Personal Finance

The Official RFD thread for Savings Accounts! (Updated as of 07/20/2017)

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Sep 19, 2009
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choclover wrote:
Apr 25th, 2017 10:55 am
If these institutions are trying to be paternal and proactive towards their clients, why let people chance it no matter who the issuer is?
Probably impossible to implement. You can buy an Oaken GIC from HCG, another one from Scotia, another one from TD, another one from CIBC, and another 50 from 50 different HCG brokers.

Anyway, only a small percentage of the money they are using to finance the mortgage business is CDIC insured.
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choclover wrote:
Apr 25th, 2017 10:55 am
This seems proactive but why not put the $100,000 cap on all GIC issuers?
Because the big-5 (TD, RBC, BNS, CIBC, BMO) are considered "too big to fail" regardless of CDIC coverage. It's generally believed that Ottawa would step in to bolster them if they got into a "near death" situation. To let any of them fail would jeopardize the reputation of our financial system. One might ask why these banks are required to offer CDIC protection in the first place. So in that context it makes sense to act "paternally" on a selective basis.

Currently all banks pay the same percentage of deposits as an insurance premium into the CDIC pool. It's been argued that the big-5 should pay less and the others should pay more based on their financial stability. But doing that would create other issues, e.g. it would give the big-5 a further advantage (lower costs) over the smaller players.

Even the current move to limit the amount of Oaken and Home Trust/Bank GICs sold to CDIC limits sends a message to the market that these FIs are less secure than others. I suppose it's the lesser of two evils. Scotiabank initially suspended sales of all Home GICs. That sent an even worse message.
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bylo wrote:
Apr 25th, 2017 11:24 am
Currently all banks pay the same percentage of deposits as an insurance premium into the CDIC pool. It's been argued that the big-5 should pay less and the others should pay more based on their financial stability. But doing that would create other issues, e.g. it would give the big-5 a further advantage (lower costs) over the smaller players.
I don't think that is accurate. Pretty sure I recall premiums being different based on issuer. Not that the categorization is public obviously. I'm sure NorthernRaven or another poster better informed than us can provide the details which I've forgotten.
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S5 wrote:
Apr 25th, 2017 4:58 pm
I don't think that is accurate. Pretty sure I recall premiums being different based on issuer. Not that the categorization is public obviously. I'm sure NorthernRaven or another poster better informed than us can provide the details which I've forgotten.
As usual I should have googled twice, posted once rather than the other way around. Thanks for the clarification. As your reward is some reading material to put you to sleep tonight ;)

CDIC Differential Premiums By-Law Manual
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Feb 28, 2010
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CDIC has 4 premium categories. Category 1 is the base rate where most (79 of 100) members are, and pays 4.5 basis points on insured deposits. There are 13 in Cat 2, who pay twice as much (9 basis points). There are 5 in Cat 3, who pay twice as much again (18 basis points), and 3 in Cat 4 (33 basis points, the max CDIC can set under the law). It would be interesting to know who's who, but CDIC won't disclose this, and prohibits the institutions from disclosing it either (they provided this summary breakdown in their annual report). Presumably the outliers are small and shaky ones running closer to the edge of those criteria in the Premium By-Law Manual.
andrew4321 wrote:
Apr 25th, 2017 11:12 am
Probably impossible to implement. You can buy an Oaken GIC from HCG, another one from Scotia, another one from TD, another one from CIBC, and another 50 from 50 different HCG brokers.

