CBC Go Public continues to do excellent investigative reporting and this week they caught banks behaving badly again, this time misleading and upselling customers on pricey credit card insurance. Known as balance protection insurance, this product charges a hefty premium (typically around 99 cents per $100 balance) to “protect” cardholders from missed payments as a result of job loss, illness, disability, or death.
But as 72-year-old Jolante Groves found out, the coverage comes with so many exclusions that it can be difficult to make a successful claim. Jolante’s husband George suffered a stroke in February that left him incapacitated and unable to make payments on his outstanding credit card balance. The card issuer, Canadian Tire, demanded payment and refused to allow Jolante to make an insurance claim on her husband’s behalf because the card was in his name alone.
CBC’s Marketplace took their hidden cameras into some of Canada’s big banks in Toronto to investigate how bank employees marketed balance protection insurance when a customer signed up for a new credit card. If you’ve seen Marketplace’s or Go Public’s previous bank investigations before then the results will shock but not surprise you.
A BMO employee offered balance protection insurance but when questioned about it seemed to have little grasp of the product she was selling. A Scotia employee inaccurately claimed the coverage would pay off an entire credit card balance if someone lost their job. And a CIBC employee added balance protection to a credit card before the customer had a chance to decline the insurance.
That was also my experience with CIBC this summer when I applied in person for the CIBC Aventura Visa Infinite card. We never discussed balance protection at all. Several weeks later, before receiving the credit card, I got a letter from CIBC and Sun Alliance Insurance describing the balance protection coverage already enabled on my card. I immediately called to cancel it, but it made me wonder if this was common practice at CIBC.
CIBC also added balance protection insurance to my Aventura card without my permission. Shameful practice. https://t.co/dEi1VPFf5T
— Boomer and Echo (@BoomerandEcho) November 6, 2018
Several anonymous bank customer service representatives revealed to CBC how they are under pressure to make sales targets and sell balance protection insurance to everyone who takes out a credit card. They’re misleading clients and often signing them up for the coverage without their knowledge.
Balance protection insurance is part of a list of useless products that are designed to enrich banks and dupe unsuspecting customers. It should be banned along with other insidious products such as mortgage life insurance, extended warranties, and deferred sales charges.
This Week’s Recap:
This week I compared the best high interest savings account options at Canada’s big banks, online banks, and credit unions.
Over on Rewards Cards Canada I described my CIBC Aventura Card adventure in further detail.
Weekend Reading:
Is there a problem with the way we envision retirement? An MIT study’s results were surprising and a little concerning.
The “Financial Independence, Retire Early” advocates are using assumptions about future market returns that are unrealistic.
A group of younger workers, devotees of the FIRE movement, are seeking ways to duck mistakes made by prior generations. (Wall Street Journal subscribers)
You’ve heard of stocks for the long run, but there are 30-year periods where bonds have outperformed stocks. Michael James answers the question of what we do with that information.
The Wealthy Barber David Chilton has partnered with RBC Wealth Management to raise awareness about estate planning options – specifically the idea of taking advantage of corporate executors:
“I am a big believer in the benefits of corporate executorship. In fact, I refuse to take on the executor role for even my closest friends’ wills. If you’re wondering why, you’ve probably never been an executor,” says Chilton.
If you have both a mortgage and an investment portfolio you might have wondered if it makes sense to use some of your investments to pay off your mortgage. Ben Felix explains what’s optimal and realistic in his latest common sense investing video:
Rob Carrick says this is a definitive sign you have overborrowed and owe too much.
Surprisingly, Carrick then makes the case for 30-year mortgages as a financial stress reliever for new home buyers. There is a sensible argument inside:
“Here’s a compromise if you’re gagging on the idea of paying that extra interest: Set up the mortgage with a 30-year amortization, but make extra payments so that you end up paying the amount you would have if you went with 25 years.”
Michael Batnick explains that where the market goes in your first ten years can have a disproportionate impact on how you think about investing for the remainder of your life.
Finally, one of my favourites – read Martin Short’s nine categories for self evaluation.
Have a great weekend, everyone!
