Feeling the Bank Of Canada rate cut

By now, I'm sure you've heard that the Bank Of Canada cut its rate by 0.25% this week, and the banks have followed suit with a 25-point cut of their own. Our mortgage and student loans are all fixed-rate loans (our mortgage is up for renewal next year), but my line of credit and savings accounts are subject to the whims of the banks and changes in prime rate.

Here's the impact of this latest cut:

• My line of credit interest rate dropped from 6.25% to 6%, which will save me money every month.


• My student loan, currently at 5% interest, remains below the 5.25% that I would be able to get from my bank today; Ms. Loonie's loan is currently at 5.75%, so it may be worth looking into renegotiating this loan.


• ING Direct, Canadian Tire Financial Services and ICICI Bank have all held steady through this most recent rate cut, with savings account rates of 3.75%, 4% and 4.25%, respectively.


• HSBC Direct have dropped their rate again from 4% to 3.75%. This puts them on par with ING in terms of rate, so their abundant access methods are now the only reason for keeping my Emergency Fund with them. This is interesting, because they have gone from having one of the highest rates to having the lowest rate out of the primary players in Canada.

Overall, the rate cut is beneficial to me, especially given that my debts are a lot larger than my savings. This really just gives my debt reduction a boost, as more of my payments will go toward principal. I'll be interested to see if the other savings accounts lower their rates to follow HSBC.