Bad news for smart savers looking to grow their nest eggs - one of the highest interest-earning online savings accounts in Canada has been shut down. Ally Bank’s High Interest Savings Account has been discontinued by new parent bank RBC as of April 30. The “Big 5” banking giant first announced its acquisition of Ally Financial Inc.’s auto financing business and deposit clients last October. At the time of the takeover, Ally’s assets were listed at $4.1 Billion.
The Ally High Interest Savings account offered one of the highest interest rates around at 1.8% with no monthly fees or minimum balance - features that earmarked it as RATESDOTCA’s Best of Finance 2012 pick for Best High Interest Savings Account.
Current Ally customers can opt to switch to an RBC High Interest e-Savings Account, which would slash potential interest earnings from 1.8% to 1.2%. Those looking to maintain their interest earnings can do so by switching to a one-year non-redeemable GIC at 1.8%, or a cashable one-year term at 1.5%. Customers who take no action by the April 30th deadline will see their Ally funds transferred back to their external bank (the institution used to transfer funds into the account upon set up).
All TFSA HISAs and TFSA GIC accounts will remain operational.
While it’s clear RBC is looking to accommodate Ally’s current client base, many are understandably frustrated at the shake up for their finances. After all, many chose the independent bank, which was a popular online-only lender, because it was an alternative to banking with a big, corporate institution. As well, Ally was known for offering very competitive rates, and for voicing the importance of good customer care. After all, Ally Bank was known for its tongue-in-cheek advertising that referenced kids, ponies and ice cream to illustrate the concept of “fair” to consumers.
Now, as their banking business changes hands without apology or consequence, the question is raised: what can consumers do when the terms of their banking services change?
According to Dawn Borges, sales and services manager at Entegra Credit Union, parent company to Implicity Financial, consumers are wise to remember the value of their business - and their comparison shopping options.
“The Financial Industry in general is extremely competitive, which allows consumers the benefit of options that addresses their individual needs,” she says. “As a consumer, change can be very frustrating and without any warning can lead a consumer to feel that they are pressured to make a decision and have no options. In truth, change can provide an opportunity to look at alternative options in products or Financial Institutions.”
Fortunately, good news abounds for former Ally clients and smart savers alike, as there are a few solid online high interest options available on the Canadian market. Here’s our take on some of the best high interest savings account options:
Implicity Financial High Interest Savings: It’s official; this Manitoba-based credit union offers the highest interest return on savings, at a full 2%. Like Ally, their services are offered nationally, are 100% online, and free of monthly fees. Interest is paid out monthly on savings, and there is no maximum or minimum balance to get started. Because Implicity is a branch of a credit union, deposits are guaranteed provincially through the Deposit Guarantee Corporation of Manitoba rather than the Canadian Deposit Insurance Corporation.
Borges adds that it’s a great option for customers looking for self-service tools, higher rates and lower banking costs. “We offer interest rates that are among the best in Canada and have competitive investment options that are simple, secure and fee free,” she says. “Plus we have a seamless online account opening process eliminating the need to fill out and mail in paper forms.”
Canadian Tire Money Magnet High Interest Savings Account: With 1.7% interest on savings, Canadian Tire offers another way to grow money at a faster rate. This CDIC-insured account is also fee-free and online-based, and also offers consumers increased Canadian Tire loyalty rewards.
ICICI Bank HiSave High Interest Savings Account: This full-service online bank offers an interest rate of 1.45% on deposits, with no monthly fee, and is also CDIC insured. For those who prefer paper, statements can also be mailed for a $5 in addition to their online services.