# Customers are flocking to this online bank for rates that beat the big banks



## newfoundlander61 (Feb 6, 2011)

Customers are flocking to this online bank for rates that beat the big banks


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## Just a Guy (Mar 27, 2012)

Wow 2 whole percent...wish I could get that kind of return...I’d only be losing money then.


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## AltaRed (Jun 8, 2009)

Given non-subscribers cannot read that link, here is an excerpt from Rob Carrick's article.


> EQ Bank launched in early 2016 and a year ago was sitting on assets of about $2.7-billion. In February, EQ hit $5-billion. “It’s pretty remarkable,” Mahima Poddar, head of personal banking at EQ parent Equitable Bank, said in an interview this week. “During the pandemic, we crossed $3-billion, $4-billion and now $5-billion in assets.”


and


> EQ’s regular savings account rate isn’t quite the highest out there, but the RRSP and TFSA rates are exceptional and, thus, very likely to be pared back. At a time when the pandemic is driving elevated savings rates for households where jobs and incomes have held steady, offering higher rates than the big banks is resonating with people like never before. The number of people banking at EQ has risen to more than 185,000 from approximately 102,200 a year ago, and new account sign-ups are about 150 per cent higher than they were before the pandemic began.
> 
> EQ came into the pandemic with a rate of 2.45 per cent on its regular savings account and then slashed rates to 2 per cent, 1.7 per cent and finally to the current level of 1.5 per cent. You may have heard about rising rates in the bond market, which are putting upward pressure on the cost of fixed-rate mortgages. Savers should know that the rates they get on their money are unaffected by this trend, and that makes rate increases on savings account very unlikely.


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## m3s (Apr 3, 2010)

Wait till yall discover DeFi


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## ian (Jun 18, 2016)

We have been EQ customers for quite some time. Good service, much better rates than our day to day bank, even if they are miniscule. Very happy with them.


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## MrMatt (Dec 21, 2011)

I don't see how anyone can offer savings account rates basically at mortgage rates.


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## Just a Guy (Mar 27, 2012)

I don’t know how anyone can get excited by these rates...

mr. Matt, don’t forget mortgages are leveraged, even from the banks...they aren’t hurting.


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## AltaRed (Jun 8, 2009)

MrMatt said:


> I don't see how anyone can offer savings account rates basically at mortgage rates.


Equitable Group mortgage rates for fixed mortgages. Variable rate mortgages are prime of 2.45% plus/minus an adjustment factor obviously to be competitive. 

Their NIM (net interest margin) has been in the range of 1.5-1.8% the past 5 years with 2020 at 1.75%. Much of their loan book has to be approaching 4% to get that kind of NIM.


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## scorpion_ca (Nov 3, 2014)

Motive Financial has dropped the interest rate from 1.55% to 1.25% today. Not sure if EQ would drop it too.


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## Just a Guy (Mar 27, 2012)

My banker just drove out to my place to bring me pizza tonight.


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## james4beach (Nov 15, 2012)

scorpion_ca said:


> Motive Financial has dropped the interest rate from 1.55% to 1.25% today. Not sure if EQ would drop it too.


Kind of a reminder why it can be a good idea to lock in a rate with a 5 year GIC.

Every time we talk about GICs, someone responds and says, why on earth would I lock in money with a GIC when I can get almost as high an interest rate from EQ and Motive?


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## AltaRed (Jun 8, 2009)

I doubt EQ can hold their 1.5% rate indefinitely this year, especially if they continue to attract too much in deposits and don't have enough lending action to push all that deposit money out the back door. EQ has been very effective in managing a decent net interest margin despite that rate but one can only loan out so much money. 

What I don't understand is why EQ continues to offer 2.3% for RRSP and TFSA money. It is now captive for the most part so drop that rate to 1.5% as well and those deposits will remain sticky. Time will tell.


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## newfoundlander61 (Feb 6, 2011)

AltaRed said:


> Given non-subscribers cannot read that link, here is an excerpt from Rob Carrick's article.
> and


Sorry about that, I was able to read it and do no subscribe. Maybe a free article for the month or something like that.


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## Eclectic12 (Oct 20, 2010)

AltaRed said:


> ... What I don't understand is why EQ continues to offer 2.3% for RRSP and TFSA money. It is now captive for the most part so drop that rate to 1.5% as well and those deposits will remain sticky. Time will tell.


They kept their 3% rate back in the day for a lot longer than I expected. To avoid repeating the mistake of skipping the rate, I opened and deposited in an EQ Bank TFSA in about five minutes.

Why do you think the RRSP and TFSA money is captive?
Or have they changed their policy of zero fees for a transfer out for RSPs and TFSAs?


Granted the process of cutting a cheque to send to the new account is time consuming but compared with transfer fees of $25 to $150, the costs are far less of a barrier to moving it, n'est pas?


Cheers


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## Eclectic12 (Oct 20, 2010)

newfoundlander61 said:


> Sorry about that, I was able to read it and do no subscribe. Maybe a free article for the month or something like that.


