GUEST POST FROM http://nocommunism.blogspot.com/
Middle Class Millionaire has foolishly agreed to let me do a guest post. I apologize in advance for the mass exodus away from his blog.... to mine! Ha ha!
Oh, right. I was supposed to make a serious point about something.
Okay, most of us have a very similar problem. We don't have enough money. Even when we get a little extra, we're either using it to pay down debt, or we're plowing it back into our investments.
If you were, say, this guy or this guy, you'd definitely want to place to park your excess cash. But where? Don't worry son, I can help!
Let's start with the big banks, just so we can get them out of the way early. They all suck. The best one offered is RBC, which offers a high interest savings account at 2.75%. The catch is that all you get on that account is online banking.
As for the other big banks? You either need ridiculously high minimum balances, or the rate sucks. Most are 2.25%, and quite a few have a minimum balance of at least $5000.
Now onto some more interesting options.
E-Trade Canada will let your uninvested cash earn 3.05%. This is interesting if you already have an account at E-trade, since there'd be no transferring back and forth. Even though there's better rates out there, if I was an existing E-Trade client I'd just plow my money there.
ING was the company that started the high interest savings revolution, at least in Canada. They offer a rate of 3%, combining that with the promise of zero service charges if you switch all your banking to them. They also have an interesting option for your U.S. dollar cash, an account yielding 1.75%.
PC Financial's rate is a comparable 3.05%, plus a bonus of about .05% on your anniversary date. It sure was nice for PC to remember our anniversary date, cause I, uh, forgot to get PC Financial a present. Guess I'm not getting any tonight.
Manulife offers 3.00% on a pretty standard account. HSBC is the same.
Canadian Tire Financial Services is interesting. They offer 4.3% for the first 90 days, (up to $100k) then the rate drops to a more realistic 3.05%. Still, if you average those out over a year you get 3.32%, which isn't too shabby. No word on whether they pay you in Canadian Tire money, but I'd hope not.
Altamira offers a decent yield of 3.2% for their account. Citizens bank is at 3.15%.
The winner is... ICICI BANK! With an astonishingly high 3.4% interest rate, the boys from India come through on this one. Great job guys. There's just one thing. What's up with that name? Get on that, wouldja?
Upon further searching at Globefund, the average 5 year return on a money market fund is around the 3% range. You could try to cherry pick a better fund, but good luck with that.
Taking the time to set up one of these is actually worth your time. The difference between ICICI and my savings account is 3.15%. (3.40%-.25%) Having a 10,000 balance would get you an extra $315 per year.