The past 10 years have been a lost decade for savers as interest rates plummeted and stayed at historic lows. A so-called high interest savings account at one of Canada’s big banks pay next to nothing for interest. Meanwhile those looking for higher rates on their deposits have to chase short-term promotional offers at online banks and out-of-province credit unions just to stay ahead of inflation.
Luckily the tide is starting to turn thanks to the Bank of Canada raising its key interest rate on five occasions in the past 15 months. While debtors bemoan the 1.25 percent increase over that time, savers are cheering for higher rates on their deposits.
High Interest Savings Account Comparison
It had been some time since I surveyed the market to compare high interest savings accounts rates. What I found was much of the same from Canada’s big banks, whose best rates range from a paltry 0.5 percent to 1.2 percent on a high interest savings account.
RBC’s eSavings account is easily the best of the bunch for everyday deposits, paying a decent 1.2 percent on every dollar with no monthly fees or minimum deposits required. The account also includes one free ATM cash withdrawal per month.
| Bank | Account | Interest rate % |
| RBC | High Interest eSavings Account | 1.20 |
| Scotiabank | Momentum Plus Savings Account | 1.05 |
| CIBC | eAdvantage Savings Account | 1.05* |
| BMO | Smart Saver | 0.80 |
| TD | High Interest Savings Account | 0.50* |
* $5,000 minimum balance required
In the middle of the rate pack you’ll find online banking pioneers Tangerine and Simplii Financial (formerly PC Financial), plus other household names such as Manulife and Canadian Tire Bank.
At the top of the online competitors we have EQ Bank, which pays a healthy 2.30%* everyday interest rate on its savings deposits. The EQ Bank Savings Plus Account comes with no monthly fees, no minimum balance, and acts as a chequing account with unlimited transactions, including free bill payments and unlimited free Interac e-Transfers® per month.
| Bank | Account | Interest rate % |
| EQ Bank | EQ Bank Savings Plus Account | 2.30* |
| Alterna Bank | High Interest eSavings Account | 2.25 |
| Canadian Tire | High Interest Savings Account | 1.50 |
| Manulife Bank | Advantage Account | 1.40 |
| Simplii Financial | High Interest Savings Account | 1.25 |
| Tangerine | Savings Account | 1.25 |
Finally, I’d be remiss not to include a section on credit unions, which for years have offered some of the highest interest rates on savings accounts in the country. The trouble is that savers often need to look beyond their provincial borders to take advantage of these higher rates.
Indeed, some of the best interest rates today are offered by little known Manitoba credit unions. Topping the list (and the country) is Manitoba’s largest credit union, Steinbach, which pays an incredible 2.65 percent on its regular savings account. Not too far behind is Winnipeg’s AcceleRate Financial, which pays 2.35 percent on its high interest savings account.
The Deposit Guarantee Corporation of Manitoba guarantees all deposits. Canadian residents outside of Manitoba can open an account with a Manitoba credit union by becoming a member and providing additional supporting documentation with their application.
| Manitoba Credit Union | Account | Interest rate % |
| Steinbach | Regular Savings | 2.65 |
| AcceleRate | High Interest Savings | 2.35 |
| Achieva | Daily Interest Savings | 2.15 |
| Outlook | High Interest Savings Account | 2.15 |
| Implicity | High Interest Savings Account | 2.15 |
Ontario also has its share of credit unions that offer competitive rates on savings accounts among other products. Pacing the field is Alterna Bank, an online offshoot of Alterna Savings, which has 33 locations across Ontario. Alterna offers a high interest eSavings account at 2.25 percent.
| Ontario Credit Union | Account | Interest rate % |
| Alterna | High Interest eSavings | 2.25 |
| Meridian | High Interest Savings | 1.50 |
| IC Savings | Investment Savings | 1.25 |
The verdict
Many of the above listed banks, online banks, and credit unions typically offer promotional interest rates upwards of 3 percent or more for short periods of time. A savvy customer with the time and inclination could stay ahead of the curve by moving their savings around every few months.
A less complicated solution is to park your money with a bank that consistently offers an everyday high interest rate at or near the top of the market with no hassles. For my money today, that’s the EQ Bank Savings Plus Account at 2.30% interest*.
