From a 3 per cent industry record high, EQ Bank lowered its savings rate for its newest savings account program to 2.25 per cent yesterday (April 18).
The high-interest savings account, which offered a rate unmatched by both traditional and online banks, led to an influx of around 17,000 new clients as of the end of March, officials said.
“It has been very strong uptake… I’m a bit surprised by Canadians’ willingness to embrace a bank they had not heard of up until now!” Equitable
Bank chief executive Andrew Moor wrote in an email, as quoted by the Financial Post
The rate adjustment came in the wake of the bank’s imposition of a limit on the number of new account openings weekly as EQ had some difficulty addressing the enormous demand, bank officials said.
“I’m always a bit nervous to make these kinds of rate changes, but our market survey shows this continues to be a great rate for our customers – and certainly the early acceptance is showing that people are embracing the approach of a pure play digital bank,” Moor stated.
EQ could afford to offer its above-average rates and still generate a margin as its operational costs (being a pure online venture) are far cheaper than traditional banks, according to industry observers. Brick-and-mortar banks usually offer less than 1 per cent interest on their savings accounts.