# tranferring GIC from TD to other financial institutions without penalty



## GreenAvenue (Dec 28, 2011)

I have been locked in a GIC for 5 years, it's about $11000 and I set it up with TD. If I transfer this money TD will charge me a hefty penalty. I am considering keeping the GIC open with a cheap chequing account to avoid paying the penalty (as this was money saved by my parents for my children). Is there another way of getting out of paying the penalty that you guys might know of?


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## carverman (Nov 8, 2010)

GreenAvenue said:


> I have been locked in a GIC for 5 years,


Depends on what type of GIC it is.
Cashable, Redeemable, or non cashable-non redeemable. 

To try and reclaim your original amount without a huge penalty is very difficult as I heard they have to sell the GIC
to another investor entity at a discount to get the money to pay you, so it's not going to be "even steven"as they say.
When you invest in a GIC, it's really a contract to invest your money for a fixed interest rate for a fixed time..and if you try to break the contract early..it will definitely cost you something.

Sometimes in case of a death of the GIC investor, the bank can (regrettably) make arrangements to return the money
early to the estate of the deceased investor at a discount and certain fees, but even that situation really depends 
on how agreeable the bank is to do that. 
They could still hold on to the deceased GICs and pay them to the estate at time of maturity. The banks have no 
obligation to return the principle on the GIC before maturity. 



> *Redeemable GICs *are typically offered for longer terms (between 1 and 5 years) and will allow you to cash out your investment prior to maturity under certain conditions. Usually, early redemption is permitted after a closed period, and interest to the date of encashment is paid at a reduced rate, often depending how far into the initial term you are. Early redemption rates will be disclosed at the time you purchase the GIC. If you hold the redeemable GIC to maturity, interest will be paid at the contract rate. Features and restrictions on redeemable GICs can vary considerably from one issuer to another. *Make sure you’re clear on the details before you buy.
> *





> *With non-cashable/non-redeemable GICs, *however,* you are bound by the contract to hold the investment until the maturity date.*
> In order to break the contract, you would have to demonstrate financial hardship and even then, it is at the discretion of the issuing financial institution, *as they are under no obligation to let you redeem.* If the issuer does agree to break the contract, there may be penalties and/or you may lose some or all of your accrued interest.


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## gibor365 (Apr 1, 2011)

When I transferred RRSP from TWD to CIBC IE, I also had non-redeemable GIC, so I transfered everything except this GIC and when GIC matured , cash got transferred to CIBC IE as well


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## GreenAvenue (Dec 28, 2011)

Yeah I am looking at CIBC as well. They don't offer products like TD but I'm fed up with TD so I'm considering switching to Questrade for the trading part (at least their trading platforms work) and will let the RDSP do it's work with CIBC. I have suggested this to TD, let's see what they say. I will suck up the penatly on closing the GIC if I have to.


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## carverman (Nov 8, 2010)

GreenAvenue said:


> Yeah I am looking at CIBC as well. They don't offer products like TD but I'm fed up with TD so I'm considering switching to Questrade for the trading part (at least their trading platforms work) and will let the RDSP do it's work with CIBC. I have suggested this to TD, let's see what they say. *I will suck up the penalty on closing the GIC if I have to*.


Be prepared that if yours is a non redeemable (until maturity date), you may be looking a a huge penalty for early redemption.. probably a LOT more than any accrued interest it has earned so far. 

If the annual interest (calculated monthly), was setup to be paid monthly when it was purchased, then there will be a *substantial discount on the principle* of the GIC.. that is...if they even agree to early redemption before maturity date. 

If they do, be prepared for being shellacked by Banker " Black Jack Shellack".:biggrin:


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## gibor365 (Apr 1, 2011)

Why to get penalty?! Transfer everything except this GIC and it will be transfered when matured


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## AltaRed (Jun 8, 2009)

GreenAvenue said:


> Yeah I am looking at CIBC as well. They don't offer products like TD but I'm fed up with TD so I'm considering switching to Questrade for the trading part (at least their trading platforms work) and will let the RDSP do it's work with CIBC. I have suggested this to TD, let's see what they say. I will suck up the penatly on closing the GIC if I have to.


You need to explain what you mean regarding 'not offering products like TD'. What sales channel are you looking at? The basic bank branch level? The mutual fund asset management channel? The discount brokerage channel? What part of the TD conglomerate is the GIC with?


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## GreenAvenue (Dec 28, 2011)

gibor365 said:


> Why to get penalty?! Transfer everything except this GIC and it will be transfered when matured


Yes I guess you are right, I am leaning towards that option. I want to stay with TD but their CS is so frustrating! But I'm going to probably sing it out until maturity.


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## GreenAvenue (Dec 28, 2011)

AltaRed said:


> You need to explain what you mean regarding 'not offering products like TD'. What sales channel are you looking at? The basic bank branch level? The mutual fund asset management channel? The discount brokerage channel? What part of the TD conglomerate is the GIC with?



Like the TDB 902, low MER's. 
The GIC is with TD Trust. On my online bank account it is just a line and the number doesn't change. So I can't see how much return it made. I called Waterhouse last November, the employee there calculated the return which was close to zero he said. So that's why I thought the GIC was with Waterhouse. When I called TD Trust later they said it was with Waterhouse. When I called Waterhouse they said it was with the bank. But it is with the bank, I found the contract yesterday. And like gibor suggested, I'll just let it sit till maturity.


