HISA | Financial Crooks

It’s quite possible to have a large amount of money that needs to be kept as cash, not invested, because it will be needed either within a few months or on very short notice. We have such a stash of cash so I spent some time recently trying to decide where to safely store it to make the most interest while we wait.

Why Do People Have Thousands of Dollars in Cash? Why Don’t They Buy Stocks or Shares With It?

Here are some examples of reasons you could have tens of thousands of dollars sitting in cash, un-invested:

you’ve got your tuition for the year or the next two years saved up and you are in a high cost university program like medicine, engineering or law
you have the money saved up to pay your rent for the next year at university
you sold a home and are shopping for a new one soon
you are almost ready to start your renovation and of course you saved for it instead of charging it all to a HELOC or credit card
you are almost ready to buy a vehicle, which could even be a new boat
you or your partner will be going on maternity leave soon and you have money saved up for when the new Mom is not working for pay
you are retired and need to have cash to pay the bills for the next year or more that is not going to vanish if the markets tumble
you have a generous emergency fund because you have to keep an entire family and house going if you lose your job

In those types of cases you don’t want to risk losing the money due to a sudden drop in equity or bond prices. You do want to make as much interest as you can, though.

Highest Daily Interest Savings Accounts

One place to put cash is in a savings account. The ones offered at most of the Big Canadian Banks, though, don’t offer much interest. (There can be exceptions when Big Banks offer special promotions. Credit Unions can also offer special deals with good rates so keep an eye on your largest local unions.)

That leaves the smaller banks. Some of these banks offer full-service features such as debit cards and ABM access. Others are eBanks.

An eBank usually doesn’t offer a debit card nor can you put in and take out money using an ABM. Instead, you usually must have a chequing account at another bank and move your money in by cheque or electronic funds transfer and out by EFT.

Which High Interest Savings Accounts at Which Banks Did I Look At Recently?

Here are some of the banks and eBanks I looked at:

Alterna Bank
EQ Bank (eBank)
Oaken Financial (eBank)
President’s Choice Financial
Tangerine
Zag Bank (eBank)

What’s the Best Highest Interest Rate I Can Get from These Banks?

The annoying thing with banks is that they can change a “daily” interest rate daily. So as soon as I write and publish this, the rates could jump around. Always check the newest rate before investing.

The good thing is that you can MOVE YOUR MONEY if the rate changes. I have an account at EQ Bank, Oaken Financial, PC Financial and Tangerine. (I opened one at Zag Bank but I won’t use it (yet anyway). If one of them offers a better rate, I move my money. At the time I am writing this, on April 14 2016, there is no fee to move my money. So if I can earn higher interest by moving it, I do.

In most cases, I can move the money immediately. It may go “on hold” for a few days but it still starts earning the higher rate.

2.5% Zag Bank (eBank) But this rate is only on offer until June 1, 2016. There’s no telling what the rate will be on June 2.
I wouldn’t recommend Zag Bank to my friends and relatives because I was not happy with my account setup.
I’ve read comments from lots of other people who have been happy with the service, though, so I don’t know what to think. I’m still not sure whether I want to risk putting my money here so I’ve only got a few dollars in the account.
2.25% EQ Bank (eBank) As of April 18, 2016, they are dropping their rate from 3% to 2.25%.
You also have to go on a waiting list to open a new account until they catch up with demand.
1.85% Alterna Bank eSavings Account ONLY
Note: you don’t want their regular savings account if you are looking for their high interest account. You want the limited access eSavings Account. This is CDIC insured unlike some other Alterna products because Alterna is a credit union.
1.75% Oaken Financial (eBank)
They’ve offered this rate for a long time, specifically since May 12, 2015 till now April 14, 2016.
0.8% President’s Choice Financial
PC Financial offers special rates, though, from time to time. You have to keep an eye on it.
0.8% Tangerine But Tangerine is always tinkering.
Recently, in April 2016, they started emailing special short-term interest rate offers to some customers.
I got offered a rate of 1.81% but only on new deposits and only for a few months.
Others, like my husband, got offered nothing.
Still others were offered 3%!
They are also offering today, April 14 2016, a bonus rate of 2.4% for six months for customers opening their first (ever) account at Tangerine or ING Direct.

Which Bank Do I Recommend?

None of them.

I mean I have used most of them, except Alterna and I had a problem with Zag, but I don’t personally recommend any financial service.

You have to nose around yourself and decide whether you like the service and the offerings.

I’ve had acceptable service from Oaken Financial, Tangerine, PC Financial and EQ Bank but I’ve read comments from others who haven’t. I have never heard of anyone losing money at any of these banks, though.

Right now, on April 14, 2016, I have most of my cash at EQ Bank and at Oaken Financial. But if someone else offers me a better rate, I’ll be moving it.

If you open your first ever account at Tangerine (or ING Direct) and use my Orange Key, I will get a cash bonus. You have to actually type in my key, though, there’s nothing sneaky hidden in some link or whatnot.

I don’t get anything cash or otherwise from any of these other banks, in case you’re curious.

There are some Google ads on my website pages. If I’m lucky I make a few cents if you see an ad that interests you and you click through and buy something or do something similar. You’re right that I don’t make much money off this website!

Caution: If You Need IMMEDIATE Access to Your Cash These Banks May Not Be Right For You!

It’s important to know it could take up to 10 business days to get your cash back out of some of these eBanks. If you might need your cash immediately check the details very carefully for the bank you pick to put your cash into.

