Bank Transfer Fees on Maturing GICs.
Over the past few years, we have come across the following situation again and again.
You’ve had your money in a GIC within your RRSP or TFSA at a bank or credit union. The GIC matures and you have found a better rate somewhere else. Your advisor or the institution with the higher rate completes the transfer papers and sends them to the bank your money is at now. A few weeks later, your money finally transfers to the new institution….minus a nasty fee!
We’ve seen fees as high as $100 which, given current interest rates, is probably more than you earned in interest for the entire GIC term that matured! In the meantime, your money sat earning zero interest for those weeks between the time your GIC matured and when they got around to forwarding your money to the new institution.
So what to do about it? First, before you deposit your money anywhere, find out in writing what all the charges are, including the charges if you transfer your money out on maturity. The companies we deal with do not charge you to transfer your money on maturity. The deposit business in Canada is very competitive and if you insist on placing your hard-earned dollar with a company that operates in this fashion, negotiate a waiver at time of deposit and get it in writing.
The idea that it costs a financial institution nothing to take your money but somehow it costs $100 worth of their time to give it back is ridiculous. They don’t charge a fee when a non-registered GIC matures and the money goes into your bank account so what is the difference.
As the man says, it’s your money.