There is yet another entrant in the already crowded online savings accounts marketplace. A tiny Manitoba-based credit union has started offering online savings accounts, term deposits, TFSA savings account and TFSA term deposits under the Hubert brand through the website happysavings.ca. The savings account offers an interest rate of 2.25 percent and the 2- to 5-year term deposits yield an average of 3.075 percent. Though the interest rate on the savings account is one of the highest available, it is largely negated by a $2.50 service charge per withdrawal from the savings account. Just like competing online accounts offered by credit unions, Hubert accounts are not CDIC-insured and deposit insurance is provided by the Credit Union Deposit Guarantee Corporation. New customers are required to purchase a $5 member share.

Hubert joins two other online savings accounts currently offered by credit unions: Outlook Financial and Achieva Financial. Outlook Financial offers a 2.0 percent interest on a savings account and 2- to 5-year GICs that provide an average yield of 3.11 percent. RRSP, RRIF and TFSA accounts are also available from Outlook Financial but watch out for the fees. One free withdrawal can be made from a savings account every month but each subsequent debit transaction is charged a fee of $1. A fee of $50 is charged for RRSP / TFSA transfers to another institution.

Achieva Financial currently offers a 2.0 percent interest on a savings account and 2- to 5-year GICs are yielding an average of 3.09 percent. RRSP, RRIF and TFSA accounts are available but again watch out for those fees. The first debit transaction is free but each subsequent debit is charged a fee of $1. Online bill payments from the account are charged a fee of $0.50.

Online savings accounts from credit unions do seem to offer a smidgen more interest on savings accounts and GICs than most of their competitors. But, other online products such as those from ING Direct and Ally make up the difference by providing a CDIC guarantee and not charging any fees. Also note that you can park cash in your brokerage accounts in high interest savings accounts that can be purchased like mutual funds.

This article has 48 comments

  1. Although Manitoba credit union deposits are not covered by the CDIC insurance, which is only $100,000 maximum, there is no limit to the amount that is covered by the Credit Union Deposit Guarantee Corporation.

    Not having a maximum $100,000 limit on the insurance is comforting to a lot of people.

  2. I also wanted to say (why is there no edit function after you make a post on here?) that therefore a lot of people would disagree that ‘other online products such as those from ING Direct and Ally make up the difference by providing a CDIC guarantee’ statement as if all you are doing is investing in term deposits or GICs then not having a $100,000 limit on the insurance on your deposit is a big plus.

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  4. Keep in mind at Achieva, to offset those fees maybe, they give you a bonus of $1 per month if you go paperless and get your statements online.

  5. There’s a few other Manitoba credit unions with high-savings accounts (a handy high-interest chart can be found at http://www.highinterestsavings.ca/chart). AcceleRate Financial was the previous topper before Hubert’s Happy Savings – they are at 2.20%. Not sure if they have the $2.50 withdrawal fee or not.

  6. Whether or not this new entrant is any better than existing players, more competition is a good thing for consumers. It’s good to see open competition on costs.

  7. @Sean: I’ve always been intrigued by Outlook Financial because their GIC rates typically pay as much as 0.5% better than ING Direct (for RRSP accounts). For me though, the lack of a CDIC has been a gating factor.

    @Michael: Thanks for pointing it out. And yes $1 per month for paperless does make up for some of the debit fees.

    @NorthernRaven: Thanks for that chart. I missed AcceleRate and MAXA Financial. What’s up with Manitoba credit unions offering so many online accounts?

    @Michael James: Agree. More competition is a good thing.

    [Edited for correctness]

  8. I agree 100% with Sean re CUGDC coverage and do not believe this should be construed as a disadnvantage to deposits with this, or any other Credit Union. The CUGDC is backed by the Provincial Govnt where the credit union is located and as he pointed out, there is no ceiling on coverage.

  9. I’ve been curious about what it is in the Manitoba air as well. I’m assuming that there is something in their regulatory regime that allows them to more easily offer higher rates, or advertise nationally, or something. I think Ontario has a $100,000 limit on its credit union guarantee corporation, and Manitoba’s is unlimited, so they are probably siphoning a lot of Ontario resident’s money, but why this is happening in Manitoba and not also, say, BC, is a little puzzling.

    The high rates are interesting for parking money for a couple of years (Hubert is offering 2.7% on a 2-year GIC), and I’d probably trust the Manitoba credit union guarantee corp to clean up any individual mess or shaky CU. But Manitoba does have that Icelandic settlement in Gimli, and what if their great-grandparents shared genes with those who created the Icelandic bank mess… 🙂

  10. Good for competition! The more the merrirer! Although it must be getting pretty crowded out there in MB. There are others by the way: Accelerate and Maxa.

