Kip Frasz
High interest? Be skeptical
Don't be fooled by the advertising lingo - the recession has taken a toll on the ability of banks to offer truly high rates of return on savings accounts. That means even the highest of high-interest accounts may leave some consumers wanting. Here is a snapshot of the rates currently offered by some Canadian banks:
Bank of Montreal Premium Rate Savings Account: 0.25 per cent
Bank of Nova Scotia Scotia Power Savings Account: 0.00 per cent on balance under $5,000; 0.75 per cent on balance of $5,000 or more
Canadian Tire Bank High Interest Savings: 1.75 per cent
Canadian Western Bank Summit Savings Account: 1.15 per cent on balances greater than $5,000
CIBC Premium Growth Account: 0.15 per cent on balances up to $9,999.99
Citizens Bank of Canada Ultimate Savings Account: 1 per cent
HSBC Bank Canada Direct Savings Account: 1.05 per cent
ICICI Bank Canada HiSave Savings Account: 1.6 per cent
ING Direct Canada Investment Savings Account: 1.35 per cent
President's Choice Financial Interest Plus Savings Account: 0.50 per cent on balances up to $1,000; 0.75 per cent on balances over $1,000
Royal Bank of Canada High Interest E-Savings Account: 0.75 per cent
TD Canada Trust Guaranteed Investment Account: 0.00 per cent on balances under $5,000; 0.75 per cent on balances $5,000 and over
How much would you earn?
Interest rates have fallen sharply worldwide as a result of the global financial crisis, and high-interest savings accounts are no exception. But what do the changes mean to consumers? Here is a comparison of the interest a $5,000 bank balance would earn if the rate were 1 per cent compared with versus 3 per cent:
Balance: $5,000
Interest (calculated daily and paid monthly): 1 per cent
One year: $50.23
Three years: $152.21
Five years: $256.25
Balance: $5,000
Interest (calculated daily and paid monthly): 3 per cent
One year: $152.08
Three years: $470.26
Five years: $808.08
Source: INGDirect.ca
Carly Weeks