RBC closes Ally Bank’s high interest savings accounts

February 21 2013 by Ellen Roseman

I’m hearing from disgruntled clients of Ally Financial, which was bought by RBC last October. After the deal closed this month, RBC delivered bad news to Ally customers.

They won’t earn 1.8 per cent on a non-registered savings account any more. They’ll earn only 1.2 per cent, unless they want to buy a one-year GIC.

Here’s the story from Matt Gierasimczuk, an RBC spokesman.

As part of our purchase of Ally Canada, we are integrating their Canadian operations into our existing Personal and Commercial Banking business.

All Ally non-registered high interest savings accounts will be closed on April 30, 2013, but we are offering these existing Ally clients an exclusive limited time rate of 1.8% on a one year non-redeemable GIC and 1.5% on a one-year redeemable GIC.

These are competitive interest rates in the market and provide access to RBC’s broad range of products and services.

All Tax Free High Interest Savings Accounts (TFSA HISA) and Tax Free Guaranteed Investment Certificate (TFSA GIC) accounts will continue to operate under their respective governing terms and conditions.

I’m posting comments from people who are angry with RBC and plan to take their money elsewhere. They worry that ING Direct, too, will lose its distinctiveness as part of Scotiabank.

A week ago, I did a column about cleaning up errors on your credit report. This was inspired by a U.S. Federal Trade Commission survey, featured on 60 Minutes, about the frequency of credit report mistakes.

Readers sent many questions about their credit reports, so I enlisted Ross Taylor, a credit counselling specialist, to help alleviate their concerns. You can find some of these conversations below.

13 comments

  1. GP

    Feb 21 2013

    I’m fuming today.

    I’ve been an enthusiastic Ally customer for the last couple of years. When RBC bought Ally, I thought that couldn’t be good.

    I was surprised when I found out that Ally’s interest rate was reduced from 1.8 to 1.2%. All high interest savings accounts will be closed April 30th and the money transferred back to the account holder’s bank.

    I can understand why RBC and the rest of the Big 5 would be unhappy with Ally paying a much higher interest rate than they do, but RBC fixed that situation by slashing the rate.

    I just can’t understand why RBC would unilaterally close customers’ accounts and transfer out their funds without any direction from their customers.

  2. BE

    Feb 21 2013

    Ellen, like your other readers I am upset that RBC is closing the HISAs at Ally.

    The government allowed RBC to buy Ally and Scotiabank to buy ING, virtually eliminating high interest savings online banking.

    It appears the Competition Bureau’s job is to eliminate competition in the banking sector.

    Fortunately, based on a recommendation you made in a previous column, I opened an account with online credit union Outlook Financial recently and will be moving the money I have in both Ally and ING to Outlook for better rates.

    As I have TFSA GICs at Ally, I am concerned that RBC will charge me $50 per account to transfer these out of RBC at term.

    (I am assuming that in order to keep these investments tax-free, they must vest into a TFSA savings account before they can be transferred out of RBC.)

    Ally did not have this fee and ING does not, but RBC does.

    And for the record, why would I lock money into a one-year GIC at RBC for 1.8 per cent?

    I can get 1.95% in a no-strings attached HISA at Outlook or a one-year cashable GIC at 2.05%?

    Keep up the good fight!

  3. CL

    Feb 21 2013

    Quite frankly, I was very annoyed when I received this news.

    The Bank of Nova Scotia has taken over ING and now the RBC has acquired ALLY Canada.

    The few bastions where one could house their extra cash flow at a decent interest rate are soon disappearing.

    The BIG BANKS like to rule the roost.

  4. DA

    Feb 21 2013

    There are still online high interest savings accounts available that pay up to 2% interest.

    The Monday Toronto Star has a table of what various institutions are paying. I will be moving my deposits from Ally/RBC to one of these other options.

    RBC has been quoted as saying that they bought Ally for the car dealership financing piece and are not interested in the personal deposit part anyway.

    I would prefer to deal with an organization that at least acts as if it wants my business.

  5. Scott

    Feb 21 2013

    How can I get a trade item off my credit score? It was a car that was returned. I made a settlement and made the payment.

    Now it is on my credit report and will remain there for another few years.

    Since I made the settlement, is there any way I can ask Trans Union and Equifax to delete it?

    ———————————————————-

    Ross Taylor’s response:

    Whatever it was that he did, it will remain there for six years since the settlement date.

    His concern should be that its status is correctly shown as settled, or paid or equivalent words – and not bad debt or writeoff or the like.

    It might appear in two different places in his report – first in the list of trade lines near the beginning AND near the end under other items such as Collections.

    He should check to see they are both reported with consistency – if it does not show in the second place at all, let sleeping dogs lie.

    Finally, it’s quite probable that prior to settling the car, he incurred late payments, perhaps 30, 60, 90 or even 120 days late. Those late payments will also stay on his report.