Another non-subscriber who was able to read, around the ad to subscribe, the article.

The second access resulted in a message to signin to read the article.


Cheers


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## MrMatt (Dec 21, 2011)

AltaRed said:


> Equitable Group mortgage rates for fixed mortgages. Variable rate mortgages are prime of 2.45% plus/minus an adjustment factor obviously to be competitive.
> 
> Their NIM (net interest margin) has been in the range of 1.5-1.8% the past 5 years with 2020 at 1.75%. Much of their loan book has to be approaching 4% to get that kind of NIM.


Interesting point, then it sounds likely sustainable, assuming high creditworthiness of their borrowers.
I used to spend time chasing rates, and decided it's not worth it, teaser rates are just too popular.


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## AltaRed (Jun 8, 2009)

Eclectic12 said:


> Why do you think the RRSP and TFSA money is captive?
> Or have they changed their policy of zero fees for a transfer out for RSPs and TFSAs?
> 
> 
> Granted the process of cutting a cheque to send to the new account is time consuming but compared with transfer fees of $25 to $150, the costs are far less of a barrier to moving it, n'est pas?


It takes more effort to do the paperwork to move registered funds, especially RRSP money, along with funds being in hiatus for a period of time. TFSA funds are a bit easier, but the loss of contribution space until the next calendar year is a headwind even if it is just 2 weeks. The funds are more sticky... No more simple than that.


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## Eclectic12 (Oct 20, 2010)

Yes ... the PITA factor of the paperwork is a barrier to some for moving registered funds. If I was an EQ bank exec, I'm not sure I'd trust it would be enough of a factor as I suspect those using EQ Bank are more likely to take the paperwork in stride instead of being intimidated by it, should rates be slashed. 

We are, after all, talking about why the rates might stay higher longer for these new EQ bank registered accounts. It's also cash deposits and GICs so I'm not sure transfer headwinds will matter much for some time to come.


Personally, I'm puzzled by a Dec TFSA withdrawal with a Jan re-contribution to a different TFSA would take two weeks. It's usually been at maximum four days for me. As I say, though - we are talking cash and in my case, the jump from 0.1% to 2.3% means headwinds would be tiny and it won't take much time to beat leaving it where it was.


Cheers


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## AltaRed (Jun 8, 2009)

Few people would leave the withdrawal to the period between Xmas and New Years (or at least the last few business days in the year) so the reason I used 2 weeks in my example. Four days is cutting it far too close if the TFSA withdrawal doesn't get transacted on the last business day in December and/or holds are incurred. So, I take issue with a maximum of 4 days in the majority of cases.


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## l1quidfinance (Mar 17, 2017)

A great little bank. I pretty much use these as a chequing account. Flip between here and Tangerine if they have a good offer. I'm not going to be fooled by the TFSA and RRSP rates. They are clearly trying to encourage more sticky funds vs people moving in and out of the chequing accounts. 

I'm also reluctant to open more accounts at this point unless the rates get too low. I do use Hubert (HappySavings) but they are now down to only 1.0%. However the 1.5% pays for a couple of meals out and Tims throught the year depending on how you look at it. It sure is better than what any of the big banks offer.


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## Eclectic12 (Oct 20, 2010)

Fair enough that most people would do it earlier, expanding the time frame.
Though I did say *maximum four days for me* so you can rest assured that it has usually been four days, _for me_. 



Re: cutting it far too close to be sure the TFSA withdrawal is recorded as a Dec withdrawal and/or hold occurred

Are you thinking of an EFT?

Using Dec 2019 as an example, the TFSA withdrawal was done online Monday Dec 30th. It was a transfer between accounts at the same bank where the line item in each account showed in a minute or so. The fine print for holds is for funds coming from other FIs or ATMs or ETFs. The funds had been there for months so no reason I can think of that a hold would occur. Having done this multiple times, the statements show a Dec withdrawal with no issues raised by CRA.


The receiving chequing account does say for the amount deposited Jan 2nd that a five day hold _may_ be applied. There seems to discretion as it was transferred Jan 2nd from the chequing account to the discount brokerage TFSA the same day. IIRC, the morning of Jan 3rd, a HISA MF buy was placed and accepted.

The funds transferred where greater than the funds in the receiving chequing account so the factor that may have waived the hold is that the total brokerage assets are significantly greater than the funds transferred.


Cheers


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## Eclectic12 (Oct 20, 2010)

l1quidfinance said:


> ... I'm not going to be fooled by the TFSA and RRSP rates.
> They are clearly trying to encourage more sticky funds vs people moving in and out of the chequing accounts.


I'll see if they cut rapidly and how the updated rate compares with other TFSAs.

Having moved TFSA money with a Dec withdrawal then Jan re-contribution several times, I'm not worried about having to move it.
Plus if I want to move it earlier, the no fee transfer is a more useful option at the current rates as well as compared to other FI's TFSA.


