Several new players are now offering high-interest savings accounts with significantly better rates than traditional leaders like ING Direct, President’s Choice Financial and Canadian Tire Financial. If you have a savings account with ING Direct you’ll earn 1.05%, just 0.75% with PC Financial and 1.20% with Canadian Tire. The new players are offering rates that are even better than Outlook Financial, which typically has the top rates (currently 1.5%) but no CDIC guarantee (Outlook’s deposit insurance is through Credit Union Deposit Guarantee Corporation).

Canadian Direct Financial, a division of Canadian Western Bank, is offering a savings account that currently pays 2% and non-redeemable GICs with slightly better rates than ING Direct. However, note that the savings account allows one free withdrawal per month but subsequent electronic transfers cost $2.50.

While Peoples Trust’s clunky website does not make a good first impression, it offers a top rate of 2.1% on its savings account. Again watch for those fees: the first five transactions are free but subsequent withdrawals cost $1.50. Peoples Trust does offer GICs but the rates are much less than those of its competitors.

Ally, a division of ResMor Trust, seems to be the most promising new comer. Launched just the other day, Ally offers a 2% rate on the savings account and redeemable GICs with top interest rates. On a 5-year GIC, Ally offers a rate of 3.5% compared to 3.0% at ING Direct. Ally’s early redemption rates are also higher. For a GIC term of 1 year, cash out will include all the earned interest. For terms greater than 12 months, the current early redemption rate is 1.5% (subject to change) according to a representative I spoke to today (customer service is available 24/7). Compare this with ING Direct’s early redemption rate of 0.5%. It does seem that Ally is so far living up to its promise:

We promise to be among the top rates always, with no monthly fees, no minimum deposits, no minimum balances, and no “special” rates that drop when you’re not looking.

Since Ally also offers tax-free savings accounts, its top savings rate, top GIC rates and top cashable rate makes it a top choice for a savings TFSA. Too bad Ally did not open its doors before I went looking for a TFSA account.

Canadian Direct, Peoples Trust and Ally all members of Canadian Deposit Insurance Corporation (CDIC).

This article has 47 comments

  1. It’s sad that ING invests so much money in advertising an inferior product, trying to seduce the consumer that they, unlike the “other banks”, are honest and leave more money into his pocket.

  2. I just opened up an account with Ally as a high interest savings account. Hopefully that works out, currently I’m with ING, and I’m pretty happy there, but if Ally are offering a higher rate and have a similar ease of use then I see no reason not to switch.

    So far I have opened the account online, and linked my external account to my regular day-to-day bank online too. They make two small deposits to your account and you go on their website and verify the amounts to create the link. Hopefully no mailing of forms and cheques back and forth, but if I can remember I’ll let you know how it goes.

  3. Outlook Financial is mentioned again with the caveat “but no CDIC guarantee’. Just keep in mind that these deposits and interest are insured by the Credit Union Deposit Guarantee Corporation. (http://www.cudgc.com)
    I’m not selling for them, but I have used them for 5+ years and they have been great to deal with. The only drawback is you do not transfer funds over the internet.
    Personally that was a bonus, since it was a little harder to access the funds I had saved.

  4. Just so you know, Standard Life and SSQ vie offer higher rates on GIC but, with a 25K minimum

  5. Don’t forget about Maxa – 2% interest in savings account, 4.0% on a 5-yr GIC. Also CUDGC guaranteed (not CDIC) and only one free transaction out/month ($1 after that).

  6. Many of us have a TFSA already, and the amount in our TSFA’s are (so far) low, ($5k), but what about switching? It wouldn’t make much difference for a percent or two, but for the future, if the amounts or differences increase, what are the steps and costs in switching from one institution to another?

  7. Canadian Capitalist

    @Jeff: Interesting tip on Maxa. We’re now spoiled for choice in high interest savings.

    @Ron: Fair enough. I updated the post to point out guarantee is through CUDGC.

    @Traciatim: Do let you know how it turns out. I’m tempted to move my TFSA accounts from ING to Ally towards the end of the year.

    @JF: Thanks for the tip. I’ll check Standard Life out though 25K is a high hurdle to clear.

    @luc: Yes, ING Direct is not very competitive any more. Even the big banks now offer rates that are just a step below ING. Thank goodness for scrappy new competitors.