*Interest is calculated daily on the total closing balance and paid monthly. Rates are per annum and subject to change without notice.
I was caught by surprise when Daylight Saving Time ended this weekend but I’m thankful for the gift of time with an extra hour I didn’t know I had Sunday morning. Many jurisdictions have considered abandoning Daylight Saving Time, including the European Union. The EU Commission surveyed 4.6 million people and found that 84 percent called for ending the spring and autumn clock change.
That prompted the EU to do away with twice-yearly clock changes as of October 2019 and it has given member states until April 2019 to decide whether they’d permanently remain on winter or summer time.
Various parts of Canada and the United States do not observe Daylight Saving Time, including:
- Most of the province of Saskatchewan
- Peace River Regional District, B.C.
- Fort Nelson, B.C.
- Creston, B.C.
- Pickle Lake, Ont.
- New Osnaburgh, Ont.
- Atikokan, Ont.
- Quebec’s north shore
- Arizona
- Hawaii
I don’t have a strong opinion about observing Daylight Saving Time or not, but I feel like everyone should be on the same page and either adopt it or not.
I had a hard enough time last month trying to schedule a conference call in MST with someone in EST while I was travelling in PST. My Outlook calendar was just as confused as me and the poor guy from Ontario. I can’t imagine the chaos when more (but not all) provinces and countries decide to end Daylight Saving Time.
This Week’s Recap:
On Monday we had a guest post from Dale Roberts at Cut The Crap Investing who shared some year-end tax traps to avoid for mutual fund investors.
And on Wednesday I reviewed CoPower Green Bonds and their 6-year bond that pays a fixed return of 5 percent.
Next week I’ll have a piece on Financial Literacy Month and also look at the best options for high interest savings accounts in Canada.
Promo of the Week:
Here’s a great one. The cash back king, Scotia Momentum Visa Infinite, is offering an incredible 10%(!) cash back on everyday purchases for three months (up to $200 earned), plus your first year annual fee waived.
Best to apply for this one through Great Canadian Rebates and earn an additional $55 in cash back rebates from GCR. That’s a total of $255 in cash back for free if you can reach $2,000 in spending in three months.
Speaking of cash back, don’t forget to stop by Ebates.ca and Great Canadian Rebates this holiday season so you can earn cash back bonuses and discounts on your online shopping.
Weekend Reading:
Questrade rebranded its robo-advisor platform from Portfolio IQ to Questwealth and in the process dropped its management fee to an industry leading 0.25 percent. That all sounds great, but I’m skeptical of Questrade’s insistence on using actively managed investment strategies in its portfolios.
Some old pieces of financial wisdom aren’t as helpful as they used to be. Here are the new rules of personal finance.
The Bank of Canada wants rates back to normal – here’s what that means for your mortgage, line of credit.
Squawkfox Kerry Taylor says debt builds when we turn to thinking instead of doing.
Millionaire Teacher Andrew Hallam says that when stocks drop, the biggest threat is the person you face in the mirror:
“Plenty of people fear stock market drops, especially new investors. When stocks fall, many people sell. Plenty of others cease to add fresh money. They stop contributing to their investments. They choose to wait until things return to normal. But this is as crazy as eating sand for breakfast– because market drops are normal.”
Jason Heath shares how single seniors can plan for retirement.
Michael James on Money reviews the excellent Fred Vettese book, Retirement Income for Life.
Think saving for old age can’t be fun? Try making a game of it.
Jamie Golombek explains how to ensure you take advantage of all the tax benefits that come with being a landlord.
Consumer advocate Ellen Roseman says getting repairs made under warranty shouldn’t be so draining.
Dale Roberts also looks at CoPower Green Bonds. Changing your portfolio one LED light bulb at a time: Getting your investments into the green.
Finally, a shocking look at pro sports charities hoarding cash and overspending on fundraising. The Calgary Flames Foundation was particularly bad, donating a dismal 30 cents for every dollar raised. They also have $8 million in reserves despite spending less than $2 million a year on charitable giving.
Have a great weekend, everyone!