increments.

Cashable GICs at BMO InvestorLine

At the time I wrote this, September 26 2017, InvestorLine was not offering any cashable GICs in USD online. I suspect if you had a very large amount of cash and phoned in, though, you could probably arrange something. Given the current low rates for cashable GICs, though, it may be just as beneficial to put the money in a HISA.

Be Aware: US Dollar Savings are NOT Insured by CDIC!

Just as a public service, I’d like to remind readers that CDIC does not insure deposits held in foreign currencies, which includes US dollars. If something goes terribly, terribly wrong with the financial institution holding your US dollar assets, you may lose the money. Check before investing whether any other kind of assurance or insurance is provided for your savings.

What Are AAT770 and AAT780 Paying for CAD and USD Deposits at BMO InvestorLine?

Today, October 3 2017,

AAT780 the USD high interest savings account is paying an annual rate of 0.50%.
AAT770 the CAD high interest savings account is paying an annual rate of 0.95%.

That’s the influence of the recent increases in the federal prime rate.

Related Reading

How to Buy Units in AAT770 in a BMO InvestorLine Account

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Do you have any cash parked waiting for an opportunity? Please share your strategy with a comment.

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Tag Archives: HISA

With the Bank of Canada Increasing Rates Where Can I Keep My Cash to Get a High Interest Rate?