  8. I’m just in the process of opening a savings account with People Trust, anyone deal with them?

  9. From a cursory examination of Ally Bank’s American service, there seems to be a lot of customer complaints of mishandling and non-responsive customer service. I know this is a huge GMAC rebranding, but do you think that the service is going to be similar?

    I’m leaning towards waiting a couple of months and seeing the verdict on this one.

  10. I don’t think Ally is a member of CDIC but its parent company ResMor is. Example: Deposits at Royal Bank are CDIC insured but deposits at RBC brokerage accounts are not.
    ResMor is a subsidiary of GMAC whose majority shareholder is GM. Your money is used to make car loans not residential morgages.

  11. I’m relieved!!!
    In the past I thought I was a lone wolf trying to get a decent return on my cash component. I am relieved that I am not the only one that would not stand for a statement that showed an interest rate that had a decimal place before the rate (i.e. 0.5% from CIBC quite a while ago).
    Thanks to ‘Canadian Capitalist’ AND the contributors for an email that I make a point of reading when I receive it.

  12. Don’t forget to factor in the inflation rate and your income tax marginal rate before putting your cash into an account which pays 1-2%. Most of the time you will be losing money to do so.

  13. “Deposits at Royal Bank are CDIC insured but deposits at RBC brokerage accounts are not”

    Robbie,

    Brokerage accounts are not savings accounts but investments accounts, they will fall under CIPF.

  14. Wow! What a timely article! I’m about to come into a pile of cash from the sale of my condo… And I haven’t yet found a home that I like yet, so I need a place to temporarily park my cash… I am currently an ING customer, but I am running pretty close to my CDIC insured limit. Once I receive the cash from the sale of my condo, I’ll be WAY over the CDIC limit if I dump it all into my existing ING account. So, this is the perfect timing for this line of conversation! And I didn’t know about these Canadian Direct Financial guys at all!

  15. Canadian Capitalist

    @Norman: I’ll wait for a few months on Ally as well. It seems promising so far and will probably dip my toe first with a small savings account and see how it goes.

    @Robbie: Ally is a service of ResMore Trust and provides CDIC protection. Details here:
    http://www.ally.ca/en/cdic.html

    @Ron: Surprisingly, the some of the big banks themselves offer some decent high-interest accounts. RBC’s eSavings that pays 0.75% is an example. But generally, you are right. Most banks offer pretty much nothing on their savings accounts.

    @Bob: Most of my long-term investments are in stocks. However, you do need a decent place to park emergency savings and some of your portfolio cash.

    @Phil: Canadian Direct, Ally etc. offer nearly twice as much as the well-known names. They would be perfect locations for parking large amounts of cash temporarily.

  16. CanadianRetiredGuy

    I did a Google search on ResMor and found this:

    http://forums.canadianbusiness.com/thread.jspa?threadID=16518&tstart=0&messageID=290298

    which made me decide to wait. Sure, my money is CDIC insured but do I want to ride the roller coaster that may ensue as they ramp up to get business.

    I moved $100k of “estate cash” to Canadian Tire when they were starting and paying a decent premium over ING, etc and suddenly they are now “middle of the road”.

  17. @Boko – I do have an account at Peoples.
    Pros: Great rates (relatively speaking), 5 free withdrawals per month (Chq, Transfer or PAP only), CDIC (their name appears on my CDIC brochure), Detailed monthly statement.
    Cons: No ATM access, No on-line banking, No (self serve) telephone banking, all banking by e-mail or snail mail or talk to CSR. Bare bones operation.

  18. Which of these are available to Quebec residents?

  19. Canadian Capitalist

    @slickvguy:

    Ally – Not available in Quebec.
    Canadian Direct – Not available in Quebec.
    Peoples Trust – Not able to find the info on the website.

    Why do these institutions not bother to offer their products in Quebec? After all, it is not exactly a small market.

  20. Just a small update to my Ally experience. So far I opened the account online, attached my bank account, they set up two small deposits (under 20 cents each) to my day to day bank account which I verified the amounts on their website to confirm the link on the account. After that I set up my first transfer from my bank account to Ally today. I’ll update once the transfer is successful and report on any holds etc.

