# Lowered Interest Rates



## Koala (Jan 27, 2012)

Many of the banks with decent HISA (TFSA or unregistered) interest rates dropped their rates near the end of March or beginning of April. As far as I know, the BoC didn't change their rate, so I'm curious as to why the sudden change? Was this just a case of one of them lowering their rate so the others did as well?

Also, any suggestions as to what to do with money sitting in these accounts when it needs to be accessed in a year or so? I'm thinking of maybe moving more into bond MFs.


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## leoc2 (Dec 28, 2010)

Here is the conspiracy theory answer. Lower the daily rate so that you buy a 3 to 5 year GIC. Change the early redemption penalty rules on the new GIC you have purchased to favour the banks. You are locked into the GIC at a low rate the bank will easily pay as interest rates start heading higher in the coming months. :friendly_wink:


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## jamesbe (May 8, 2010)

Noticed today Ally is now 1.8% not 2%


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## OptsyEagle (Nov 29, 2009)

What's the mystery. They advertise a higher rate at the beginning of the year when everyone has some new TFSA money to invest and once the money gets invested they lower the rate to something that allows them to make a bigger profit.

Bait, then switch. This practise has been discussed on here for quite a while.


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## Koala (Jan 27, 2012)

It's not just TFSAs, it's HISAs. Many of the banks that lowered their rates aren't ones that typically do a bait and switch. If they were wanting to lower their rates though, I guess it makes sense to do it when the bait and switch ones are being lowered.


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## the-royal-mail (Dec 11, 2009)

RBC is still 1.15.


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## DanFo (Apr 9, 2011)

My td TFSA lowered the rate at the beginning of the year but I've been getting "bonus" interest paid monthly since then that seems to top it up higher then the old 1.25% rate (interest + bonus interest seems to be 1.44%/year)


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## Koala (Jan 27, 2012)

My best rate is still 2%, so no plans to switch to a big bank savings account yet. It's just sad to see the decrease when I'm planning on a large purchase in the near future!


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## doctrine (Sep 30, 2011)

PC has been 1.5% for like 4 years now.


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## JustAGuy (Feb 5, 2012)

Koala, who do you bank with?


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## Koala (Jan 27, 2012)

Most of savings account money is with Canadian Tire. I also use ING, TD and RBC.


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## NorthernRaven (Aug 4, 2010)

The Big5 banks have pared their sorta-HISAs down to 1.2%, so a lot of this is probably just the general savings market ticking down a bit - perhaps the general reasoning is that there won't be a BoC rate hike anytime soon, and the various HISA rates were overly juicy if one wasn't coming along.

I'd guess each of the HISAs position themselves relative to the others. ING feels it needs only offer 15-20 basis points over the big banks, and PCF thinks it can meet its needs at ING levels. I wouldn't be surprised if Canadian Tire drops down to 1.75% or 1.8% as well - it looks like they tried to drop their rate to 1.75% for a couple of months last April before bouncing back up, even while Ally and others were locked at 2%. 

The interesting ones will be the Manitoba credit unions - I'm curious to see what happens there.


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## Brian Weatherdon CFP (Jan 18, 2011)

Hi Koala, maybe interest-rate investing is a problem because it pays nothing (after inflation). One could opt for dividend-yield to pay twice as much ....and offer a lower tax-rate if non-registered). 

Many Bond funds could have losses if interest rates rise; yet if you work through to find funds with short-duration bonds, corporate bonds, and govt/corp bonds globally (pref not from high debt countries) you could be on the right track. Global infrastructure some dividend focus could even be part of such a focus.

I don't give any advice on purchasing in this forum, however the terms I've mentioned here could be accomplished inside a low-cost one- or two-fund portfolio that you could enjoy with some profitability and pleasure for the year's time you suggested.

Cheers!
BW


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## slacker (Mar 8, 2010)

*HISA rates drop?*

I just noticed that both Ally and ING has dropped their rates, from 2.0%, and 15% resptively, to 1.8% and 1.35% respectively.

What's going on? I thought rates were pressured to go up??

PS: Ah yes, thanks admin for merging thread.


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## mrPPincer (Nov 21, 2011)

So far the Manitoba credit unions are still hanging in there at 2% and 2.1%.


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## Koala (Jan 27, 2012)

BW thanks for the advice! Not all of my money is in HISAs, but there is a large portion there. I did move a little bit more to a bond fund, and may consider contributing more to some of my other MFs. As long as rates don't go down further, I'll play it safe with a good sized portion as cash.

It might not beat inflation, but as long as it beats what the housing market here is doing I'll be happy. I'd prefer it if the HISA rate was still at 3.5% though


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