    I’ve only had an account at Achieva. Now almost 4 years. Very good service but they have fallen back on their interest rates lately. It took them forever to match the 2% offered by others who’ve now moved even further ahead.

    The interest rate you get on your savings MUST beat inflation otherwise you’ll be no further ahead.

  11. @NorthernRaven: Are you saying the Vikings don’t know how to manage money??

  12. @Maurice – while I’m sure there would be heavy pressure on a provincial government to make good on any shortfall in their CU guarantee program in case of a full-blown crisis, not all are explicitly guaranteed by the provincial government. Alberta is (http://www.cudgc.ab.ca/faqs.html#3), but Manitoba isn’t (http://www.cudgc.com/faqs.html#q4).

    @CC – when you said the lack of a CUDGC was a drawback for Outlook, did you mean to say lack of CDIC? They seem to be covered by the Manitoba CUDGC the same as the rest of Riel’s children… 🙂

  13. @Sean – I believe “plunder” was the term traditionally associated with Vikings in regards to other people’s money… 🙂

    Of course, Icelanders could be considered Vikings with a bad sense of direction, who wound up in the stuck on an island in the middle of the North Atlantic instead of the pleasant shores of Ireland or France, or terrorizing Russia, or sundry other pastimes. Perhaps the latent Viking-ness lay dormant and burst out all at once in the form of investment bankers. Whatever it was, it certainly created quite a mess for the rest of the Icelandic population!

  14. How does this bank differentiate from the other ones?

    It seems to be a crowded space now!

  15. @Maurice: It is not clear to me that CUDGC has an explicit backing by the Govt. of Manitoba. Even CDIC is a crown corporation and has no explicit federal government backing. But CDIC has dealt with numerous bank failures in the past but I don’t know if CUDGC has made depositors full in the past.

    @NorthernRaven: I’m somewhat sympathetic to the plight of Icelanders. We’d be very upset too if Canadian banks offered high interest rate accounts overseas, became insolvent and we had to make good on the deposit insurance.

    @Steve: Yes, it is quite a crowded space. But thank goodness for competition. Even many of the big banks now offer high-interest accounts.

  16. Competition comes, competition goes. Let’s not forget HSBC’s virtual High Savings account which lasted all of 18 months, I don’t! While I can’t comment on Hubert or Maxa, I can comment on Achieva where I have had an account for over 10 years. The service has been excellent and the rates always within the top quartile in all areas, from daily savings, term deposits and RRSP. Yes there are fees on multiple withdrawals in a month, however, the account is not a transaction account and yes I get a $1.00 every month for an online statement. I think the comparison to Aly Bank is unfair. Aly does not have any RSP offers, chequing services, nor ATM access (which my Achieva account has). As a conservative investor, I have done my research and no consumer has ever lost a nickle with a Manitoba Credit Union. The 100% deposit guarantee is a great comfort.

  17. I stand corrected re the backing of Manitoba Govnt.for CUGDC. My apologies. Having been a member of the credit union movement in B.C. for over 40 years, and knowing we have full Provincial Govnt. backing, I wrongly assumed it was the same in all other Provinces. Apart from Manitoba, are there any other Provinces that do not fully stand behind CUGDC?

  18. @Maurice – Googling the BC Financial Institutions Act, it says the if the guarantee corporation’s fund is impaired, even after additional levies on the credit unions, the Lieutenant Governor in Council (i.e. the Cabinet), IF it concurs that the fund is impaired, MAY direct the minister of finance to back up the guarantee. “May” sounds like a bit of wiggle room and not a cast-iron legal requirement, although of course politically and economically it would be highly implausible that this wouldn’t be done. Alberta is much more specific – “The Government shall ensure that the obligations of the Corporation under subsection (1) are carried out”.

    @CC – I’m certainly sympathetic to Icelanders as well. I’d be furious if a small bunch of hotshot yuppie bankers and business guys wrecked my economy. There’s a colorful Michael Lewis article in a back issue of Vanity Fair and a couple of other good writeups I came across at the time. Certainly sounds like some fishy business, and I don’t mean the cod trawlers… 🙂

  19. Re: Hubert/Happy Savings, I have tried several times using different browsers to open account. The app crashed each time. Then they said it was fixed. Same error. How can you trust with your money if can’t run a site…

  20. @Ray: Very good point. Also, remember Citizens Bank? Introduced a free chequing account with much fanfare and shut it down in less than a year. I’ll be sure to make this point in the future anytime a new product comes out.