Anyway, only a small percentage of the money they are using to finance the mortgage business is CDIC insured.
Actually, I suspect a majority of their funding is CDIC insured. They seem to have less than a billion in institutional wholesale deposit notes. The rest is mainly (circa $15 billion) either GICs or HISAs (either Home or Oaken branding). They have a line of CMHC securitized prime mortgages as well, but that looks like only $2-3 billion. I don't know to what extent either corporate treasuries or big whale individuals are buying their deposits, but I'd suspect a lot of it within the various CDIC $100K categories. If the GICs are being done "in street name" then people could get separate $100K coverage from, say, an Home GIC bought in their Scotia iTrade account and an Oaken GIC bought directly, etc.
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Sep 19, 2009
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NorthernRaven wrote:
Apr 25th, 2017 8:57 pm
Actually, I suspect a majority of their funding is CDIC insured. They seem to have less than a billion in institutional wholesale deposit notes. The rest is mainly (circa $15 billion) either GICs or HISAs (either Home or Oaken branding). They have a line of CMHC securitized prime mortgages as well, but that looks like only $2-3 billion. I don't know to what extent either corporate treasuries or big whale individuals are buying their deposits, but I'd suspect a lot of it within the various CDIC $100K categories. If the GICs are being done "in street name" then people could get separate $100K coverage from, say, an Home GIC bought in their Scotia iTrade account and an Oaken GIC bought directly, etc.
Wrong assumption. According to the Financial Stability Board (FSB), in Canada as of 2010,
while CDIC covers an estimated 97% of eligible deposit accounts, this represents only 35% of the total value of deposit liabilities
which means that 65% of the money deposited in Canadian banks is actually not insured. Considering that a lot banking regulations and capital requirements have been relaxed after 2010, and usually small financial institutions cut a lot of corners to be competitive, you can safely assume that small financial institutions probably have 70-80% if not even more un-insured deposits.
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andrew4321 wrote:
Apr 26th, 2017 7:25 am
Wrong assumption. According to the Financial Stability Board (FSB), in Canada as of 2010,
which means that 65% of the money deposited in Canadian banks is actually not insured. Considering that a lot banking regulations and capital requirements have been relaxed after 2010, and usually small financial institutions cut a lot of corners to be competitive, you can safely assume that small financial institutions probably have 70-80% if not even more un-insured deposits.
But much of this is likely corporate-type money, parked in the bigger banks. If you look at credit unions in Ontario, DICO reports that 70%+ of deposits are insured. I'd strongly suspect that Home's deposit profile is much closer to this - they won't have corporate Canada using Oaken for day to day operating accounts, and while there is probably some use of the GICs for yield, individuals are going to be a big part of the customer base. There may be whales with big uninsured amounts skewing this, but I haven't seen anything that indicates CDIC coverage for deposits at the level of individual institutions like Home.
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Sep 19, 2009
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Home Capital seeks $2B line of credit as deposits plunge http://www.bnn.ca/home-capital-seeks-2b ... e-1.735043
Home Capital said the credit line is intended to “mitigate” a sharp drop in Home Trust’s high-interest savings account balances, which sank by $591 million from March 28 to April 24, at which point the total balance was $1.4 billion. Home Capital warned on Wednesday that further outflows are anticipated.
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I noticed that Oaken increased most of their GIC rates across the board a few days ago. I wonder how much capital this has attracted given the whole situation? I am assuming that whatever it is, it has not alleviated the need to request the large line of credit cited in the bnn story.
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Jan 23, 2009
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ace604 wrote:
Apr 21st, 2017 11:46 pm
ffs ... :facepalm: ...
Hi Ace604 you have the link for the TD HISA %2.2 offer actual letter and the fine print would you please post a link to actual TD letter I spend an hour in here I cannot find it thanks
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agit wrote:
Apr 26th, 2017 5:50 pm
Hi Ace604 you have the link for the TD HISA %2.2 offer actual letter and the fine print would you please post a link to actual TD letter I spend an hour in here I cannot find it thanks
Original post was by st-d I think on Tangerine hot deal thread ... I reposted his screenshot of paper letter info on PCF promo thread.
POLL: How frequent is your RRSP-matching?
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Jan 20, 2010
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I have never understood why people go and invest their money with B lenders like Home Capital (through its subsidiaries, Oaken etc) to earn that extra 0.25% or whatever small additional amount it is. It just comes down to their business model of giving mortgages and loans to people who do not qualify at a bank. I always thought it was funny when people are putting money with these institutions saying its a GIC so the money is guaranteed. Its only guaranteed by the institution issuing the GIC.
Why do you think they can give you a higher rate than the banks.
Sure you can argue dont worry because the CDIC insurance but do you really want to have to go through this. Why not be smart and realise in the first place the business model can eventually get a firm in trouble. Stick with the big players!
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sliktrader wrote:
Apr 26th, 2017 10:01 pm
I have never understood why people go and invest their money with B lenders like Home Capital (through its subsidiaries, Oaken etc) to earn that extra 0.25% or whatever small additional amount it is. It just comes down to their business model of giving mortgages and loans to people who do not qualify at a bank. I always thought it was funny when people are putting money with these institutions saying its a GIC so the money is guaranteed. Its only guaranteed by the institution issuing the GIC.
Why do you think they can give you a higher rate than the banks.
Sure you can argue dont worry because the CDIC insurance but do you really want to have to go through this. Why not be smart and realise in the first place the business model can eventually get a firm in trouble. Stick with the big players!
If you stick under CDIC limits there is nothing to deal with. The CDIC transitions lately have been smooth and painless and if you have a GIC you don't really care until it comes due anyways, so even if the CDIC took longer than there target max of 72 hours to get your money available it wouldn't matter because your GIC is still locked up for another N months or years anyways.

