GIC rates continue to fall after BoC rate cut

Every month Money Reporter subscribers know where they can get the best GIC, RRSP, Term Deposit and Money Market interest rates in Canada.

GIC rates continued to fall following the Bank of Canada’s decision to cut its overnight target rate by 25 basis points to 0.75 per cent.

Of the 60 GIC rates we monitor, 23 rates have remained the same since our last issue. The average change of the 60 was a decrease of 11.4 basis points. The biggest decrease was 41 basis points in the semi-annual pay two-year third-best rate. But the top rate among annual-pay and annual compound five-year GICs was also down substantially — 40 basis points. Similarly, the third-best rate on the five-year semi-annual GIC was down 40 basis points.

The best rate on a five-year annual-pay and annual compound GIC is now 2.70 per cent, down from 3.10 per cent in last issue.

This is not all that far above the 2.50 per cent you can earn on a Peoples Trust Company Tax Free Savings Account. The company has provided boutique financial services to the Canadian marketplace since 1985. One reason it can offer you such a high rate is that it has no retail branches and conducts its business on its website.

With the company’s high-interest TFSA account, interest is calculated daily and paid monthly, your deposit is eligible for insurance offered by the Canada Deposit Insurance Corporation, there are no set-up, service or transfer fees, monthly statements are available online, and contributions may be made at anytime. There is a minimum deposit of $1,000.

We frequently advise you to place your cash in TFSAs such as this one. Any interest you earn in such an account will, of course, be tax free. And, unlike an RRSP, if you choose to take money out of the plan, you wont’ have to pay tax on that money. But there are no tax deductions for placing your money in a TFSA. The total cumulative contribution limit for the TFSA is now $36,500.

 

Money Reporter, MPL Communications Inc.
133 Richmond St. W., Toronto, On, M5H 3M8, 1-800-804-8846

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