    @Jim: Yikes! That definitely doesn’t inspire confidence considering there are so many alternatives out there.

  21. I know that CDIC is guaranteed by the Federal Govt. for 100K. But i don’t think that the credit union in Manitoba is guarateed by the Manitoba Govt. How risky is it to invest with the credit union in Manitoba?

  22. Re: risk – I have researched it and it seems is as safe as CDIC – if memory serves me no one has ever lost a dime with a credit union and it’s just a provincial version of CDIC?

  23. @pete – as mentioned earlier, the government of Manitoba is not legally required to backstop the Credit Union Deposit Guarantee Corp. But neither is the Canadian Government legally required to backstop the CDIC, I believe. Of course, in reality the Government of Canada would probably go to great lengths in the remote chance of a crisis the CDIC fund couldn’t handle. I’d suspect Manitoba would be similar, although they might be more likely to be overwhelmed. It would take some sort of major collapse in Manitoba for this to be an issue anyway – the CUDGC would be able to handle individual credit unions that might go kaput.

  24. LOL I like the name “Hubert”. Definitely an interesting eye catching name for a credit union/ financial institution.

    I actually was with Citizens Bank and enjoyed one trip of withdrawing my money without being dinged from an international bank, but then they sent a letter that they were closing down. It didn’t really matter as I withdrew all my money out anyways. But I’m a bit more careful about where I park my money now.

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  26. It is great to see all these comments about Hubert! We’re very excited about our new online offering.

    In regards to our deposit guarantee, all deposits are 100% guaranteed without limit by the Credit Union Deposit Guarantee Corporation of Manitoba. Details can be found here: http://www.cudgc.com/

    As well, Hubert is a new division of Sunova Credit Union. Sunova (previously South Interlake Credit Union) has been in business over 50 years in Manitoba and, in addition to Hubert, we are also opening two new branches in Winnipeg early in the new year, with plans for additional expansion in the near future.

    As with any new product offering, we’re very interested in hearing feedback so we can customize and improve our products and services, and in this case, our new website as well.

    For additional information, please call us at 1-855-4HUBERT or use our secure chat on http://www.happysavings.ca

    Vanessa Foster
    Director, Marketing
    Hubert Financial
    Sunova Credit Union

  27. Apart from the CDIC or Credit Union guarantee, you should watch for the bank charges which is $50 for RRSP / TFSA transfers to another bank. If you’re investing $2000 @ 2% and you move your funds to another banks, your principal will become $1900 net of the charges of $50. You’re better off investing with Institutions like ING and Ally as they do not charge any fees and CDIC insured,

  28. i meant that your principal will become $1990 ( $2000+$40 interest – 50 transfer charges) instead of $1900.

  29. I’ve never commented on blogs but feel compelled to here and elsewhere…I too have tried to open an account with hubert and the account application has been crashing on several different computers (it’s an issue with their site) for weeks!! Despite the assurances here of the “marketing director” from hubert I would suggest that readers apply a high degree of caution with this FI – even after one their management posts here a basic web function does not work?!? What a joke. Not professional nor I’d say dependable….hello accelerate financial here I come….

  30. Hi Robert T.,

    I can assure you that our IT Department has looked into your comments about our application not working, however, we have not found any issues with our site or online application process during our testing / investigation. The only errors we have logged are related to individuals who do not enter correct / accurate information within the membership application itself, and therefore the application is canceled due to security / identity confirmation reasons.

    I encourage you to contact us via online chat or at 1-855-4HUBERT so we can try to work through the application and ensure there are no errors present that we’re currently not aware of. Any feedback is much appreciated!

    Thanks.

    Vanessa Foster
    Director, Marketing
    Hubert Financial

  31. Another FYI: There is no fee to transfer money out of or to close an RRSP at Achieva, unlike Outlook and Accelerate (which charge $50).

    Their fee structure, especially for parking money, seems very good. We’ve been impressed so far with their service and will be opening a GIC based RRSP there shortly.

  32. Hubert is a joke. Despite assertions here, the site is brutal (as other blogs have noted such as http://www.highinterestsavings.ca) and cant open account for me several times. Contacted them and instead of just quickly offering another way to open an account (get a PDF people!!! ugh) the rep wanted to burn my time with questions on when I tried, what part failed….dear lord. Bad site. Denial. Bad customer service….I am done….Bye bye forever hubert.