    Difference being their six-year drop off schedule is tied to the month and year of each actual late payment, as opposed to the date of settlement, which was presumably later.

    Depending on the specifics of his case (how many late payments, how late they were and verbiage about the settlement), the black mark on his report may have less of an impact than he fears.

    The more time and distance from the negative event, the less dramatic the effect on score.

    And provided the item is listed as settled and not written off, it should not preclude him from qualifying for mortgages, car financing and so on

  6. Ian

    Feb 21 2013

    I read your column on erroneous information driving down credit scores. I can do one better: NO negative or erroneous information driving down my score.

    I purchased a credit report from Equifax a year ago and my score, as I recall, was mid to high 700s. I purchased another report a couple of weeks ago and my score had dropped to high 600s.

    There has been ZERO material change to my financial situation in the past 11 months.

    I’ve had another year of paying my bills on time, paying down my credit card to zero every month and paying my mortgage on time every month (my finances are very simple).

    There are no blemishes on my financial record.

    I logged into Equifax to get my old report to do a comparison, but it wasn’t there. When I called Equifax and got its offshore customer service, I was told:

    A credit report is only available to me for 30 days, even though it doesn’t say that ANYWHERE on its web site or during the purchase process.

    They don’t know why my score went down in spite of a clean record for the last year.

    There is no way to find out why my score went down because it is an algorithm that is too complex to understand.

    If I want more information, I can talk to a bank or some other financial agency about how to raise my credit score.

    I tried going through Equifax’s online dispute process but the link didn’t work.

    I emailed Equifax’s chief privacy officer, as I was instructed to do, but 9 days later this person has not yet felt the need to respond to me.

    I can understand if I do something wrong financially, it is going to affect my credit rating.

    But to have a perfect financial record for a year and have it drop significantly, and then to have the rating agency wash its hands of this illogical and unreasonable drop, is unconscionable.

    The score Equifax generates about my creditworthiness can make or break me in terms of buying or renting real estate, getting loans and a whole host of other things that are important in life.

    There must be more accountability and transparency around what it does and why it does it, right?

    ————————————————————

    Ross Taylor’s response:

    Ian sent you his credit report and after reading it, I think the answer most likely rests with his Telus account.

    It seems completely out of character, but for some reason Telus had to write off an amount of $172 owing by Ian, perhaps as late as October 2011.

    It is quite possible this writeoff (R9) had not yet hit his report when he last checked in and had a score in the high 700s. If he sends THAT report along, I can confirm this diagnosis.

    If the Telus writeoff was in error, he can fight back to get it removed from his report.

    If it was an honest misunderstanding, again he can try to get the report softened. Sometimes people refuse to pay a disputed amount on principal and the result is that their credit history takes a whack.

    If it is clear he owed this money, my advice would be to settle it with Telus and secure a pledge they upgrade the account status from bad debt/written off to paid in full.

    He should check his report and hound them until it’s done. The late payments would probably remain, but it would be less of a tarnish to his credit history.

    In closing, let me give you and your readers one good piece of advice.

    If ever you have a dispute with a reputable retailer, or a disputed charge with your credit card issuer, don’t take the high road.

    First, settle the account. Advise them you are doing so not as an admission you owe the money, but rather to preserve your credit rating. You expect a proper investigation and a full refund upon completion of their review.

    If you are in the right, you have nothing to fear.

    Refusing to pay can be very costly.

  7. Paul M

    Feb 21 2013

    I’ve been a loyal Amex customer since 2002. Last year, I decided to upgrade my no fee Air Miles credit card, but had the first year at no charge.

    Now the card is coming up for renewal and I have decided not to continue with it. My primary credit card currently serves my needs and I don’t need two fee-based cards.

    I called to switch my card back to the no fee version and I am getting the runaround from Amex.

    Apparently, the only thing they can do is to CLOSE my current card and then I can apply for the no-fee card (and hope to get approved).

    I will also have the credit bureau inquiry on record for three years.

    I think it has something to do with my credit limit ($23,600). I’ve had this limit for at least 10 years, but don’t really use it. I am a firm believer in having multiple credit card types and issuers in my pocket, just in case.

    I’ve always had a perfect credit history. Now it looks like they do not even want my business.

    ———————————————————-

    Ross Taylor’s response:

    Yes, many card issuers take this same approach as Amex in such situations, as illogical as it may seem.

    Did they do a hard inquiry when they upgraded him last year? If not, he has an excellent case to argue they should not do so now.

    If he checks his own credit report (as explained on your website http://blog.ellenroseman.com/?p=1373), he can find this out.

    Does his current bureau report reflects two Amex cards – the original (showing as closed at consumer request last year) and the newer one?