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## gibor365 (Apr 1, 2011)

> So that's why I thought the GIC was with Waterhouse. When I called TD Trust later they said it was with Waterhouse. When I called Waterhouse they said it was with the bank. But it is with the bank, I found the contract yesterday. And like gibor suggested, I'll just let it sit till maturity.


 Actually CIBC IE did it for me  they said that depends with which part of TD GIC is, it may be transferred to CIBC IE in kind.... but later they told me that it cannot be transferred, so was waiting until maturity


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## AltaRed (Jun 8, 2009)

Agreed that TD e-funds are a good deal and exclusive to TD. 

Not to beat a dead horse, but your TDDI (formerly Waterhouse) account can hold all sorts of GICs including those in the name of TD Trust. If the GIC that is issued in the name of TD Trust is actually held at TD Trust, you can just let it mature and then move the cash elswhere at no cost. 

But beware that if your TD Trust GIC is actually held in your brokerage account, and you leave it there (but move out all your other holdings to Questrade, etc.), then it could attract minimum account fees. I know that TDDI recently changed its policies to consider all of your TD holdings in determining account size, but you better check with TDDI first to determine that leaving a single GIC at TDDI won't attract minimum account fees (that would end up costing you most? of your annual interest from that GIC. Not only that, you will incur a transfer out fee in the order of $135. Be forewarned!


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## carverman (Nov 8, 2010)

GreenAvenue said:


> Like the TDB 902, low MER's.
> The GIC is with TD Trust. On my online bank account it is just a line and the number doesn't change. So I can't see how much return it made. I called Waterhouse last November, t*he employee there calculated the return which was close to zero he said. *So that's why I thought the GIC was with Waterhouse. When I called TD Trust later they said it was with Waterhouse. When I called Waterhouse they said it was with the bank. But it is with the bank, I found the contract yesterday. And like gibor suggested, I'll just let it sit till maturity.


*Something does not make sense here with your statement*. Where do the banks find these employees that can't even
calculate an interest rate payable? Out of a cracker jack box. it's a shame to have somebody like this giving you the
wrong answer when you inquired? *I would tell the bank to say to that employee... "Your'e Fired!"*

Did you take out the GIC with TDtrust? I*f so, then they should have sent you a notification in the mail with the GIC number and the annual percent interest it is to pay to maturity.* 

You must have had also the option to specify what they were to do with the accrued interest at the time when you took it out.

The interest earned can stay with the GIC and be compounded as the GIC matures *OR* you can specify the option to have the bank pay the interest on that GIC on a MONTHLY basis , and deposit the interest into a savings account you have set up for that purchase. 

This way you can take advantage and use the interest earned every month and move that into a TFSA (if you have one opened) or use it as cash to be added to yor checking acct. The bank holding the GIC in your name would/will send you a T5 every year at tax time to declare interest earned on that GIC.

Where are your T5s that the bank has sent you, if its a 5 year GIC? 
*Is this the first year you opened the GIC* or it into a 2nd, 3rd or 4th year already in the 5 year maturity?

If it's the first year, and the anniversary date of when you opened it comes around, the bank will send you a T5 each year the GIC is still active and drawing interest..in other words..

if you opened it in 2015, and it's already passed the GIC maturity date in 2016, you should have received a T5 showing the interest paid, (but perhaps not redeemed yet), as y*ou still have to declare the interest in the year it is earned to CRA, *and not necessarily wait until the 5 years are up.

If you still have the paperwork for the GIC and the interest it pays, there are * ONLINE CALCULATORS * that will give you approximate value of interest earned.

For instance; $11,000 at 2.0% per annum is: 

Year	Year Interest	Total Interest	Balance
1	$222.21........ $222.21......	$11,222.21
2	$226.70.........$448.91......	$11,448.91
3	$231.28.........$680.18.......	$11,680.18
4	$235.95.........$916.13.......	$11,916.13
5	$240.72........$1,156.85.....	$12,156.85
http://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php

So assuming you still have 5 years to go on this GIC..why sweat it? You'll get back around $12,156.85 with the compounded power of the interest over 5 years. (Principle Plus Interest.)

*Assuming the interest rate on your GIC is 2%, you'll have another $1,156.85 in your pocket at maturity. 
Not zero interest as you are saying. Enjoy the ride as they say.*


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## gibor365 (Apr 1, 2011)

> But beware that if your TD Trust GIC is actually held in your brokerage account, and you leave it there (but move out all your other holdings to Questrade, etc.), then it could attract minimum account fees. I know that TDDI recently changed its policies to consider all of your TD holdings in determining account size, but you better check with TDDI first to determine that leaving a single GIC at TDDI won't attract minimum account fees (that would end up costing you most? of your annual interest from that GIC. Not only that, you will incur a transfer out fee in the order of $135. Be forewarned!


As was also concerned about it! I even confirmed with CIBC that if TDW will charge me additional transfer out fee of $135, CIBC IE will be refunding it. However, TDW didn't charge me, as it was part of the same transfer , same T2033R...

P.S. you may want to save all your TDW statement you may need in future. TDW after transfer out, next day, disabled my account and I wasn't able to view any transactions.
P.P.S. Note, that if you get dividends, most likely they will be transferred separately, however, TDW didn't give a [email protected] about transferring them and I didn't have access to online account.... so I should've call TDW several times and requesting to transfer cash from dividends and DRIPed shares. it took for me AFAIR 3 additional transfers. But it worth it, as TDW sux


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## GreenAvenue (Dec 28, 2011)

You know, you guys are all correct. You really are! And I'm glad to hear this! 

My only concern is with my children that go to college or university and my RRSP. And TD... well really they don't give a ****. What am I really going to change there.


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