  33. I too couldn’t complete the Hubert application…… apparently I failed. Requested the forms and they offered to process the application using the information from my failed applications…. worked for me as it beats wasting my time filling out a form and mailing it.

    As far as the application process it seems over complicated compared to others I’ve applied for (Ally, ING)

  34. Definately opening an account.. Up to 2.50%.. Crushing some major banks.. Ill give it a shot..

  35. The Deposit Guarantee Corporation of Manitoba (DGCM) will pay 100% of your deposits with a member Credit Union if the Credit Union goes down, but what if two or three credit unions go broke at the same time? That is, what if the DGCM runs out of money to cover its members’ looses?

    No one has any responsibility to rescue the DGCM: not the Manitoba Government nor any other entity.

    There is nothing like the protection of the CDIC, and so Manitoba Credit Unions offer better rates in exchange for the additional risk savers take.

    People should know this before opening an account in a Manitoba Credit Union.

  36. Note that the CDIC crown corporation, similarly, does NOT have sufficient funds and borrowing authority to presently cover the full failure of most large banks.

    Therefore, be careful in your assumptions that CDIC-backed banks are safer than CUGDC-backed credit unions. I wonder if the opposite is true? Perhaps a smaller credit union failure is more likely to be covered than, say, an ING or CIBC.

  37. Manitoba guarantee scheme: 1% ($0.168 billion to cover $16.2 billion deposits)
    Saskatchewan guarantee scheme: 1.5% ($0.21 billion to cover $14 billion deposits)
    Federal guarantee scheme: 0.3% ($1.95 billion to cover $590 billion deposits)

    CDIC goes up to 1.35% if you include the $6 billion they could borrow, and ignore what the provincial agencies could borrow. When I last checked, Saskatchewan was on a pretty good financial footing!

    Remember that CDIC could never cover the full failure of a large bank.

    Therefore, provincial credit unions are actually better covered!

    Ken

    —- details from Wikipedia below

    According to the CDIC’s 2010 Annual Report, CDIC protects $590 billion CAD in total eligible deposits, and has $1.95 billion CAD in assets to meet insurance claims.[4] This amount represents 0.03% (ACTUALLY 0.3% according to my calculator) of total eligible deposits. As of 2010, the deposit insurance fund was worth $1.6 billion, and the CDIC could borrow $6 billion if necessary from the federal government or the financial markets, or more under an appropriation act.[5]

    The CDIC’s assets are insufficient to pay for the failure of any of the 14 biggest banks in Canada[6] where Canadians have most of their money. In this eventuality, CDIC would have to tap the financial markets for additional funds or receive the required additional funds from the Bank of Canada. It is not clear whether the Government of Canada is legally bound and obliged to rescue a crown corporation such as CDIC, but there is a tacit assumption that failure to do so would be unfeasible politically.

  38. Ken,

    Regardless of Wikipedia’s numbers whose sources are not necessarily reliable, the point is:

    CDIC is very likely to be rescued by the government if necessary while the DGCM is somehow likely. That lesser probability means DGCM insurance is riskier and therefore Manitoba Credit Unions HAVE TO offer better interest rates to offset the higher risk people take by saving their money with them.

    Trying to justify that in this case safer translates into higher interest rates is just insane.

    I know this is Canada, but just some words of caution: I have seen credit unions in Spain, Mexico and the US going broke, and most of the times people loose all or part of their money. I lost $20,000 US dollars in a credit union that offered 100% deposit insurance! We got 0% of our savings!

    On the other hand, I have never seen a bank backed by government or Crown corporations not assuming their liabilities with savers if the bank goes broke.

  39. @Ed: In the US, federally chartered CUs, and most state-chartered ones, have deposit insurance through NCUSIF, which has a “full faith and credit” backing from the US government, I think. I’d be interested in which US credit union you were with which didn’t pay out.

    For Manitoba, remember that a CU failure wouldn’t mean all its assets just disappeared; rather that they had devalued (bad loans, etc) enough to eat through the CU’s capital reserve. The deposit guarantee corp would have to make up the difference between assets and liabilities when winding up the credit union.

    It really depends what sort of disaster you are planning against. If you assume that the Manitoba regulators are spectacularly incompetent or venal, stay away. If you think the Manitoba economy is going to splatter spectacularly, beyond the capability or desire of the government to support its own credit unions, stay away. If you are merely worried that Hubert/Sunova (or any particular CU) is too aggressive and it is likely to lead them to ruin, the deposit corp can clean them up. If you think the entire Manitoba CU sector is a bubble, that might be worrisome, but that’s effectively the venal regulators/Manitoba=Ireland scenario, which doesn’t seem too likely.