    So looks like the account setup is smooth, I’m not sure, but I think they are mailing me a welcome package where I’m supposed to write myself a cheque to open the account like ING did at first, but don’t see much point. If I receive something I’ll call to see if I need to send anything in.

  21. @CC: I believe it’s not so much that they don’t want to, but that they may not be allowed to due to either consumer laws or securities regulations. I’ve come across this quite a few times before, which is why I asked. I’m sitting on a lot of cash at the moment, and am earning a measly < 1%.

    Which institution is a CDIC member, has products available for sale in Quebec, and has the best rates for savings accounts (rrsp and non-rrsp)? Thank you.

  22. Ally: the interesting thing is that the 1 yr GIC rate (1.75%) is *lower* than the saving account one (2.00%), which suggests that the later is a teaser rate which may suddenly go down. Initially ING used this same method of attracting customers.

  23. Do you have any similar suggestion for US$ interst rates held in Canada? Thnaks.

  24. @luc, I agree. PC pulled the same trick when they introduced TFSA. Their Tax Free Savings account had much higher interest rate than an identical regular Savings account. Lasted only a couple of month. So if anyone is planning to use Ally for TFSA you might want to proceed with caution.

    I’m guessing here, but it seems like they’re hoping to attract people with existing TFSAs who are planning to execute “December 31st” manoeuvre. Once enough people join, they could drop rates sometime in the beginning of 2010 (like PC and many others did last year). For regular accounts however, it seems like a pretty good deal.

    I also REALLY dislike the fact that it’s impossible to find a list of fees on their web site. Big red flag for me, it’s like they’re hiding something.

    @Traciatim: how do you find Ally’s online banking interface?

  25. It’s pretty plain and simple, I can take some screenshots if you want. There are only a few places to look around at things, and an overview of your account, pretty similar to ING, just a left menu instead of a top menu for moving between sections.

    I think I lost my transaction though. Maybe it was user error, but I’m pretty sure my first $25 bucks that I moved over to test my account link was in my pending transactions yesterday, and isn’t today. Neither my day to day or my ally account have moved the money, but I don’t want to do it again, just in case it shows up somewhere. I’ll wait a couple of business days and call them to be sure it isn’t stuck somewhere and try again just in case I messed it up somehow.

  26. @Traciatim, screenshots would be great! Also, keep sharing your experiences with interface and service. Thank you.

  27. Canadian Capitalist

    @Sergei: Ally is promising to be among the top interest payers and not play games with limited-time offers. Of course, we’ll have to see if they keep the promise. I think they don’t have any fees of any kind as of now.

    @Traciatim: If you want me to put up some screen shots in this post, let me know.

  28. The PCFinancial TFSA is now the same as their High Interest rate, 0.75%. It took until July 1 for me to pass the 1% gain ($5,052.88), and that was because I got a couple of “Early Bird” incentives.
    I am at the moment transferring my TFSA account over to Qtrade where I can (hopefully) get some better returns on the market (like 1% in a week would be great!

  29. No fees at all? I saw the “no monthly fees”, but no service fees at all? That’s new, especially for HISA.

    I guess there aren’t that many services to charge for: no cheques, no ATM cards all transactions are by EFT and snail mail.

    Can you make bill payments for free? What about for transferring of TFSA to another financial institution? What about for wire transfers?

    I guess I better call them and test their customer service.

  30. OK, so I made a phone call and here’s the list of answers I got from customer rep (“service advocate” as they call them).
    Disclaimer: technically this is hearsay since almost none of this is available in writing on Ally’s web site, so don’t call me a lier later if any of this changes.

    So I pulled up Achiva’s list of fees and ask Ally’s rep if they have any of them:

    * Outbound wire transfers: N/A (you can’t do outgoing wires)
    * Inbound wire transfers: FREE (but the sending financial institution will most likely charge you)
    * US/International/Domestic ATM Deposits, Withdrawals, Interac Direct Payments: N/A (you don’t get a bank/ATM/Interac card)
    * ATM Card Replacement: N/A (ditto)
    * Bill Payment (Online or Phone): N/A (you cannot pay bills from Ally’s HISA)
    * Internal Transfer of Funds – Ally Account to Ally Account: FREE and instant
    * Direct Deposit (deposit of payroll or government cheques): N/A (you cannot make direct deposits from 3rd parties)
    * Official Cheques: N/A (you don’t get cheques)
    * Stop Payment: N/A (no cheques = nothing to stop)
    * N.S.F. Charge: N/A (should be impossible since you can only withdraw using Ally’s online or phone interface, and there’s no cheques or ATM card)
    * Account Closing: FREE, money would have to be transfered via EFT to linked external account
    * Dormant Account (6 months): you’ll be notified and account terminated 12 months later if no response given
    * Transferring of TFSA to another financial institution: FREE (this one took the longest to find out, answer had to come from the top)

