Personal Finance

3% GIC for 3 months from Meridian - scam?

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  • Feb 14th, 2015 10:33 pm
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Deal Addict
May 1, 2013
2706 posts
1400 upvotes
Toronto

3% GIC for 3 months from Meridian - scam?

Does anyone know how this works? I've never even heard of Meridian. I'm willing to put a couple grand down but not sure if this is worth it. Has anyone tried this before? Does it tie into your TFSA in any way?



Here's what it says on the site..


http://www.meridiancu.ca/personal-banki ... ign%202015

Our BIG 3-month 3.00% GIC

Whether your savings goal is for a comfortable retirement, homeownership, a rainy day or emergency, it’s important to know when an RRSP and TFSA are right for you.
Park your savings in the short term and watch it grow while you meet with one of our advisors to plan your financial future. Get started now.​
7 replies
Sr. Member
Apr 28, 2014
675 posts
185 upvotes
Oakville, ON
Ferocious12 wrote: Does anyone know how this works? I've never even heard of Meridian. I'm willing to put a couple grand down but not sure if this is worth it. Has anyone tried this before? Does it tie into your TFSA in any way?



Here's what it says on the site..


http://www.meridiancu.ca/personal-banki ... ign%202015

Our BIG 3-month 3.00% GIC

Whether your savings goal is for a comfortable retirement, homeownership, a rainy day or emergency, it’s important to know when an RRSP and TFSA are right for you.
Park your savings in the short term and watch it grow while you meet with one of our advisors to plan your financial future. Get started now.​
Firstly, it's not a scam. Meridian is a well established credit union.

Everything you need to know is in the offer and in the fine print. It's a 90 day GIC that pays 3% (annualized rate); however, it is only available within registered plans (i.e. RRSP and TFSA).

So, assuming that you have TFSA contributon room remaining for this year (as you get $5,500 this year, plus any unused contributions from previous years, plus any TFSA withdraws you made in 2014), you can go into a Merdian branch and buy this GIC for your TFSA. You can have TFSA at more than one Financial Instiution; just make sure you don't go over your maximum limit. The onus is on you to keep track of that, the government and the banks don't do it for you.

$5,500 * .03 (interest rate expressed annually) * 90/365 (prorated for 90 days) = $40.68, for example

Of course, the real question is if you want to take your TFSA out of Meridian and move it somewhere else, do you have to pay a fee? You probably do.

http://www.meridiancu.ca/personal-banki ... rvices.pdf

$50 to transfer your TFSA out; $100 if you do it within 90 days of opening the TFSA. This fee applies for all registered accounts.
Newbie
May 17, 2013
36 posts
3 upvotes
Scarborough
3% is an annual rate so for 3 months you'd get like 0.75% or so.
Sr. Member
User avatar
Feb 28, 2010
668 posts
340 upvotes
Flying over Canada
Ferocious12 wrote: Does anyone know how this works? I've never even heard of Meridian. I'm willing to put a couple grand down but not sure if this is worth it. Has anyone tried this before? Does it tie into your TFSA in any way?
It says explicitly right in the fine print that this GIC is "only within registered plans", i.e. TFSA and RRSP. Meridian (a large Ontario credit union) has a $50 transfer-out fee for RRSP or TFSA, so you are likely locking your money in with them. Note that all these places (ING, PCF, etc) that offer promo rates don't do it on their non-registered stuff much. At $2000, and assuming you would otherwise get their 1.6% HISA rate, 3% for 3 months is an extra $7 in interest; yippee (not!). They pay short-term pin money against the chance at having your deposit longer term at their (fairly lousy) GIC rates or at least their (fairly good) HISA rate.

The thing to do with these bonus come-on offers, especially in registered accounts, is to figure out where you would put your money without any of them. Then calculate the one-time addition of the bonus, and ask if it makes a material difference. Banks design these things to work to their benefit in the aggregate - if you can't determine what makes you part of a minority that can gain disproportionally from something, that's usually a sign. As the old poker saying goes, if look around the table and can't spot the sucker, it's you... :)
Deal Addict
Feb 5, 2010
2764 posts
183 upvotes
Typical RFD. Always pulling the 'scam' card first without any validaiton.
Deal Expert
User avatar
Aug 18, 2005
21223 posts
5939 upvotes
Burlington-Hamilton
Fouracle wrote: 3% is an annual rate so for 3 months you'd get like 0.75% or so.
+1, the real reason for this is that once you lock in the money, you probably won't move it due to transfer fees. Then the CU can continue to use your money to make themselves more money.
This is also why many institutions offer some kind of TFSA promo near year-end or early in the year. They know that once the year rolls over, you're probably not going to pay transfer-out fees and you won't be able to withdraw and re-contribute for another year.

It's not a scam, it's just that bankers know the rules a lot better than most people, and plan strategies to make money. (And RFD is not most people. ;) )

Personally, I have no cash accounts in the TFSA. Only funds.

In other news, the TSX reached a 5 month high today.
- casual gastronomist -
Newbie
Apr 4, 2019
1 posts
Please assist me. I would like to know if Meridian Bank even exists in the States. More particularly is www.mymeridianbn.com
a legit banking website. I have my doubts. If legit has anyone heard of paying for a TAC Code and then a PIN Code to release funds.
My gut tells me its a scam. The number on the website is not coming through to the bank. I searched Google, but to no avail. On Linked In, i have found connections but once again website and contact details _ fail. Please advise. All appreciated

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