Several new players are now offering high-interest savings accounts with significantly better rates than traditional leaders like ING Direct, President’s Choice Financial and Canadian Tire Financial. If you have a savings account with ING Direct you’ll earn 1.05%, just 0.75% with PC Financial and 1.20% with Canadian Tire. The new players are offering rates that are even better than Outlook Financial, which typically has the top rates (currently 1.5%) but no CDIC guarantee (Outlook’s deposit insurance is through Credit Union Deposit Guarantee Corporation).
Canadian Direct Financial, a division of Canadian Western Bank, is offering a savings account that currently pays 2% and non-redeemable GICs with slightly better rates than ING Direct. However, note that the savings account allows one free withdrawal per month but subsequent electronic transfers cost $2.50.
While Peoples Trust’s clunky website does not make a good first impression, it offers a top rate of 2.1% on its savings account. Again watch for those fees: the first five transactions are free but subsequent withdrawals cost $1.50. Peoples Trust does offer GICs but the rates are much less than those of its competitors.
Ally, a division of ResMor Trust, seems to be the most promising new comer. Launched just the other day, Ally offers a 2% rate on the savings account and redeemable GICs with top interest rates. On a 5-year GIC, Ally offers a rate of 3.5% compared to 3.0% at ING Direct. Ally’s early redemption rates are also higher. For a GIC term of 1 year, cash out will include all the earned interest. For terms greater than 12 months, the current early redemption rate is 1.5% (subject to change) according to a representative I spoke to today (customer service is available 24/7). Compare this with ING Direct’s early redemption rate of 0.5%. It does seem that Ally is so far living up to its promise:
We promise to be among the top rates always, with no monthly fees, no minimum deposits, no minimum balances, and no “special” rates that drop when you’re not looking.
Since Ally also offers tax-free savings accounts, its top savings rate, top GIC rates and top cashable rate makes it a top choice for a savings TFSA. Too bad Ally did not open its doors before I went looking for a TFSA account.
Canadian Direct, Peoples Trust and Ally all members of Canadian Deposit Insurance Corporation (CDIC).