    Well it looks like there really are no fees, but that’s because it is a *truly* online-only, high interest _savings_ account. No cheques, no ATM card no was to overdraft your balance == no fees. The customer rep was great: very helpful, polite, spoke intelligible English and really tried to answer all my questions.

    Few things he mentioned that I really liked:

    * The interest starts compounding on your deposit before it even gets to your account. So if you initiate an EFT your balance won’t increase immediately, but Ally *trusts* you and will start compounding interest on that transfer as if it was already in your account.
    * 10-day rate promise on GICs (see Ally’s web site)

    I must admit, it does look very promising if they do deliver on their promise. I was quite sceptical at first, “Huh, no fees? Yeah right!”, but it seems they do have the right idea.
    Disclaimer: This is not an endorsement, do your own diligence and research.

    BTW, this is hush-hush, unconfirmed and all, but they *might* introduce a chequing account with ATM cards in the future (near/far? don’t know). Perhaps it will be a worthy competitor to PC chequing accounts, now that Citizen Bank is gone.

  31. An update on my transfer from my account. When you first open your account with Ally you can’t do any deposits until you send in a cheque to yourself with your account details. I thought I could jump ahead and just add the account myself and make a deposit, but that’s going to be stuck in the Ally system somewhere until I send in my cheque once I get the welcome package. That explains why it left my pending transactions but didn’t show up in my account yet. They called me this evening to explain to me what happened with the transaction, which was really nice to see that they were right on top of it.

    Like I said, since the service is really simple, I took some screen shots of the interface for the account overview, account details page, the transfer setup page and the add external account page.

    I checked them over after editing to remove any identifying numbers and names, but if I missed anything can you let me know?

    http://s201.photobucket.com/albums/aa229/Traciatim/

  32. Canadian Capitalist

    @Sergei: Thanks for your research. I talked to a service agent as well at the time of writing up this post and your investigations confirm what I heard. Yes, the savings account is strictly an online-only account and there are no fees. It’s interesting to hear they may offer checking accounts — the scuttlebutt is ING is also planning on one, so it should be interesting when it happens.

    @Traciatim: Thanks for the screenshots. It looks good and as far as I can tell, I don’t see any personal information. I’ll probably update the post and post a link to the screenshots.

  33. Peoples Trust offers great rate on their savings account (at the end of 2008 their rate was over 4% for their savings account. Fall under the CDIC. However, the customer service is so-so!
    Outlook Financial (division of Assibidoine credit union in Manitoba) protection falls under the Credit Union Deposit Guarantee Corporation. Customer service is ok. What is great about them is that all of their GICs are redeemable.
    ***I prefer another Credit Union from Manitoba, Achieva Financial, (divion of Cambrian): protection is also offered through Credit Union Deposit Guarantee Corporation. Their rates are quite competitive- and their customer service is by far the best I’ve ever experienced in my life with any financial related matter. (I’ve dealt with them for praticly 6 years now)
    ING Direct – their rates are so lo, it speaks for itself!
    Ally is not offer to Quebec resident unfortunately!
    For the 4 companies mentioned above: I’ve dealt with them in the past. I am still dealing with Peoples Trust(Savings only) and Achieva Financial (Savings, RRSP Savings, TFSA, RRSP GICs) + Achieva offers for clients who choose online statement a 1$ deposit in your account.
    Have a great weekend!

  34. Any comments on the new Canadian Direct Financial Chequing Account? If you keep $5,000 in a GIC all banking is free, and the GIC rates look very decent.