"Depositors do not have to file a claim. CDIC aims to reimburse most accounts within three business days"
http://www.cdic.ca/en/about-cdic/resolu ... tools.aspx
POLL: How frequent is your RRSP-matching?
Plastiq: Pay any bill with credit card for 0-2.5% fee (help meet min spending and keep old cards active!)
Rewards program transfer times (e.g. SPG->Aeroplan, Marriott->SPG, Amex MR->SPG...)
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agit wrote:
Apr 26th, 2017 5:50 pm

Hi Ace604 you have the link for the TD HISA %2.2 offer actual letter and the fine print would you please post a link to actual TD letter I spend an hour in here I cannot find it thanks
ace604 wrote:
Apr 26th, 2017 9:39 pm
Original post was by st-d I think on Tangerine hot deal thread ... I reposted his screenshot of paper letter info on PCF promo thread.
Fine print in the email I got:

"¹ Your TD High Interest Savings Account (the “Account”) opened between April 10, 2017 and May 31, 2017, will
earn extra interest of 1.70% per annum (“Bonus Interest”) above the posted interest rate for this type of account
above on balances of $5,000 up to $5,000,000 commencing on the fifth business day after Account opening until
July 31, 2017 (the “Offer Period”). Interest at the posted rates is paid monthly on the total daily closing balance of
the Account. Bonus Interest will be calculated separately from the posted interest rate and will be credited
to the Account at the end of the month. Posted interest rates and calculations for the Account as set out in
About our Interest Calculations will apply after the last day of the Offer Period. This offer is limited to one savings
account per person and does not apply in any month in which your TD High Interest Savings Account is closed or
the type of savings account is changed. For accounts opened via the phone, account opening documentation must
be signed and received by TD Canada Trust by May 31, 2017. We reserve the right to change, extend or withdraw
this offer at any time; cannot be used in conjunction with any other offer. This offer is valid for the recipient name
on this communication only and is not transferable. All interest rates are per annum.
"
POLL: How frequent is your RRSP-matching?
Plastiq: Pay any bill with credit card for 0-2.5% fee (help meet min spending and keep old cards active!)
Rewards program transfer times (e.g. SPG->Aeroplan, Marriott->SPG, Amex MR->SPG...)
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on the links
Due to the recent Oaken/EQ liquidity news, I thought I would add another HISA account as a CDIC contingency.

Alterna Bank looks to be the next best one listed as 1.95% here, however their website says 1.90% for both the non-registered HISA and the TFSA account...

OP needs some updating.

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