Battle of the Banks: BMO Bank of Montreal vs. CIBC

Craig Sebastiano
by Craig Sebastiano April 18, 2017 / No Comments

Canada’s Big Five banks offer mortgages, credit cards, mutual funds, GICs, and much more. Trying to choose the best bank is difficult when the products and services they offer are virtually the same.

But when you narrow it down to GICs and high-interest savings accounts, there are some differences, especially between BMO Bank of Montreal and CIBC.

GICs

Both banks require a minimum investment of $1,000 to invest in GICs with a term of one year or more. As of April 17, these are the rates they offer on non-redeemable GICs for terms of between one and five years:

Term BMO CIBC
1 year 0.85% 0.55%
2 years 1.05% 0.65%
3 years 1.15% 0.85%
4 years 1.25% 1.05%
5 years 1.5% 1.25%

BMO offers much better rates than CIBC. However, they’re not the best GIC rates in Canada as a number of other financial institutions offer higher rates.

Market-linked GICs

BMO and CIBC also offer a number of market-linked GICs, which can provide you with the possibility of higher investment returns without the possibility of losing any money. However, there are a couple downsides with market-linked GICs: Your returns are capped at a certain amount even if the index or stocks the GIC tracks do really well. And if the market drops, your principal is guaranteed and you may receive a nominal return, which will be lower than what you would have received had you chosen a regular GIC.

Read: Should You Put a Market-Linked GIC in Your RRSP?

CIBC offers five of these types of GICs with a minimum investment of just $500. There are only three- and five-year terms available. On the other hand, BMO offers eight market-linked GICs with terms of between 1.5 and five years. However, the minimum investment at BMO is $1,000.

High-interest savings accounts

The two banks also have a number of different savings accounts. As of April 17, the BMO Savings Builder account and the CIBC eAdvantage Savings Account offer the best rates. But each account comes with a catch.

The basic interest rate on the BMO Savings Builder account is 0.2%. You can get an additional 1% (for a total of 1.2%) if you deposit $200 into the account every month. The CIBC eAdvantage Savings Account offers a rate of 0.5% but only if your balance is $5,000 or more.

The banks also offer other options. The BMO Smart Saver account has a rate of 0.4% no matter what your balance is and there’s no minimum monthly savings requirement. The CIBC Bonus Savings Account has a rate of 0.1% but your balance has to be at least $3,000.

The winner

This was an easy one to decide. BMO Bank of Montreal offers much better GIC rates, a wider selection of market-linked GICs, and one of its high-interest savings accounts actually pays a high rate of interest. Scotiabank takes on last week’s winner—RBC Royal Bank—in the next battle of the banks.

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Flickr: Chris Tyler