Review of Canadian high-interest savings accounts: online banking with Citizens Bank of Canada, ING Direct, and PC Financial
First published on November 6, 2006
July 10th, 2007 note: I have spun off a separate site to deal specifically with high interest savings accounts: highinterestsavings.ca. Therefore, the three reviews below will be maintained and updated there.
If you have access to a computer and you’re not yet doing online banking, get with the program! Save time and money by conducting day-to-day transactions such as bill payments online; while you’re at it, stop giving the big banks funds to re-distribute to their shareholders. Consider a high-savings account at one of the “online” banks for rates that are comparable to GICs! When I first heard of ING Direct (when I was first considered online banks) a few years ago, I was wondering, “is it for real?” The answer is a resounding yes — these are all real banks, their web interfaces are secure, and you are covered under the CDIC.
Once I went the online banking route, I have never looked back. Most of them suggest that you still keep at least one account at a bricks and mortar (b&m) bank, which is a good idea. Whenever you open an account with an online bank, simply mail in a void cheque (they will give you detailed instructions on how to do this) and you will be able to electronically transfer between your b&m and online accounts. Electronic transfers usually take 5 business days.
Here is a review of the three banks that I have accounts with:
A caveat: I’ve tried to cover all of the main points as accurately as possible. Feel free to leave a comment to this post asking me any questions about banking with these three banks, as I have accounts with all three of them and do not work for any of them! However, please visit the banks’ respective websites to get the most updated information!
Account of note: Investment Savings Account, 3.5% as of April 11th, 2007
Catchy ads and fun newsletters call attention to what is actually a rather limited account. You must rely on linking this account to another bank (once you do this, you can transfer money between banks for free), as there are only 7 ATMs in Canada where you won’t be charged fees to withdraw money directly from ING Direct. This might actually encourage you to save your money…
What ING Direct has going for it is the simplest online interface I have ever seen. Online banking beginners will enjoy the flat learning curve:
-no minimum balance required
-no cheques available, no online bill payment system
-very accessible customer service by phone
-Get a $13 sign-up bonus by registering at http://www.ingdirect.ca/en/ISAfriends/ before the end of the 2007 (that page says until the end of 2006, but it’s still valid). If you don’t know anybody who has an existing ING Direct account and you need a referral code, ask me for mine. I’d post mine publicly, but that might defeat the unbiased approach I’m going for…
Citizens Bank of Canada
Accounts of note: Ultimate Savings Account, 3.55%; Investment Savings Account, 2.4% as of April 11th, 2007
Citizens Bank is actually a Vancity company, and is my favourite bank. You get free cheques on the Investment Savings Account, and can transfer funds between that account and the Ultimate Savings Account instantly (instantly as in… as soon as you click the button!).
Therefore, keep as much money as you can in the Ultimate Savings Account and transfer it to the Investment Savings Account whenever you need it (this transfer happens instantly).
Regarding ATMs, Citizens Bank is on the Exchange network, which HSBC and all of the BC credit unions are a part of. Did somebody say coverage?
-no minimum balance required
-pair the Ultimate Savings Account and Investment Savings account for a powerful combo
-free cheques, free bill payments
-four free debits from ATMs on the Exchange network, which should be plenty if you use your credit card as much as possible…
-Ultimate Savings Account’s interest rate is unofficially pegged at 0.05% higher than that of ING Direct’s
-If you’re familiar with credit union online interfaces such as Vancity’s and Envision’s, you’ll feel right at home
-Call their customer service line (available 24/7) and get some of the same representatives that handle Vancity’s customer service. They’re not supposed to reveal this fact, but some of them will admit it…
Account of note: Interest Plus Savings Account, 4.0% for balances over $1,000; No-Fee Bank Account, 0.10 to 0.50% as of April 11th, 2007
If you have over $1,000 to save, use PC Financial. Otherwise, consider ING Direct or Citizens Bank.
If you have a Superstore near you, head into their financial pavilion and set the account up in person. Then pair the Interest Plus account with the No-Fee account to enjoy free everything (cheques, bill payments, withdrawals from PC Financial and CIBC machines). Just be sure to only transfer as much as you need, when you need it to the No-Fee account. Currently I have $0 in my No-Fee account.
I find the interface a bit clunky, but it just takes some getting used to.
-no minimum balance required in the No-Fee chequing account
-free everything (practically): just transfer money (allow yourself 24 hours, unlike with transferring between Citizens Bank accounts) from the Interest Plus account to the No-Fee account
-PC Financial is now a divison of CIBC. This hasn’t seemed to negatively affect account features or service.
The bottom line:
Use ING Direct for the easy-to-use interface.
Use Citizens Bank for the most powerful, flexible account with the best feature-to-rate ratio.
Use PC Financial for the highest rate if you have more than $1,000.
Here’s a guy who was looking at some less mainstream high-interest accounts, such as Achieva, Cataract, and Dundee: High Interest Savings Account Search. He ended up going with Achieva.