It had been the common trend for people to save their money into Registered Retirement Savings Plan (RRSPs), but with low interest rates, contention from increasing online banks and credit unions, RRSP is going through a slower growth.
In recent years, the rate at which people save in their RRSP has subdued as other investment options are moving in. During this time of the year, it was expected that bigger institutions such as banks will urge customers to their RRSPs which will help them get through all their taxes after receiving a receipt in the mail. This was a very easy process.
However, customers have now being exposed to tax-free savings accounts to Canadian and international stocks, bonds and real estate in addition to other companies offering cheaper financial services. This puts RRSPs in the sidelines for the time being.
Some banks have also ceased to urge customers in making retirement savings plans as online banks are providing cheaper and more convenient services. But even these online banks are going through tough time as new banks like Zag and EQ Bank are coming up with even cheaper rates.
Janine White, vice president of ratesupermarket.ca, an online website that provides consumers with the various interest rates from mortgages and credit cards to investments states it had been quite difficult to tell apart RRSPs from the rest.
Most of these credit unions provide almost the same rates hence customers can not really distinguish between service providers.
According to Noel D’Souza, a financial planner at Money Coaches Canada, “what is considered high interest rate is quite absurd”.
This situation is turning customers from RRSPs to real estate as they consider it a better way to invest. Housing is seen by many as a good way to have faster financial growth.
White went on to add banks are now focusing on their existing clients rather than trying to bring in new customers as it is much more expensive to get a new customer