Coast Capital Introduces Canada's First Full Access, No Fee High Interest Savings Account

Credit union says move will help it carve a slice of competitive market for Tax Free Savings Account customers

• Press Release
• Source: Coast Capital Savings Credit Union
• On 11:42 am EST, Wednesday January 7, 2009

VANCOUVER, BRITISH COLUMBIA--(MARKET WIRE)--Jan 7, 2009 -- The competition among financial institutions to woo customers signing up for the newly introduced tax free savings account just got hotter with Coast Capital Savings' introduction of the nation's first high interest savings account offering full, no-strings-attached access to financial transactions, for free.

While Canadian financial institutions offer various types of high interest savings accounts, these accounts either exclude popular features such as debit card purchases and in-branch transactions, or where these transactions are available, charge a fee-per-use of up to $5.

Lloyd Craig, Coast Capital Savings' president and CEO, says the High-interest, No-fee Savings Account gives customers full access to all those common financial transactions at no cost, and will be particularly attractive to those looking for a flexible way to take advantage of the government's new tax free savings account, which became available January 1. The product can also be used as a regular savings account and for registered products (e.g., RRSP, RRIF, RESP).

"The new product from Coast Capital Savings offers a unique combination of features including a high interest rate that is currently 2.75 per cent and the ability to access your account how and when you want to," Craig said. "It includes unlimited day-to-day transactions like debit card purchases and in-branch transactions, as well as withdrawals on 2,300 ATMs across Canada. The best part is that unlike other high interest savings accounts, there are no service fees for all these transactions."

The introduction of the new Coast Capital product coincides with the release of the results of a national Ipsos Reid survey commissioned by the credit union that found that nearly 60 per cent of Canadians are actively looking for ways to reduce service fees charged by financial institutions and 65 per cent are paying more attention to service fees. Also, 75 per cent of Canadians said they'd open an account with features similar to Coast Capital's new savings account (See attached backgrounder for more survey highlights).

The interest rate on Coast Capital's new savings product places it in the top-tier of high interest savings accounts in Canada, beating current rates offered by the big five banks.

Below is a chart that compares Coast Capital's High-interest, No-fee Savings Account to similar accounts from three leading competitors, as of January 7, 2009.

 

---------------------------------------------------------------------------
                Coast
Financial       Capital         Royal         Bank of
Institution     Savings         Bank          Montreal        ING
---------------------------------------------------------------------------
Account name    High-interest,  RBC           Premium         Investment
                No-fee          High Interest Rate            Savings
                Savings Account eSavings      Savings
---------------------------------------------------------------------------
Minimum $
 required for
 interest       $0              $0            $0              $0
---------------------------------------------------------------------------
Interest rate   2.75%           2.5%          Tiered,         2.7% (flat)
                                              0.75% to 1.75%,
                                              depending
                                              on balance
---------------------------------------------------------------------------
Monthly fee     $0              $0            $0              $0
---------------------------------------------------------------------------
Debit card
 purchases      $0              $5            Not available   Not available
---------------------------------------------------------------------------
In-branch
 withdrawals    $0              $5            $5              Not available
---------------------------------------------------------------------------
Home ATM
 withdrawals    $0              $5            Not applicable  $0
---------------------------------------------------------------------------

Mike Bushore, Coast Capital's Chief Innovation Officer, said the savings account is part of the financial institution's continuing focus on meeting the ever-rising expectations of consumers.

"Coast Capital's High-interest, No-fee Savings Account is another step in our commitment to bring value and savings to customers," Bushore said. "We know that the value proposition of this account will resonate very strongly with customers and likely even more so, given that the current economic climate is forcing everyone to take a closer look at how they manage their money. Customers want a secure place to put their funds and to be better able to manage expenses and we believe our new product will deliver on our commitment to provide the public with simple financial help."

Bushore said the new product will also be appealing to small businesses because it provides cost-savings on their day-to-day transactions, while paying a rate that is higher than what is typically offered by financial institutions on small business accounts.

Coast Capital Savings' national Ipsos Reid survey, conducted in December 2008, revealed 62 per cent of Canadians are more likely to open a tax free savings account because of current economic conditions. At 68 per cent, B.C. residents are even more likely to do so, compared to other Canadians. Among Canadians likely to open a tax free savings account, the most preferred product for the account was a high interest savings account, at 48 per cent. British Columbia residents were even more likely than other Canadians to select a high interest savings product for the tax free savings account, at 55 per cent.

"Our survey shows 56 per cent of Canadians are planning to save more, in case they or another income earner in their household loses their job, and among British Columbians the figure is 63 per cent," said Lawrie Ferguson, Coast Capital's senior vice president, marketing, adding that 75 per cent of Canadians indicated a high interest savings account would motivate them to save more.

"Clearly, given the current market uncertainties, many Canadians are fast beginning to realize the importance of having secure savings and investments and so combining the benefits of the tax free savings account with a product like ours makes it an even more attractive choice for the consumer," Ferguson said.

The Ipsos Reid survey of 906 Canadians (effective base size of 516 due to weighting) has a margin of error of plus or minus 4.3 per cent, nineteen times out of twenty. The B.C. sample of 463 respondents has a margin of error of plus or minus 4.6 per cent, nineteen times out of twenty.

