As I may have mentioned, my job as a personal finance writer has made me a collector of bank and investment accounts.
In the months ahead, I’m going to report on how well some of these accounts work and whether they offer anything you should check out. First up, the Savvy Savings Account from alternative bank Motive Financial.
Motive earns a shoutout by offering 4.1 interest on savings, straight up, with no teasers or promo periods. Rate cuts by the Bank of Canada later this year will push savings rates lower, but for now Motive offers one of the best returns available from a traditional savings account.
Motive is a member of Canada Deposit Insurance Corp. through its parent, Canadian Western Bank. I set up an account online and arranged a link to a chequing account at another financial institution. Transferring money in and out is basic.
So is making a bill payment, or an e-transfer, but you won’t do many of those because a Motive savings account is mainly for holding savings. If you want a transactional account at Motive, try its free chequing account. Motive Savvy Savings gives you just two withdrawals (including bill payments) per month for fee, and then you pay $5 each. Interac e-transfers cost $1 each.
The Motive website is a nondescript set-up based on a design used by some other small financial institutions. It’s nothing special, but it gets the job done. The Motive app is a similar off-the-rack design that is way behind banking trendsetters. Motive does offer two-factor authentication to log into your account, which means you need a code sent by text.
What I really like about Motive is looking at the monthly interest payments in my savings account. Other alternative banks offer a high rate of interest on savings without the annoyance of expiring promotional periods, and I’ll report back on some of them. But the Motive Savvy Savings Account is absolutely worth a look if you want an uncomplicated way to park savings and earn inflation-beating amounts of interest.
Find out what other Motive clients think about the bank on this online forum. Preview: There are complaints about service, especially getting someone on the phone. I haven’t needed to talk to anyone there.
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Rob’s personal finance reading list
His EV died five times
An Ottawa man bought a used 2016 Nissan Leaf, an electric vehicle. After spending more than $10,000 to address chronic battery problems, he’s still without a working vehicle. Battery replacement is one of the uncertainties of owning an EV for the long term. Now for a report from J.D. Power about how EV owners are finding their tires wear faster than on gas-powered vehicles. It’s the extra weight of EVs, and the higher power of their engines.
Should you hold a mortgage in your RRSP?
High mortgage rates have stoked interest in the idea of holding a mortgage in a registered retirement savings plan. The mortgage is basically an investment that pays income in the form of monthly mortgage payments. A financial planner explains here how the strategy works, and why he’s not a big fan. Another issue is that it’s extremely hard to find a financial institution that allows mortgages to be held in RRSPs.
The FHSA delay
People who contributed to first home savings accounts in 2023 have been experiencing delays in getting tax refunds. Here’s a Reddit thread on this issue, and a Globe report. Now for some background on FHSAs - how they work and where to get one. As with registered retirement savings plans, you get a tax deduction when you contribute to an FHSA.
A lesson on credit card takeaways
Here’s a look at how Mastercards issued by Brim, a financial services upstart, will have some of their benefits trimmed back. The pattern here is a familiar one. New cards come to market with standout benefits that later get pared. Now for a look at some Brim alternatives.
Ask Rob
Q: What strategies would you suggest for using my non-registered investments to supplement my defined benefit pension income now that I have started my retirement? I am 60 years old and plan to wait until I am 70 to collect CPP. I also have an RRSP, which I will eventually convert to a RRIF, as well as a maxed out TFSA.
A: Questions like this remind me of the benefit of paying for a retirement income consultation with an accredited financial planner. Dividend income sounds like an option here because of the favourable tax treatment in non-registered accounts. But for high earners in retirement, dividend income can increase exposure to the Old Age Security clawback. This is where a full analysis by a planner can help.
Do you have a question for me? Send it my way. Sorry I can't answer every one personally. Questions and answers are edited for length and clarity.
Today’s financial tool
A tool for finding the reward credit card that best suits your needs and spending patterns.
The money-free zone
Smooth L.A. soul from the 1960s: It Only Hurts For a Little While, from The Whispers. Found on a new release of the band’s work called The Whispers Soul Legends. Many worthy nuggets on this album, including a cover of You Make Me So Very Happy. Here’s the Blood, Sweat and Tears version of that song, which is pretty great.
ICYMI
What I’ve been writing about:
- A how-to for people caught up in CRA’s confusing new rules for reporting bare trusts
- Home ownership is turning into a gated community that renters cannot join
- The DIY mutual fund investor’s guide to avoiding brokerage commissions
- A timely reminder of how long and hard U.S. stocks can fall
More Rob Carrick and money coverage
Subscribe to Stress Test on Apple podcasts or Spotify. For more money stories, follow me on Instagram and Twitter, and join the discussion on my Facebook page. Millennial readers, join our Gen Y Money Facebook group.
Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: Why millennials and Gen Z are Alberta-bound for a more affordable life • Rising interest rates brought pain for new homeowners - and opportunity for house hunters • Why more Canadians are choosing to be childfree or delay parenthood • Love in the time of inflation: How to manage rising costs when dating • You're not bad at money - you're suffering from money shame • Retirement might look different for Gen Z and millennials. Here's how to plan for it • Recession-beating tips for the job market, housing, investing and the cost of life • Is the middle class dead for millennials and Gen Z?
- ✔️ The housing file: A house isn't special. Get your head straight about the reality of home ownership • The good, the sad and the unaffordable: Saving for a home downpayment in Canada's big cities • Property taxes are popping in some cities - how worried should you be about other tax hikes? • Our other real-estate problem - people have too much wealth tied up in houses • Borrowers and savers, here's how to time the eventual rollback of interest rates
- 📈 Investing: Canada's top digital broker is TD Direct Investing, with an assist from the TD Easy Trade app • 2023 Globe and Mail ETF buyer's guide part one: Canadian equity ETFs • For the ultimate in cheap investing, check out the Freedom .08 ETF Portfolio • Yes, there is risk in Canadian bank deposits for the unwary and complacent • CDIC covers bank deposits, but who protects your investments if your broker goes bust? • Answers to your questions about the low-risk ETF paying almost 5% • Happy fifth birthday to one of the all-time best investing products for everyday people • An investing strategy that wins cleanly over the long term by outperforming in bad years like 2022
- 💰 Your money: Mortgage holders, savers and GIC investors, it’s time to change your thinking on interest rates • How much debt is each generation of Canadians carrying, and how do you compare? • For the sake of their financial futures, young people should leave Toronto and Vancouver • This practical new spin on a savings account might just peel you away from your big bank • Rental fraud grows amid rise in fake, falsified tenant applications • Are Canadians worse off financially now than in the 1980s? • From groceries to auto loans, here’s how much more it costs to live right now • When saving for retirement, should you change your asset mix over the course of your career? • Do retirement income needs always rise alongside inflation? Not necessarily • When the bank suggests you lock in your variable rate mortgage, it has an angle
Rob Carrick