Q&A: Smaller institutions
Question: I enjoy being a subscriber to the Internet Wealth Builder newsletter and have a question regarding cash investments. I have a high interest savings account with ING Direct and was considering opening an account with either President’s Choice Financial or Ally. I deal with TD Waterhouse but the high interest accounts they offer pay 1.2% interest, while ING and PC Financial pay 1.5%. Ally pays the highest at 2% but I am concerned about dealing with them as they are new to the marketplace. All are covered by deposit insurance. I had hoped TD Waterhouse would offer a rate comparable to ING or PC Financial as they are a discount brokerage and it would be convenient for their investors. Would you have any concerns about a newer institution? – Peter H.
Gordon Pape answers: As long as the institution is a member of the Canada Deposit Insurance Corporation (CDIC) or a provincial equivalent, I would not be concerned as long as your deposit does not exceed the coverage limit.
lthough the brand name “Ally” is new, the company is not. In the U.S., Ally Bank is the old General Motors Acceptance Corporation (GMAC) which has been relaunched with a new image. In Canada, the Ally savings accounts and GICs are actually held by ResMor Trust, which is the CIDC member. The GMAC connection remains through a division of the company called Ally Auto Financing.