An interest rate cut by the Bank of Canada has affected both borrowing costs and savings rates for Canadians. While borrowing costs are expected to decrease, savings rates are also at risk of being lowered. Following the rate cut, some banks have already reduced interest rates on savings accounts and Guaranteed Investment Certificates (GICs). However, there is uncertainty about how quickly banks will adjust their rates in response to the central bank’s decision.
Competition for savings products, such as high-interest savings accounts and GICs, can be intense in the Canadian market. Challenger banks and digital-only banks may offer more attractive rates compared to traditional Big Six banks. These banks have lower overhead costs, allowing them to provide better rates to customers. While some Canadians may be hesitant to switch to non-traditional banks due to the lack of physical branches, online reviews and certifications by the Canadian Deposit Insurance Corp. can provide reassurance.
To attract new customers, banks often offer promotional rates on savings accounts. While these initial rates may be enticing, consumers are advised to read the fine print and understand the terms and conditions of the account. Some banks may also require customers to set up direct deposits or recurring billing to discourage them from switching to competitors. While regularly moving money between accounts to chase promotional rates can be a strategy, it can be challenging to keep track of multiple accounts.
EQ Bank recently introduced a notice savings account with relatively high interest rates. Customers must give advance notice for withdrawals in exchange for competitive interest rates. While this account may not be suitable for emergency funds due to the withdrawal notice requirements, it is geared towards customers saving for medium-to-long term goals like travel or a downpayment. The stability provided by the advanced notice allows EQ Bank to offer attractive rates, which are not promotional and subject to change.
While the notice savings account from EQ Bank offers attractive rates, customers need to consider their financial needs before committing to the account. Since withdrawals require advance notice, the account may not be suitable for short-term cash needs or emergencies. However, for customers looking to build savings over a few months or longer and are comfortable with planning their withdrawals in advance, the notice savings account may be a suitable option. The account offers a balance of high interest and no fees, providing a faster path to achieving savings goals.
