Why banks aren’t paying higher interest rates

So far in 2010, Canadians have opened 20 per cent more chequing and savings accounts than last year at this time.

That amounts to about $100 billion in new deposits and Canada’s major banks have been fighting for a share of it with incentives, including cash rewards for customers opening new accounts.

While consumers can get cash and travel points to open a new account, there is one conspicuous weapon missing in the banks’ marketing arsenal when it comes to attracting new customers.

And that is the lure of higher interest rates, something you won’t find the banks offering on those new savings accounts and products – or old ones for that matter.  Read More…

This article has 16 Comments

  1. the money paradise

    yes high interest rates are the incentive for anyone. everyone wants to see one’s money grow bigger. so it is quite natural that they expect more from banks. but banks are not ready to offer more anywhere in the world

  2. Kassidy Tolbert

    There are some havens one can look to for better rates but yea banks are pretty lousy right now.

  3. London T

    TD’s promotion of a free iPod is back up if anyone is interested. The rates suck but still free ipod shuffle!

  4. Matt

    I think you have your facts wrong.

  5. Afton B.

    Bank of Canada sets rates and so in ways its not banks to blame its the government.

  6. Stuart L

    Until i see rates back up to 4% i will leave mine in long-term RRSP accounts.

  7. Elliot

    After the financial turmoil of a few years back i think banks have their excuse not to offer higher interest rates.

  8. Nathen H.

    You can always try credit unions.

  9. Jamie

    Sure, but TD et al’s interest rates are in the hole. 0.02% at best!

  10. Ignacio M

    Banks like TD Canada Trust, or CIBC still have their uses. A lot of people still like the hand-holding of customer service with a real life person than 1’s and 0’s at a terminal.

  11. George Addington

    There are so many people banking online these days that i cant see the need for brick and mortar banks anymore

  12. Imanol B.

    ICICI Bank?!? No thank you! There reputation is horrible. Have you tried their customer service?

  13. Khalid G

    Actually there are some banks offering deals more than 1%. Try Peoples Trust or ICICI Bank.

  14. Maximillian Washbond

    Funny that ING Direct claims to “save your money” but yet their rate is lower than most internet banks. What’s with that?

  15. Trevon Bartlett

    I remember the good ole days when interest rates were at 5.1% for high-interest accounts. Now you will be lucky to find one above 1%

  16. Skylar Sanfilippo

    The reasoning is simple. They want to make more money. The lower the interest rates onto us the higher they can charge to customers wanting to get loans. Money in, money in!

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