Wealthsimple Cash

[Kipper is King]

Wealthsimple Cash launched yesterday (https://www.wealthsimple.com/en-ca/product/cash), and it seems really interesting. It's described as a hybrid spending/savings account with 2.4% interest. You receive a card that can be used to spend instantly from your account like a debit card, and they have no fees for ATM withdrawals, including reimbursing the fees from ATM withdrawals by other institutions.

I'm really intrigued. I have concerns about how well they handle fraud, as for example, Mastercard was good at reimbursing me when my card was stolen once.
Wealthsimple Cash accounts are also protected by the Canadian Investor Protection Fund as opposed to the Canada Deposit Insurance Corp. like most major bank accounts. I'm unsure of the implications of that, but I think any risk would be small as Wealthsimple is apparently partnered with two major banks.

I think I'll use my Wealthsimple Cash account for short term goals like vacations, etc. Earning a bit of interest toward that would be good, I'll still keep my no-fee chequing account at another institution for now.

Anyone else open an account? It sounds really unique compared to other spending/saving options.

[afc wimbledon]

It doesn't make sense from your description, a 'bank' that has only been around a couple of years offers a bank account that offers long term savings account interest rates without requiring you to keep your money in and charges no fees for one of the banking industries biggest earner.

Is Bernie Maddoff on the board of advisors?

[Kipper is King]

Originally Posted by afc wimbledon

It doesn't make sense from your description, a 'bank' that has only been around a couple of years offers a bank account that offers long term savings account interest rates without requiring you to keep your money in and charges no fees for one of the banking industries biggest earner.

Is Bernie Maddoff on the board of advisors?

I'm still trying to wrap my head around it. Apparently, Wealthsimple charges a fee to vendors when you use the card, and that's largely how they make money from it.

[afc wimbledon]

my question is more how do they offer 2.4%? I need to leave $1000 in my bank for 2 years to get that, because they have to invest it, probably in some schmoes mortgage where he pays 3.4% and they keep the difference.

On paper this is a bank with no way to earn money

[PeteMoss]

Originally Posted by afc wimbledon

my question is more how do they offer 2.4%? I need to leave $1000 in my bank for 2 years to get that, because they have to invest it, probably in some schmoes mortgage where he pays 3.4% and they keep the difference.

On paper this is a bank with no way to earn money

Suspect it's a loss leader to get people to use their investment services. It is less protected than a normal bank though if you are worried about them going under.

[afc wimbledon]

Originally Posted by PeteMoss

Suspect it's a loss leader to get people to use their investment services. It is less protected than a normal bank though if you are worried about them going under.

I'm worried about their CEO dying in India unexpectedly and he being the only guy with the key to the safe

[Slava]

Originally Posted by afc wimbledon

I'm worried about their CEO dying in India unexpectedly and he being the only guy with the key to the safe

Wealthsimple is backed by Power Corp. It's the same company that is Investors Group, Great West Life, Canada Life, etc.

With the CIPF and CDIC you have a different kind of protection, but this isn't some fly-by-night crypto bank or anything like that. It's surely designed to get people to use this bank account on an IIROC platform and hope/push them to transition to investing through them as well.

[Jason14h]

Originally Posted by afc wimbledon

my question is more how do they offer 2.4%? I need to leave $1000 in my bank for 2 years to get that, because they have to invest it, probably in some schmoes mortgage where he pays 3.4% and they keep the difference.

On paper this is a bank with no way to earn money

They earn interchange on every transaction and will use to cross sell their investment products.

[Regorium]

Originally Posted by afc wimbledon

my question is more how do they offer 2.4%? I need to leave $1000 in my bank for 2 years to get that, because they have to invest it, probably in some schmoes mortgage where he pays 3.4% and they keep the difference.

On paper this is a bank with no way to earn money

eqbank has been offering 2.3% for years.

Some smaller banks lately have been offering 2.8% or even 3.3% in a chequing account.

[AnonymousStranger]

You pay by getting marketing phone calls every few days trying to sell you their other products. So in a sense, the "free" savings account is offset by a payment of annoyance.

[puckedoff]

"Cash is trash". Should be throwing that in BYND stock and just racking up your HELOC when you need funds instead.

Disclaimer - NOT a financial adviser (obviously)

[Kipper is King]

Originally Posted by AnonymousStranger

You pay by getting marketing phone calls every few days trying to sell you their other products. So in a sense, the "free" savings account is offset by a payment of annoyance.

I've never received a phone call from Wealthsimple. I've had a TFSA with them for a while.

[Hemi-Cuda]

Originally Posted by AnonymousStranger

You pay by getting marketing phone calls every few days trying to sell you their other products. So in a sense, the "free" savings account is offset by a payment of annoyance.

I've had money invested with Wealthsimple for a few months now, including this specific savings accounts, and I've had zero calls

[AnonymousStranger]

Then CIBC needs to take a page out of wealthsimple's book and STOP WITH THE GOD DAMNED PHONE CALLS. NO I DON'T WANT TO BUY YOUR ACTIVELY MANAGED GARBAGE THAT CHARGES A 1.5 to 3% FEE!

[flames_fan_down_under]

Originally Posted by Hemi-Cuda

I've had money invested with Wealthsimple for a few months now, including this specific savings accounts, and I've had zero calls

Ya I have been with them for 18 months and have had zero calls as well and really like their product.

[Torture]

Have my investments with Wealthsimple and have been very happy with them. Have never gotten any phone calls from them. (Weird take)

I'll probably watch on the sidelines for now because I tend to use my credit card for day to day transactions rather than my debit card, but it's nice to see some innovation and shakeup with chequing accounts. Would be nice to get a interest rate on the funds going in and out of your chequing account though.

I'm a little bit confused about how much of a big deal the the CDIC vs CIPF thing is as well.
Either way, nice to see some innovation!

[1qqaaz]

I have had money in WealthSimple basically since they started operating, and I've never received a call.

Lots of emails though.

[Regular_John]

There's a bit of a land-rush developing right now for these "digital only" banks/financial institutes, hence the questionable "loss leader" interest rates being offered as they try to secure market share.

ATB has been prepping Brightside for a couple years now, I know of at least one other similar start up in the city focused on this sector, and some other group is also pushing at 2.4% with billboards around the city.

For the most part they'll all building "digital first" experiences, that look to remove much of the friction from traditional banking. No you can't walk into a branch, and getting a person on the phone may be a challenge, but much like budget mobile carriers you'll be able to carry out most common task through apps/websites.

Their target market would appear to be young professionals working in the digital gig economy, I mean if your "employer" is already an app, why not have your financial provider be one to?

Having said that while their cash offering holds little appeal for me, I do have an RRSP with WealthSimple and no real concerns for the security of my holdings with them. I assume cash would be no different.

[TorqueDog]

I'm going to assume off the bat that you can't just have cheques and payroll deposited into this thing. Too bad, they'd get a ton of business from that alone.

[Torture]

Originally Posted by TorqueDog

I'm going to assume off the bat that you can't just have cheques and payroll deposited into this thing. Too bad, they'd get a ton of business from that alone.

You know what they say about assumptions, right?

Direct deposit. Now you can start earning interest the day you get paid — you can simply have your paycheque deposited right into your Wealthsimple Cash account.

https://www.wealthsimple.com/en-ca/magazine/news-cash