Cheers


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## AltaRed (Jun 8, 2009)

Eclectic12 said:


> Fair enough that most people would do it earlier, expanding the time frame.
> Though I did say *maximum four days for me* so you can rest assured that it has usually been four days, _for me_.
> 
> 
> ...


It is only by sheer chance to do a me2me transfer from EQ Bank TFSA to another institution's TFSA in 4 days. You would have had to initiate a withdrawal at EQ Bank on Dec 29, 2020 most likely (Dec 30th possibly) to get a withdrawal out. Those funds would be deposited into FI X Jan 4th at the earliest, and into the new TFSA. That is at least 6 days with no hold. 

At best in a year with Jan 1st at mid-week, it would take 4 days minimum (not maximum) to get funds from EQ to FI X and into its TFSA. If the transfer is not within the corporate family, add a hold (most receiving FIs have a hold) and that adds more time before an investment can be made. That is what most everyone is facing...as evidenced by the institution hopping that typically occurs in all these forums.

Continue to argue the point if you wish. There is nothing in it.


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## Eclectic12 (Oct 20, 2010)

I haven't tested it yet with an EQ Bank TFSA withdrawal ... but the EFTs have shown up consistently for me without holds for larger amounts from EQ Bank to Bank A in two business days or less when shuffling money around to take advantage of promo interest rates.

As long as the the TFSA withdrawal and the EFT request can happen same day then the most likely slowdown is a hold on the receiving end. For one FI, the hold is ignored and other has yet to restrict money being shuffled out of the chequing account. The hold I recall was to move from the savings account back to chequing.


Regardless ... whether it is a two week through withdrawals or eight week with transfer paperwork draining of the TFSA, should the rates be cut too much - EQ Bank will find that I don't see much of barrier to moving TFSA money. That's why I'm not convinced the rate will change drastically soon. 


Cheers


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## AltaRed (Jun 8, 2009)

Eclectic12 said:


> Regardless ... whether it is a two week through withdrawals or eight week with transfer paperwork draining of the TFSA, should the rates be cut too much - EQ Bank will find that I don't see much of barrier to moving TFSA money. That's why I'm not convinced the rate will change drastically soon.


For the tenacious, as in the folks at Canadian High Interest Savings Accounts, I agree it would not be much of a barrier, especially with TFSA money. It is more complicated with formal transfers, especially with RRSPs/RRIFs which usually trigger a transfer out fee. The folks at Canadian High Interest Savings Accounts wring their hands and gnash their teeth over $50+ transfer out fees. Regardless, it is speculation as to when (probably not if) EQ drops their RRSP and TFSA rates. Even Rob Carrick thinks so.


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## Eclectic12 (Oct 20, 2010)

The registered transfer out fee is a great barrier that other FIs have but since EQ bank so far is saying they don't charge this fee, IMO they are more at risk and more apt to consider rate cuts carefully.

FWIW a bit of trivia. The registered account rates only have to stay intact a few more days to outlast the EQ bank account rates originally offered when EQ bank opened up. 



Cheers


*PS*
Since the other choices with my other banks are 0.1%, 0.2% or an almost expired taxable 2%, I'll take 2.3% for as long as it lasts.


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## AltaRed (Jun 8, 2009)

I would take 2.3% too as long as it lasts. It is just that it will not last, simply because 2.3% eats into EQ's net interest margin of ~1.75% that it consistently tries to keep over the past number of years. If their NIM is only 1.75% with a 1.5% HISA and 1.7% five year GICs, then you know the TFSA and RRSP teaser rates have to drop to at least 1.7-1.8% imminently. The only argument is in defining 'imminent'.

Equitable Group in announcing 4Q results recently talked about how they grew their deposit base at EQ Bank and are doing their best to maintain a 1.5% HISA rate at EQ Bank. That suggests they are walking the thin line at that rate.


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## scorpion_ca (Nov 3, 2014)

10 Year Treasury yield has been rising and also fixed rate mortgage has increased in Canada in the last couple of weeks. Does that mean we would get higher interest rate on HISA accounts soon?


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## AltaRed (Jun 8, 2009)

scorpion_ca said:


> 10 Year Treasury yield has been rising and also fixed rate mortgage has increased in Canada in the last couple of weeks. Does that mean we would get higher interest rate on HISA accounts soon?


Don't count* on it. Current margins are historically low so financial institutions will want to regain part of that first. Further, which mortgage fixed rates are increasing? One year? 5 year? Have to be more specific. Fixed mortgage rates react more to 5 year bonds than 10 year ones.

* In fact, after a period of 2 months without any HISA account changes per Comparison chart, there have been 4 decreases already in March (post RRSP/TFSA season). There will likely be more.


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## latebuyer (Nov 15, 2015)

This reminds me of the legendary 3% peoples trust tfsa that lasted so long. I guess the difference is it wasn’t advertised as a teaser rate. I agree it was fast to transfer funds from hubert to eq in december. Personally i’m spreading my money around between 3 fis as who knows who will have the best rates going forward.


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