  40. Hi all:

    Just to clarify, my only point on this discussion is that money saved in a Manitoba Credit Union is not as safe as in a chartered bank with CDIC coverage, and hence the additional premium in the interest rates they offer is to offset this higher risk.

    I am not inferring that a bubble is about to bust, nor making any predictions about the economy…

  41. @Ed – I realize that, but higher rates aren’t completely a reflection of higher risk. ING has a higher rate than the big-5 high-interest accounts, and other CDIC institutions have higher rates than ING. Some or all of that is how familiar people are with these institutions, how hard they have to work to attract customers, and at what cost they are willing to buy deposits. It may well be that under disaster circumstances Manitoba is less likely to stand behind its CU sector than Canada would be behind the banks, or such a disaster might be more likely in Manitoba than Canada as a whole, but it isn’t as if the rates are a simple market judgement on the risks.

    I’d still be curious as to which US credit union you sustained a loss at. As best as I can tell no-one has ever lost on insured deposits at a federal CU, or the “substantial majority” of state-chartered CUs that use the same NCUSIF guarantee fund.

  42. Ed,

    Appreciate your comments, but politely disagree with your conclusion. I’m still not sure why you conclude that CDIC is better able to cover lost deposits than (the more suitably funded) credit union guarantee schemes. Indeed, the CDIC scheme is seriously underfunded, even when taking into account a $6B loan facility.

    I included Saskatchewan numbers to merely highlight that different provinces have different deposit guarantee schemes, seeing that we’re talking about Manitoba here. SK holds (versus “could obtain”) 1.5%, MB holds 1%, and CDIC holds 0.3%.

    The “political will” and suitablity of covering the deposits of a partially failed bank or credit union – this would be arguably more important than the financial capacity to do so.

    The numbers I shared July 31 @ 5:41pm were from the three relevant annual reports (Manitoba, Saskatchewan & federal guarantee schemes, highlighting the percentage capital on hand to cover deposits as of December 31/10). It took me a while to find the relevant reports and numbers, but it wasn’t hard.

    I only quoted Wikipedia as an article of interest, despite it’s mistaken 0.03% coverage claim (when I actually calclulated 0.3%). I share your distrust of taking wiki numbers at face value.

    Also note that these provinces finances (and their capability to borrow additional funds) are extremely good.

    Ken

  43. @Ken – CDIC’s borrowing authority was raised in 2009 from $6 billion to $15 billion, and is adjusted annually based on insured deposits. The current value is $17 billion. Their fund is at around 33 basis points (0.33%), and they’ve been targeting 40-50 basis points over the next few years. There is also a recent discussion paper floating around with suggestions for an eventual 100-150 basis point fund.

    I’m cleaning up that Wikipedia entry. It looks like that “can’t handle biggest 14 banks” was somewhat misleading. I think the intent of the original source was to say that those banks had guaranteed deposits larger than the $1.95 billion fund, but of course even if one of them collapsed, the loss to CDIC wouldn’t be 100% of guaranteed deposits, since there would still be assets.

  44. Northern Raven,

    I stand corrected; $17B borrowing authority is better than $6B.
    Sounds like it will take some time before they can build up a 1%+ fund, like the provinces already have.

    Thanks,
    Ken

    PS: Still moving my money to Outlook Financial 3.5% GICs..

  45. If you want the highest posted rates with CDIC protection go to this Peoples Trust website:
    http://thebestrate.peoplestrust.com and use User Name:peoples and Password:trust . They have 3yr GICs at 3.1% and 5yr at 3.5% but you cannot redeem them early like at Ally,Maxa or Outlook.Savings account is 2.1% and TFSA savings account is 3% (same as rates at Canadian Direct Financial).Savings account allows 5 free cheques per month but they don’t give you a debit card like many Manitoba credit unions do.

  46. Just a note to say I had no problems whatsoever with the Hubert web functionality. However the $2.50 fee to get money out was by no means apparent on their web site so I am kind of ticked off about that.

  47. I opened an account with Hubert some time ago, I also wasn’t impressed with the $2.50 fee. However they seem to have removed to fee, I chatted with a CSR that assured me there is no more fee.

    Works for me..

  48. As of this writing, Savings Account rate is 2%. In the FAQs section, is:

    Are there any fees?
    <<Nope! Hubert is 100% fee-free.

    I've just sent them an email to update their online information though, as the FAQs still say savings accounts are still at 2.3%….