For example, it can take 8-10 days, possibly business days, to withdraw a large amount of cash from EQ Bank as of April 14, 2016.

It usually only takes 2 business days to push money out to a Canadian Big Bank from Tangerine or PC Financial as of April 14, 2016.

I have not tested how long it takes to get money out of an account at Alterna, Oaken Financial, or Zag Bank.

Related Reading

Join In
Do you use an eBank to park your cash? Where do you get a good rate and good service? Please share your experiences with a comment.

NOTE: As of December 2016, EQ Bank had reduced its interest rate to 2%. Please check the EQ Bank website for their current interest rate.

OK, so having just started opening an account at Zag Bank to get 2.5% interest for a few months, I’m now changing direction and opening a daily interest savings account at EQ Bank after I checked it out a bit to get 3 percent interest indefinitely, although I’m sure it won’t last the entire year.

NOTE: Unlike some lucky (?) financial writers I am getting absolutely nothing from Zag Bank or EQ Bank for writing these articles. I’m just hoping to get a higher interest rate on my own hard-saved dollars and I’m documenting my trials and tribulations for your edification and amusement.

Who Can Open a Daily Interest Savings Account at EQ Bank?

Now, on January 23, 2016 the rules say you must

be 19 or older
be a Canadian Resident
not live in Quebec
have a Social Insurance Number
have a personal cheque pre-printed with your name, for a Canadian dollar account at a Canadian financial institution that you can make payable to yourself for at least $1 to open the account

You cannot use a credit card cheque.

You cannot use a void cheque.

Why Do All These e-Banks Seem to Need Me to Send in a Cheque from My Own Chequing Account?

These e-Banks are using the other banks’ security systems to ensure you are who you say you are.

In other words, you are not presenting your personal id such as a Driver’s License with a photo or a Passport when you are opening these e-Bank accounts. So they are demanding you provide proof from another bank that you are who you say you are.

The other bank or credit union issued you cheques in your name after identifying you properly.

If it turns out you applied fraudulently under a false name when opening your e-Bank account, then the e-Bank intends to defend itself it court by shifting the blame to your chequing account bank or credit union for failing to properly identify you. It’s a cover their butt tactic.

How Else Do e-Banks Verify Your Id?

Most of these banks will also ask you a string of questions based on your credit history report. In theory, only you should know those details and be able to answer correctly.
Zag Bank uses credit history questions as part of their account setup practices. EQ Bank said it was going to but I haven’t been asked them yet, so I’m not sure when they will be asked.

What Do I Need to Get Started Opening My e-Bank Account at EQ Bank?

What should I have handy before I start this

your SIN
a valid email address NOTE Your email address will be your login ID!
a password for signing in to your bank account with a minimum of 7 alphanumeric characters

You will also have to be able to access your email quickly to get a passcode that they will email you. The code expires a few minutes after it’s sent.

Getting a Savings Account at EQ Bank

Go to the EQ Bank website and make sure the security settings say you are at the Equitable Bank site.

Click on the Join Now button.

The Step 1 Page

Type the required information in the following fields:

Email address (this will be your Login name!)
Password
Confirm Password
First Name
Middle Name (optional)
Last Name
Address
City
Postal code
Mobile number (optional, which is good because I don’t have a Smart phone) (Or a Smart fridge.)
Other phone number
SIN
Date of birth (dd/mm/yy or select from calendar)
Occupation

From the drop-down list select your Province

Do NOT click on the circle beside No for the question Are you a U.S. person? If you do, it slides over to say YES you are a U.S. person for tax reasons. It’s not a check box.

Click on the Next button.

Step 1 Second Page

Answer the question: “Apart from you (or your joint account holder) will anyone else use or benefit from this account?
If your answer is NO just leave the circle beside NO untouched. (If you click on it, it actually changes your answer to YES.)
Answer the question: “How do you intend to use this account?”
From the drop down list select Personal Savings or the applicable answer.
After you have clicked through and read the Terms and Conditions and the Account Agreement, click to check the box beside:
I have read and agreed to the Terms and Conditions and Account Agreement.
If you want to get ads and other communications, click to check that box.
Click on the button: Open Account

The Step 2 Page

Your new account number will be displayed. Make a note of it somewhere safe!
Sign in to them email address that you provided to EQ Bank.
Open their note to read it and find out your one time passcode.
Type the Passcode in the text field: Enter your six-digit passcode
Click on the button: Verify

Completing Your EQ Bank Account Setup

To completely open your account, you must send in a cheque to EQ Bank either by using a photo cheque deposit app or by mailing it in.

Your cheque must

have your name pre-printed on it
be for an account at another Canadian bank or credit union, not a foreign one (credit card cheques are not acceptable)
must be for an amount of at least $1 (This is because they will actually cash the cheque to prove the account is active and in good standing)
not be a void cheque (So you can’t print a void cheque off at, say, Tangerine)
be made payable to yourself
be signed by you like any other cheque

You can use the EQ Bank app to deposit it OR

Mail it to EQ Bank at their Toronto mailing address which will be provided on the enrollment screen.

Before closing the window, you may want to read the other EQ Bank documents. If so, click on the link provided.

NOTE: EQ Banks says your new account will become active 5 days after they receive and deposit your cheque. They will advise you by email when your account is fully active.

Will it work? Stay tuned!
UPDATE: February 10, 2016: My account is fully activated at EQ Bank and I’m using it in various ways. It all went fine, if a bit slowly.