# EQ Bank draw backs?



## tavogl (Oct 1, 2014)

Hi,

So my wife and I are saving for our first home (Vancouver) and we are waiting to get a big enough down payment AND for a correction in the market. In the mean time we are saving aggressively and just depositing our savings into a joint HISA with RBC which only pays 0.5% if I am correct. I wanted to squeeze every penny that I have and try to grow that money while we are not using it, but in reality we need the cash handy just in case something happens with the market or we find a great opportunity to buy. I saw some ads about EQ bank and their 2% savings account and I wanted to know what are the draw backs this this guys? would you recommend them? or just keep the cash with RBC (30k) we also have RESPs but we will not use them for our home, i'll grow that until retirement if possible. 

Any ideas would be greatly appreciated.


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## gibor365 (Apr 1, 2011)

Except that they may reduce 2% rate, there is no any drawback (also I wouldn't put more than 100K - CDIC limit there). However, if I were you, I'd open HISA in Tangerine, they will give you 2.4% for 6 months and after you may negotiate at least 2%. Also because Tangerine belongs to bank of Nova Scotia, it's more safe then EQ


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## tavogl (Oct 1, 2014)

Does this have a minimum balance requirement? and can I withdraw money as I want?


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## mordko (Jan 23, 2016)

EQ is OK, but they have a limit of $100K.


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## gibor365 (Apr 1, 2011)

tavogl said:


> Does this have a minimum balance requirement? and can I withdraw money as I want?


No, both EQ and Tangerine don't have balance requirement.


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## gibor365 (Apr 1, 2011)

mordko said:


> EQ is OK, but they have a limit of $100K.


Yes, they have on new accounts, I have an oldone so I don't have this limit, however, if i have a choice, I wouldn;t exceed 100K CIDC limit (with Tangerine I'm constantly above this threshold)


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## Eclectic12 (Oct 20, 2010)

gibor365 said:


> Except that they may reduce 2% rate, there is no any drawback (also I wouldn't put more than 100K - CDIC limit there). However, if I were you, I'd open HISA in Tangerine, they will give you 2.4% for 6 months and after you may negotiate at least 2%. Also because Tangerine belongs to bank of Nova Scotia, it's more safe then EQ


It's worth trying ... but I suspect with the OP mentioning what looks like $30K of savings, it may not be enough for Tangerine to bother negotiating, when the bonus rate expires.

AFAICT, a new customer needs to open both a savings and chequing account to get the 2.4%, according to their web site. Savings only is listed as getting 1.90%.





gibor365 said:


> mordko said:
> 
> 
> > EQ is OK, but they have a limit of $100K.
> ...


I'd have to find the link again but the one I saw seemed to be saying that older accounts have a $500K limit ... bigger ... though still a limit.


Cheers


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## pwm (Jan 19, 2012)

I have an HISA at EQ Bank and I am happy with their service. One thing to consider: They do not yet offer joint accounts. They plan to do so in the future, but no ETA on that yet.


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## NorthernRaven (Aug 4, 2010)

Eclectic12 said:


> It's worth trying ... but I suspect with the OP mentioning what looks like $30K of savings, it may not be enough for Tangerine to bother negotiating, when the bonus rate expires.
> 
> AFAICT, a new customer needs to open both a savings and chequing account to get the 2.4%, according to their web site. Savings only is listed as getting 1.90%.
> 
> I'd have to find the link again but the one I saw seemed to be saying that older accounts have a $500K limit ... bigger ... though still a limit.


Anyone with huge amounts of cash won't mind parking a couple hundred in the free Tangerine chequing account to get the extra bonus interest... 

EQ does indeed have the $100K limit on new accounts. But accounts opened before February 21/2016 have the original $500K limit grandfathered in.


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## yyz (Aug 11, 2013)

OP,
If you have TFSA room for either of you it wouldn't be a bad idea to put the cash in there and at least shelter the interest.


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## NorthernRaven (Aug 4, 2010)

yyz said:


> OP,
> If you have TFSA room for either of you it wouldn't be a bad idea to put the cash in there and at least shelter the interest.


Remember that TFSA withdrawals create "dead" contribution room and can't be replaced until the start of the next calendar year, so timing may impact the actual tax savings if you have anything else that could be using that room. With two people and relatively small amounts, this may not be an issue if there isn't much in existing TFSAs.

There's also the RRSP Home Buyers' Plan for first-time homeowners, where you can withdraw $25K from your RRSP to buy/build a home. The funds have to have been in for 90 days before withdrawing if you want the deduction, and you have to repay it to your RRSP over 15 years, but the OP might want to explore whether parking $25K (or $50K combined, I think, for joint ownership) in high-interest RRSP HISA would be a benefit for their particular situation.