Coast Capital Savings is Canada's second largest credit union with total assets under administration of $11.9 billion, 380,000 members and 51 branches in the Metro Vancouver, Fraser Valley and Vancouver Island regions of British Columbia. Product innovations from Coast Capital Savings include Canada's first free chequing account from a full-service financial institution and the first business account in the country to offer unlimited transactions for a flat fee. The credit union was named one of BC's Top 50 Employers in 2009, is one of Canada's 50 Best Managed Companies and the recipient of the Canadian Co-operative Association Innovations in Co-operative Governance Award. Coast Capital Savings has also been designated a Caring Company by Imagine Canada. To learn more, visit www.coastcapitalsavings.com.

Note to editors/reporters: Survey backgrounder attached. Coast Capital spokespersons, customers and sources from Ipsos Reid are available for interviews on request.

For more information or to arrange interviews, please see contact information below.

Backgrounder

National Ipsos Reid Economic Conditions Survey, commissioned by Coast Capital Savings

 

Survey date:              December 9 to 15, 2008
Sample demographic:       Canadians 25 to 54 years old, with a savings or
                          chequing account
National sample size:     906 (effective base size of 516 due to weighting)
National margin of error: Plus or minus 4.3 per cent, nineteen times out of
                          twenty
B.C. sample size:         463
B.C. margin of error:     Plus or minus 4.6 per cent, nineteen times out of
                          twenty

Survey highlights

Fees

- 65 per cent of Canadians say they are paying more attention to service fees they are being charged by financial institutions.

- Compared to a general high interest savings account, many more Canadians are likely to open a no-fee high interest savings account. When described as "a high interest savings account that has no service fees, regardless of the balance you keep in that account and without any other conditions", three-quarters of Canadians or 75 per cent indicate they would open this account. This is comprised of 26 per cent who would probably open this account and 49 per cent who would definitely open one.

- Canadians (59 per cent) are actively looking for ways to reduce service fees they are being charged by financial institutions. Many Canadians (52 per cent) have changed or plan to change how financial transactions are conducted to reduce service fees. Forty-three per cent of Canadians have reduced or plan to reduce the number of financial transactions conducted to reduce service fees.

Savings attitudes/habits

- Higher interest rates would motivate Canadians to save more money. Three-quarters of Canadians (75 per cent) agree with the statement "If savings accounts offered higher interest rates, it would encourage me to save more money than I do right now". This comprises of 44 per cent who agree somewhat with the statement and 31 per cent who strongly agreed.

- Fifty-six per cent of Canadians said they will save more in case they and/or another wage earner in household loses job. At 63 per cent, B.C. residents are more likely to save for this scenario.

- Fifty-three per cent of those who save specifically for emergencies or just in case situations have less than $5,000. One-in-five or 19 per cent have savings valued between $5,000 and $9,999 and one-in-ten or 10 per cent have savings valued between $10,000 and $24,999. Only a few (6 per cent) have savings of $25,000 and upwards while the others (12 per cent) are either unsure or uncomfortable with answering this question. British Columbians are slightly more likely to have savings between $10,000 and $24,999 (16 per cent versus 9 per cent for the rest of Canada).

Tax Free Savings Account

- The majority of Canadians are aware of the tax free savings account and most are likely to open the account when it becomes available. Fifty-four per cent of Canadians were aware of the account while 42 per cent were unaware. Four per cent were unsure.

- Regionally, those living in B.C. are more likely to be aware of the tax free savings account - 66 per cent, versus 52 per cent for the rest of Canada. Further, when asked about their likelihood to open the account, 48 per cent indicate they will open one. Thirty-three per cent are on the fence, saying they might or might not open one, while 13 per cent indicate they will not be opening this account when it becomes available. 6 per cent are unsure.

- 62 per cent of Canadians are more likely to open a tax free savings account because of current economic conditions. At 68 per cent, B.C. residents are more likely to open a TFSA, compared to other Canadians.

- A high interest savings account is the most popular financial product for a tax free savings account; relatively riskier publicly-traded securities are the least popular. Of those who definitely, probably and might or might not open a tax free savings account when it becomes available in 2009, half are likely to use high interest savings account for their tax free savings account. A regular savings account also proves to be popular among Canadians likely to open this account. Forty-eight per cent of Canadians are likely to use a high interest savings account for their tax free savings account. At 55 per cent, B.C. residents are more likely than other Canadians to use a high interest savings account for their TFSA.

- 51 per cent of Canadians are planning to put more money into a tax free savings account because of current economic conditions.

Interest paid on savings account

- Most Canadians are not content with the interest rate offered by their main savings account. Fifty-four per cent of those with a savings account are currently dissatisfied with the interest rate earned by their primary account. Forty-one per cent are satisfied. Five per cent are unsure how they feel toward the interest rate offered.

     Contacts:
     Coast Capital Savings
     Divine Agodzo
     Manager, Media Relations
     (604) 517-7549
     Email: divine.agodzo@coastcapitalsavings.com
      
     Coast Capital Savings
     Erin McKinley
     Media Relations Advisor
     (604) 517-7657
     Email: erin.mckinley@coastcapitalsavings.com
     Website: http://www.coastcapitalsavings.com