Does anyone have any idea when interest rates for high-interest savings accounts will start going up again? The current interest rate with ING is only 1.35%, whereas in the past it has been around 3.00%.
Wish I knew the answer, but that got me thinking and I have another question related to yours so I'll throw it out here... what determines the interest rate they'll pay for these kinds of accounts, is it the bond market or the overnight rate set by the bank of canada?
The rates would be a combination of the rates set by the boc and how hungry a particular bank is for deposits. ING has become far more mainstream it would seem - though not quite like the big 5 or 6. Canadian Tire seems to be one of the new eager ones offering 2.0 at the moment.
Wish I knew! The Bank of Canada is committed to maintaining the current low interest rate well into next year provided inflation is contained. If so, it may be another year before we see a spike in interest rate on savings accounts.
The savings account rates right now make me ill. I'm all about low risk with my hard earned cash right now... but looking at my TD savings account this morning online I see monthly interest of $28 on an amount approaching $40000... jeez.
Interest rates will increase when the cost of banks' funding goes back up. Currently Canadian LIBOR is currently running at an overnight rate of 0.24% with the one-year rate at 1.45%. Until the Bank of Canada raises its interest rate target and ceases its "quantitative easing" program, I don't think we will see interest rates on high-interest savings accounts increase.
I think you need to look at interest rates in comparison to inflation. If you had an ING high-rate savings account earning 3.4% interest in the third quarter of 2008 when inflation was 3.4% (this was the consumer price index inflation rate), you can see that your money wasn't actually growing at all. At the end of March the CPI inflation rate was 1.2% and I expect it's probably even lower right now. So you're actually coming out better today at ING's current 1.35% savings account interest rate than you were last year when interest rates were much higher.
A forum community dedicated to Canadian personal finance enthusiasts. Come join the discussion about investing, stock portfolios, equities, frugality, real estate, market trading, taxation, retirement, and more!