    If yes, and he goes through with this change, he will end up with three Amex trade lines on his credit report – two closed and one active. A bit messy, but not really a big deal.

    It’s a tricky issue. I have had more success than not arguing for no inquiry in such situations, but there seems to be no industry standard.

    If his inquiries are limited to one or two per year typically, as irksome as it is, the new inquiry will not be that big a deal – just a minor downwards blip in his score.

    It’s a point of pride for me, my family and my clients to have as few inquiries as possible. I teach them all to learn to fight for this.

    Example – buying a car from the dealership can result in multiple inquiries as your deal is shopped around, unless you are very clear in writing you will only allow one inquiry.

    Example – when my kids rent an apartment (or when I signed my office lease), I tell the landords they will be getting a fresh copy of the self-accessed personal report and they MUST work with that. Works almost all the time.

    Only fail I had on that front was a few years ago, a young client had been an intern at Amex in her last year at university and also had an amazing credit score – 862 or so.

    She had followed my advice perfectly and at age 22 she had two large lines of credit, an Aerogold Visa ($18,000 limit) and her very first rinky dink $1,000 TD Visa.

    All of this we accomplished with zero credit inquiries – hence the very high score, accompanied by a perfect repayment history and low balances.

    Anyway, Amex offered her full time employment upon graduation, which she accepted. We could not dissuade them from doing a hard inquiry to assess her credit worthiness.

    Her score dropped down 90 points!!! as a result of that one inquiry.

    Of course, this is an extreme example, but the higher your score, the more likely it can take a big hit as a result of an innocuous item.

    That’s why if you are 760 or higher be happy, be proud and don’t sweat the small stuff.

    Three years later, the client’s credit score is comfortably back over 800, but not to where it once was.

  8. Stephen

    Feb 23 2013

    Once again, just as I go to write a note to Ellen, it turns out you’re ahead of the curve.

    I too am one of the many frustrated soon-to-be-former Ally acct holders.

    I’m not sure what was the worst part of this fiasco: the rather sudden “We own your acct now and will close it in April..” notification; the lack of response – now three days later – to my online inquiries about the change (last I checked, the policy was still 24 hour turnaround time); the news release that conspicuously only goes into detail about the auto insurance business and neglects to mention what it means for personal banking at Ally; or the patronizing FAQ noting that RBC and Ally were still committed to me reaching my financial goals…[except the ones that involved earning decent interest].

    Thanks big banks!

  9. James

    Feb 27 2013

    Of course, the Big Five in Canada don’t want anyone horning in on their racket.

    Competition is a four-letter word to these fools. They pretend to be all about free enterprise, yet hide behind the protection of the Bank Act.

    John D. Rockefeller once said that competition is a sin. These clowns who run the banks heartily agree!

  10. jipo

    Feb 28 2013

    Well, what do you expect? That’s the price to be paid for monopolizing (my apology, among the business establishment, it’s consolidation) of the market, be it finances, manufacturing or resource development.

    I was a Canada Trust customer. Now I’m TD bank’s customer.

    Albeit officially, TD added the name Canada Trust, there aren’t even slightest remnants from what used to be Canada Trust.

  11. Deruo

    Mar 31 2013

    Count me in as another REALLY ticked off Ally customer. Not so much as to what happened (though it grates) but the way they handled it.

    I don’t deal with RBC. Don’t want to be an RBC customer and certainly don’t want to be earning even less with them than I could with someone else. A GIC? pfft.

    As for ING, in my opinion, they turned into the type of bank they used to be opposed to, many years ago. They have among the lowest interest rates of other online banks (and have for years) and their customer service blows. Twice now I’ve had issues where my personal information ended up linked with un-authorized entities, or had them access my regular bank account after a year of inactivity – only to be told that “we’re allowed to do that as per page 7 of the contract” or that I must have given someone permission to link to have access to my ING information.

    My accounts there have been empty for a long time. One of these days I’ll see if I can find out whats involved in closing them.

  12. Deruo

    Mar 31 2013

    I meant to add that Hubert has been playing what I think is dirty pool through all of this. Typical bait and switch (which ties in with your “what irks you as a consumer?” question).

    Ally decides to sell out and RBC screws its newly attained customer base by lowering their interest rates. Hubert steps up to the plate and increases their interest rates from 1.8% to 2%. They don’t state that they are trying to attract Ally customers who don’t want to be earning much less with RBC, but it’s clear thats what they’re doing.

    Then, low and behold just over a month later, Hubert announces that they’ll be lowering their rates from 2% to 1.8% – “due to continued changes and fluctuations within the market place”. Meaning they have hundreds or thousands of more customers now and have you where they want you.

  13. Deruo

    Mar 31 2013

    on edit: Last sentence should read “thousands of more depositors” – because it’s clear they don’t care about anything but having your money deposited with them.

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