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## Eclectic12 (Oct 20, 2010)

NorthernRaven said:


> Anyone with huge amounts of cash won't mind parking a couple hundred in the free Tangerine chequing account to get the extra bonus interest...


Even if one only has $30K, parking a couple of hundred to bump Tangerine up beyond EQ's 2% probably works.

My point though was that beyond the "new customer" period, there may not be enough $$ to get a higher interest rate than EQ is currently offering.


Cheers


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## gibor365 (Apr 1, 2011)

Eclectic12 said:


> It's worth trying ... but I suspect with the OP mentioning what looks like $30K of savings, it may not be enough for Tangerine to bother negotiating, when the bonus rate expires.
> 
> AFAICT, a new customer needs to open both a savings and chequing account to get the 2.4%, according to their web site. Savings only is listed as getting 1.90%.
> 
> ...


My MIL opened only SAving account and got 2.4% for 6 month. After 6 months, she contacted Tangerine by online chat and got 2% rate.... In any case,it's very easy also to open Checking accounts, then you also would be able to use debit card and cheques.

Also, there is a possibility that Tangerine can give customer even better promo rate... My mom is getting now 3.25%, she didn't even contacted Tangerine, they initiated it.

Also Tangerine offers TFSA with same 2.4% 6 months rate, EQ doesn't offer TFSA at all.

Also note that EQ can any day reduce rate (and they did several times already), Tangerine 2.4% is guaranteed for 6 months.

And last  , if you open Tangerine account and give them somebody else Orange key, you will get $50 gift


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## tavogl (Oct 1, 2014)

Hi all and thank you very much for your replies, this is an eye opener as I have more options than I thought.

Let's summarize:

Wife and I have both plenty of room in TFSA

30k is all we have, it's 13 months of savings, while it's not much I have to say we we're in debt last year and paid it all off, this year should be way more productive and savings should be higher, we are aiming for a minimum 25% of our incomes saved.

RRSP Home Buyers plan also sounds good, I'll be investigating this.

EQ vs Tangerine, a bit confusing to choose one, I think 30k is not an amount of money Tangerine would negotiate rates over, but I might be wrong, and we are adding 3k minimum a month to our savings, I don't know if that appeals to the bank.

I'll continue to do some reading about the TFSA vs RRSP and EQ vs Tangerine, any more ideas are more than welcome!


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## gibor365 (Apr 1, 2011)

> EQ vs Tangerine, a bit confusing to choose one, I think 30k is not an amount of money Tangerine would negotiate rates over, but I might be wrong, and we are adding 3k minimum a month to our savings, I don't know if that appeals to the bank.


First of all, if you have TFSA room, Tangerine is much better for you , as you gonna get 2.4% for 6 months , guaranteed.
EQ is not offereing TFSA at all.
Regarding negotiation with Tangerine..... after 6 months you will contact them via chat or call them... and Tangerine doesn't care if you have 30K, $10 or 500K , its' strange , but this is a fact (you may search and find Tangerine threads on this forum). 
Just an example: I had 150K and got 2%, my mom had $1 (one dollar!) and got 3.25% (so I transfer all her money from EQ to Tangerine as well as mine)...
P.S. and don't forget that Tangerine will give you $50 gift money


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## gibor365 (Apr 1, 2011)

You can do even smarter . Open individual account with tangerine with your name, use Orange key and get $50 bonus. You will get your own Orange key. Then you wife can open individual account using your Orange key. Both you and your wife will get $50 bonus each!


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## james4beach (Nov 15, 2012)

tavogl said:


> I saw some ads about EQ bank and their 2% savings account and I wanted to know what are the draw backs this this guys?


One drawback is that they are a higher risk bank than the big banks. Compared to the big banks, EQ Bank is more susceptible to collapse. In such a case, CDIC insured deposits would likely be transferred to another Canadian bank. Uninsured deposits may suffer losses. Even if CDIC covers all losses, you may experience delays getting access to your money.

I don't have deposits with EQ Bank because I don't have faith in specialized lenders like them. In the past, Canada has had many failures of specialized mortgage banks/trusts of this type. The US has had a lot of failures of mortgages-focused banks too.

EQ Bank is part of Equitable Bank. And unlike the large, diversified banks (with many lines of business and operations in many countries), Equitable Bank (link to annual report) has a balance sheet that is entirely concentrated in mortgages. Their risk is therefore concentrated in a single type of asset, instead of spread around different assets. The great majority of their assets are categorized as Level 3 (see page 87), which means they are illiquid and difficult to value. During past financial crisis periods, Level 3 assets were consistently the most problematic to banks. For example if the bank encounters problems and tries to dispose of their assets, they may find no buyers or receive very bad prices for their assets.

