Why are readers hesitant to pull savings from big banks?
November 11, 2020
Rob Carrick
One way I’ll know my work is done as a personal finance columnist is when people stop acting like big banks are the only safe place to park savings.
“I am rather leery about moving this amount to another bank and would appreciate your point of view on going through with this,” he wrote in an e-mail.
The interest rate on his big-bank savings account is 0.05 per cent – yes, you read that correctly. Barely anything.
The alternative bank this reader said he’s thinking about is EQ Bank, which as of early November paid 1.5 per cent.
My take can be summed up in a pandemic personal finance update I wrote during the spring.
The headline: Why you should clean out your big-bank savings account.
Let’s review this particular case. Money parked at EQ can be considered safe because the bank is part of Canada Deposit Insurance Corp,
which covers eligible deposits of up to $100,000.
I’ve done business with EQ and find its website and mobile app to be user-friendly for moving money to and from my chequing account.
You can also pay bills from your EQ accounts, which is very handy.
I presented this reader’s quandary on Twitter not too long ago and generated lots of replies,
which you can read here. Personal finance commentator Preet Banerjee offered a smart suggestion: Move half the money and then see how the difference in interest feels
after a few months.
About that 1.5 per cent from EQ: As of early November, there were a few alternative banks paying higher rates and some paying less.
Given the economic uncertainty out there as a result of the pandemic, low rates are here for a while.
We might even see savings rates fall a bit from current levels.