Archive for August, 2009

Money Tip: Use HSBC Direct Savings as a main bank account

August 12, 2009


A recent post on Citizen’s Bank of Canada (see Citizen’s Bank Shutting down Free Chequing Accounts) elicited the following interesting tip on using HSBC Direct Savings Account as a main bank account:

HSBC’s Direct Savings account might be an option for some people. While you cannot write personal cheques on the account, you can do direct deposits and bill payments to and from the account (they will provide a VOID cheque for you to use to get things setup). It works really well for me. No more shuttling money between the chequing and savings account. The only missing piece is being able to write a personal cheque — I keep a President’s Choice Chequing account for that purpose.

HSBC currently pays a competitive interest rate of 1%. Thanks for the tip Yeroc!

Higher Taxes in the Offing?

August 11, 2009


With Governments around the world running large deficits, it makes sense that taxes will be hiked at some point in the future. This column in The Globe and Mail speculates what form the taxes hikes might take:

  1. Change the capital gains inclusion rate. Recall that while the rate is currently 50%, it used to be 75% not so long ago.
  2. Increase corporate tax rates.
  3. Create a new tax rate for high-income earners.
  4. Bump up the GST.

It may be political suicide but bumping up the GST would get my vote. Increasing the GST rate by another 2% would add about $12 billion to the Federal coffers but such a move is likely to encounter angry opposition, especially at a time when Ontario and British Columbia are also harmonizing the provincial sales tax with the GST.

Citizen’s Bank Shutting down Free Chequing Accounts

August 9, 2009


Once again, President’s Choice Financial has become the only option for Canadians wanting a free chequing account. Citizen’s Bank of Canada, which launched a no-fee chequing account just last fall, is shutting the doors on most retail products:

We’re moving to a more streamlined business model that focuses on our strengths—our successful Visa* credit card and prepaid card business for consumers, and our equally popular foreign exchange services for non-retail clients.

As a result, we’ll no longer offer savings and loans products. The bank will become a non-deposit taking bank and thus, is selling most of its residential mortgages, consumer loans and real estate secured lines of credit to The Toronto-Dominion Bank (“TD Canada Trust”). Depositors in B.C. can choose to move their accounts to comparable products within our parent company, Vancity Credit Union. Depositors outside of B.C. can choose an EasySwitch™ option with TD Canada Trust.

The affected products are Chequing, Savings and US Dollar Accounts, Term Deposits, Registered Accounts and Business Accounts. As noted in the press release, the majority of personal loans and mortgages have been sold to TD Canada Trust but Citizen’s Bank is keeping the Unsecured Line of Credit and Visa card businesses.

The press release also noted that online banking has become a “crowded marketplace”. While it is true that a lot of online banks offer competitive savings accounts, chequing accounts can hardly be called “crowded” considering PC Financial is the only other player.