They are highly leveraged, at about 22:1 based on conservative measures of capital. This is a very high level of leverage for such a specialized, non diversified bank.

It's not a big danger, nor are they anywhere close to collapsing. There would need to be a real estate slowdown in Canada for them to get into trouble. Still, I'm not comfortable lending money to places like this.



gibor365 said:


> I were you, I'd open HISA in Tangerine, they will give you 2.4% for 6 months and after you may negotiate at least 2%. Also because Tangerine belongs to bank of Nova Scotia, it's more safe then EQ


I agree.


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## Eclectic12 (Oct 20, 2010)

gibor365 said:


> ... Regarding negotiation with Tangerine..... after 6 months you will contact them via chat or call them... and Tangerine doesn't care if you have 30K, $10 or 500K , its' strange , but this is a fact (you may search and find Tangerine threads on this forum).


I'll have to call and find out why they aren't giving me the bumped up rate then. Plus I can recall others from the Tangerine thread asking the same question.

Where they give the rate no matter what the balance ... all the better but that's not what Tangerine has done for me.


Cheers


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## gibor365 (Apr 1, 2011)

Eclectic12 said:


> I'll have to call and find out why they aren't giving me the bumped up rate then. Plus I can recall others from the Tangerine thread asking the same question.
> 
> Where they give the rate no matter what the balance ... all the better but that's not what Tangerine has done for me.
> 
> ...


I called them and asked them several times (last time I asked why my mom with $1 balance got 3.25% rate and myself with 100K+ got only 2%). They said that different department has some algoritm that establish promos for different clients with different rates and they don't know what criteria is 

However, in any case , imho it's better to get 2.4% guarantee for 6 months and then , in the worst case, transfer money to EQ for 2% .... (another problem with EQ that they can any date lower rate, if you remember they started with 3%)


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## Eclectic12 (Oct 20, 2010)

^^^^

Absolutely it's better to start with Tangerine for a new client. :biggrin:


Cheers


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## Mechanic (Oct 29, 2013)

EQ raised the interest rate to 2.3% yesterday :smile-new:


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## gibor365 (Apr 1, 2011)

imho, if you are below CDIC 100K limit, you are pretty safe to hold cash in EQ bank... and in case if it goes belly up, and if CDIC won't have enough money to cover Home Trust, EQ , maybe Peoples Trust, governemnt can print more money, thus value of (already depressed CAD$) will go down, but it will affect EVERYONE in Canada, not only those "small banks" investors.... and at least who kepps money there until this D-Day will get much better % than whatothers getting in 6-gig banks


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## Beaver101 (Nov 14, 2011)

gibor365 said:


> imho, if you are below CDIC 100K limit, you are pretty safe to hold cash in EQ bank... and in case if it goes belly up, and if CDIC won't have enough money to cover Home Trust, EQ , maybe Peoples Trust, governemnt can print more money, thus value of (already depressed CAD$) will go down, *but it will affect EVERYONE in Canada, not only those "small banks" investors*.... and at least who kepps money there until this D-Day will get much better % than whatothers getting in 6-gig banks


 ... but who's in line first for the distribution? Can't be small bank investors ...


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## gibor365 (Apr 1, 2011)

Beaver101 said:


> ... but who's in line first for the distribution? Can't be small bank investors ...


Don't get your point 
small bank investors will get CDIC/government cash and it gonna hit everyone


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## Beaver101 (Nov 14, 2011)

^ Yes, it's going to hit everyone. But doesn't that include pension funds, small business corps, etc.? Or maybe pension funds don't invest in these piddly deposits???


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## gibor365 (Apr 1, 2011)

Beaver101 said:


> ^ Yes, it's going to hit everyone. But doesn't that include pension funds, small business corps, etc.? Or maybe pension funds don't invest in these piddly deposits???


Probably some pension fund were invested in HCG and EQB... I don't know, I've read that currently only 1 institution still invested into HCG, but it's not the point, everyone gonna get hit, because government will need to print/spend billions to cover CDIC insurance , thus it will hit CAD$ and this will affect everyone


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## Eclectic12 (Oct 20, 2010)

gibor365 said:


> Probably some pension fund were invested in HCG and EQB ...


I thought I read that Home Trust was HCG's deposit taking subsidiary while Equitable Bank as well as their online bank EQ Bank were competitors?

Or did I miss something>


Cheers


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## pwm (Jan 19, 2012)

EQ Bank just announced that they now support Joint Accounts. I completed the conversion of my account to joint with my wife this morning, and the process was very simple. My account had zero balance while I was waiting for this to happen. Now I can move some cash there again.


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