  35. Any updates on Ally Bank’s service? Any glitches or concerns? Thanks! DJ

  36. I kind of messed this one up a little. After opening my account I never ended up sending them the opening package so they just eventually closed my account. They called me a few times on it, but I was just too lazy and never thought about it when i was leaving the house to actually mail it. The customer service people I dealt with were always nice to deal with though, I may give it another go sometime in the future but for now I’m just using ING again.

  37. Canadian Capitalist

    I’m going to write a post on this. I’ve opened a TFSA account with Ally. No glitches or concerns so far. It does take about 2 weeks for the initial funding of the account but it’s been smooth thereafter.

  38. Someone should investigate and write an article on why it is that here in Quebec we are in effect penalized by not having these high-interest savings accounts available to us. Think of how much money per year is being “lost” (not made) by Quebecers merely because we live in this province. It’s infuriating. Imagine if you were in the same situation in the province you live in.

    I am finding it increasing difficult to live in this province due to non-stop and ever-growing government interference in our lives. Government is out of control here. It’s like “the Borg”. The govt is controlling our behavior, choices, and therefore our freedom itself, and the citizens are not powerful enough to stop or change it (aside from the very large corporations or a handful of very wealthy people). More and more we are becoming slaves to the govt., as we creep slowly but surely toward the fascist side of the spectrum. And the worst part is that people gladly and willingly accept this. They are blind to it, because they are so used to living this way from cradle to grave. I’ve been spending a lot of time in the USA over the past year, and while the USA certainly has it’s fair share of negatives and I still have great love for Canada, when you return to Canada (Quebec), you really see how little freedom we have and how much govt. interferes versus in the USA. From communication services (cell phone, land line, TV, Internet) to just about anything you can think of, we are paying higher prices, higher taxes, for lower service. Healthcare here is a disaster as well (which you’ll only find out when you get sick and need help). My friend pays $500/month for UNLIMITED healthcare coverage, and unlike here where you die waiting, when she needs tests or procedures performed, she has IMMEDIATE access to the doctors/services/equipment. Hell, I pay almost that amount just for my so-called “group insurance”, which just covers dental and prescriptions. (Michael Moore is a lying azz. For the average citizen, America has the best healthcare system in the world by far). If you’re poor, Canada’s is great. But most of us aren’t poor (or rich).

    e.g. Yesterday, I had to pay $800 for professional liability insurance which is a)useless, and b)forced upon me by the govt. It is useless because it will never cover a claim as it only covers a very few things. $800 taken right out of my pocket because of the govt. Year after year. By the time I retire, it’ll cost me probably $50K of my nestegg. Ditto for the ridiculously high licensing fees.

    Sorry for the rambling, but it’s all connected, and leads me back to my original point – that the govt is far too powerful, getting larger year after year, and injects itself into just about everything to the great cost and detriment of the citizens. Govt should be here to serve us in a limited and as-needed basis. Not to take care of everything our whole lives.

    So, enjoy your 2% savings accounts fellows – because I’m earning a whopping .65% on my savings, which is costing me many thousands of dollars a year in lost interest income. Oh, and that USA friend of mine – she has a municipal bond portfolio where she a)is earning over 4% on average, and b)pays NO TAXES on the interest income whatsoever (munis are exempt). Contrast that with the brilliant TFSA where we get to save $50 a year in taxes on interest. Hurray!

  39. I opened two accounts with Ally so far. One plain HISA and a TFSA. So far so good. I described my experiences and complains in this blog post [http://blog.shvetsov.com/2009/11/more-on-ally.html], planning to add more information soon on Ally’s TFSA.

    @slickvguy: according to Ally’s CSR they are working on getting Ally in Quebec.

  40. i have deposited well over the insured amount in People’s Trust because of their interest rate and my limited options being a resident of Québec.I have been advised to withdraw what exceeds the insured limit.Any comments?

  41. I just signed up with Canadian Direct Financial, only 1 withdrawl, but they offer abm use on The Exchange Network, where i can deposit directly, instead of going through another bank first, like Ally, where i also have an account.

    Well, Peoples Trust has been around since 2008, they also fund those prepaid mastercards.
    What’s the next highest rate available in Quebec?
    AcceleRate Financial — 2%, nothing on website about excluding Quebec.

