High Interest Savings Accounts at Discount Brokers
[Note: The following post was originally published on May 18, 2010. Recently, TD Waterhouse started offering only TD Bank High Interest Savings accounts to its clients. Therefore, I've updated and somewhat revised this post to make it current. Feel free to have it bookmarked.]
In response to yesterday’s post on the Renaissance High Interest Savings Account (ATL5000), reader Joseph pointed out that a number of savings accounts are available through discount brokers. These accounts typically pay much better interest than money market funds and may be ideal for parking cash in RRSP accounts. A note of caution: first check with your broker that no fees of any kind are charged for purchasing, selling or redeeming these funds early. I wrote about the Altamira Cash Performer account many years back and the biggest knock then was the steep redemption fees and penalties charged on these funds.
The savings accounts offered through discount brokers have one huge advantage over high interest savings accounts offered by online banks such as Ally or ING Direct. Since the trades executed settle in T+1 day, these accounts offer an ideal way to temporarily park your cash in RRSP, TFSA and taxable accounts and have it readily available for your trades. In contrast, online banks are not practical for registered accounts and it may take 3-4 business days to transfer money from (or to) an online bank to (or from) taxable brokerage accounts. These savings accounts are also a much better alternative to traditional money market accounts because they pay a much higher interest rate. For example, as of this writing, the TD Canadian Money Market Fund sports an yield of 0.38% which is much less than the 1.25% yield of high interest savings accounts.
List of High Interest Savings Accounts (interest rate as of Oct. 29, 2012):
Renaissance High Interest Savings Account (ATL5000): 1.25%.
Altamira Cash Performer (NBC100): 1.25%.
Dundee C$ Investment Savings Account (DYN500): 1.25%
Manulife Bank Investment Savings Account (MIP510, MIP710): 1.25%
Manulife Trust Investment Savings Account (MIP710): 1.25%
ICICI Bank HIISA (IBN100): 1.25% (Note: Not available for RRSP accounts).
RBC Investment Savings Account (RBF2010, RBF2020, RBF2030, RBF2040): 1.25%.
TD Investment Savings Account (TDB8150, TDB8155, TDB8159): 1.25%.
Many discount brokers also carry US$ high interest savings accounts. Note that US dollar denominated products are not eligible for CDIC insurance.
Manulife Bank US$ Investment Savings Account (MIP511): 0.20%
ICICI Bank US$ HIISA (IBN200): 0.25%
Dundee US$ Investment Savings Account (DYN400): 0.20%
RBC US$ Investment Savings Account (RBF2014): 0.20%
TD US$ Investment Savings Account (TDB8152): 0.20%
Altamira US$ High-Interest CashPerformer (NBC101): 0.20%
Availability at discount brokers
The following information is presented based on reader feedback and Canadian Money Forum posts. Please do your due diligence and check with your broker first before proceeding.
TD Waterhouse: TDB8150, TDB8155, TDB8159 and TDB8152. Other HISAs not available as of mid-2012.
RBC Direct Investing: RBF2010, RBF2020, RBF2030, RBF2040 and RBF2014. Other HISAs not available.
Scotia iTrade: Only DYN500 and DYN400 are no-fee. Other funds are available but iTrade charges a fee of 1% (minimum of $38.88) for non-Scotia funds redeemed within 90 days.
CIBC Investor’s Edge: ATL5000.
BMO InvestorLine: Offers most of these savings accounts. However, BMO has a $25,000 minimum and a penalty of 1% (minimum of $43) for non-BMO funds redeemed within 90 days!