  42. I think slickvguy has a distorted view of the relative merits of living in the United States. First, their health care system is fantastic if you are very rich. If you are working class, it’s a crap shoot (your private insurance company can choose to screw you, and trust me, they have more lawyers than you do), and if you’re poor, they will let you suffer and/or die. And the rates you quote for health insurance are misleading. When I lived there, my wife and I were quoted $10,000 a year for health insurance with precondition exemptions and high deductibles. Second, it is misleading to suggest you can get a better return on your money in the U.S. Right now, as awful as the yields are on savings and GIC in Canada, they’re even worse in the U.S. To point to a muni bond fund as a comparison is to compare apples with oranges. Or even apples with squid. Muni bond funds are not guaranteed by the FDIC, and your principle is not guaranteed. But that’s probably obvious to anyone reading this board. But if you want to envy your friend in the U.S. with the purported 4% return on a muni bond fund, check with him/her once interest rates start ticking back up. It’s not a valid comparison.

    But I do agree that Quebec has a sometimes idiotic regulatory system which serves no purpose other than to limit our options. And Revenu Quebec is completely pointless. But to start trotting out words like “fascist” is frankly stupid, but not surprising from someone who thinks the United States is utopia.

  43. Polebarn,

    To be sure, there are pros and cons to each country.

    1) I did not speak of muni bond *FUNDS* – I mentioned muni bonds. I would never recommend buying a bond fund (muni or other) with interest rates where they are. While one must be very careful in selecting munis in the USA, and of course they are not FDIC guaranteed, the interest IS non-taxable (just as their mortgage interest is). The after-tax return of a well-diversified portfolio of laddered munis has proven to be a very wise investment. Obviously, there is more risk than buying CIDC insured investments like GICs (but still considered a low-risk investment). As to your warning of the effect of rising interest rates on the munis, that applies across the board to interest-rate sensitive investments. So what? With a laddered strategy, and the previous superior performance, it’s still a winning approach. Constantly maturing bonds will be rolled into higher-yielding bonds or other investments. As long as they don’t default, and interest gets paid, it’s a winner (for particular types of investors).
    2) The health insurance rates I quoted are not misleading. They are a fact. I don’t pretend to be an expert on such things, and was only offering what I know from my American family and friends. As to what any specific individual or family would pay – I couldn’t really say. But even $10k/year would be worth it. Don’t forget they have lower sales taxes and much lower income taxes. Those differences alone will more than compensate you for the seemingly higher premiums. And btw, the people I am referring to are neither poor nor wealthy. Middle class to upper middle class.
    3) When you say “(your private insurance company can choose to screw you, and trust me, they have more lawyers than you do” it sounds more like paranoia than reality. They cannot “choose to screw you”. You have a policy. A legal contract. And while I’m sure some have had problems making claims (it’s inevitable with such a large data pool), I’ve never heard from any of the people I know having had problems with their claims. They use their policies very much the same way our group insurance policies work. Can Great West Life “choose to screw you” on your claims? No.
    4) I never said, nor do I think, the USA is “utopian”. (For example, higher crime rates are a real negative in certain parts of the USA). When you make things like that up, it weakens your arguments.

  44. Pingback: Researching Ally’s High Interest Savings Account | Test Blog

  45. Before doing business with ally it would be nice to find a real brick and morter location. My contact with them is entirely offshore with no hope of resolution of existing problems, no place to go and nobody in Canada to speak to. Is this somebody that you want to trust with your money?

  46. Ally has offered superior rate in all of its products from the get-go.
    Though their lead in rates has diminished, it is not ING that is catching up, it is the bigger banks i.e. HSBC for mortgages and CIBC for GICs
    The problem with ING is that they are not getting enough money in deposits and have seen $ flight to their funds. While the deposits are CDIC covered, without it ING will not be able to keep their rates on mortgages, GICs competitive and have monetary promotions. While they are innovative in business concept and the customer service is perky, their mutual fund is just a index fund and their other products are just bland.
    Coast Capital is a stark contrast to ING, due to their solid deposit book they offer some of the best rates on consumer lending and has products that are flexible and really superb.
    Bottom line is, if you want great rates and service and a piece of mind, go with Coast Capital (if you are luckily in BC) or Ally. Don’t put your money into a sinking ship…

  47. Canadian Direct Financial has been offering a 3% rate on their “KeyReach TFSA Savings Account” cash TFSA since April of 2010