Current Economic Conditions Are Already Impacting Banking And Finance Activities of Canadians Aged 25 to 54

Vancouver, B.C. -- A new Ipsos Reid poll conducted on behalf of Coast Capital Savings shows that current economic conditions have had a financial impact on most Canadians aged 25 to 54 with a chequing and/or savings account. Between one-third and two-thirds of Canadians agree that they are doing each of the following banking and finance related activities specifically because of the state of economic conditions:

• Are paying more attention to service fees being charged (65% with 40% somewhat agree and 25% strongly agree).
• Are more likely to open a Tax Free Savings Account (62% with 34% somewhat agree and 28% strongly agree).
  • BC residents are more likely to agree with this statement compared to those elsewhere in the country (68% versus 61% in the rest of Canada).
• Are actively looking for ways to reduce service fees being charged (59% with 34% somewhat agree and 25% strongly agree).
• Will save more in case they and/or another wage earner in household loses job (56% with 35% somewhat agree and 21% strongly agree).
  • BC residents are more likely to agree with this statement compared to those elsewhere in the country (63% versus 55% elsewhere in Canada).
• Have changed or plan to change how financial transactions are conducted to reduce service fees (52% with 34% somewhat agree and 18% strongly agree).
• Are planning to put more money into a Tax Free Savings Account (51% with 32% somewhat agree and 19% strongly agree).
• Have invested or plan to invest more in a high interest savings account instead of other investments that tend to be more heavily impacted by market conditions (49% with 33% somewhat agree and 16% strongly agree).
• Have reduced or plan to reduce number of financial transactions conducted to reduce service fees (43% with 28% somewhat agree and 15% strongly agree).
• Will save more in order to make up for loses already experienced by investments that are due to current economic conditions (40% with 27% somewhat agree and 13% strongly agree).
  • BC residents are more likely to agree with this statement compared to those elsewhere in the country (46% versus 39% in the rest of Canada).
• Have invested or plan to invest more in a regular savings account instead of other investments that tend to be more heavily impacted by market conditions (35% with 25% somewhat agree and 10% strongly agree).
• Have invested or plan to invest more in term deposits or GICs instead of other investments that tend to be more heavily impacted by market conditions (32% with 22% somewhat agree and 10% strongly agree).

Despite this high level of willingness to save and invest money, the amount saved for a rainy day by the average Canadian tends to be fairly small. Half of all those who save for emergencies or `just in case' situations have less than $5,000 in savings (53%). One-in-five have savings valued between $5,000 and $9,999 (19%) and one-in-ten have savings valued between $10,000 and $24,999 (10%). Only a few have savings of $25,000 and upwards (6%). The rest are either unsure or uncomfortable with answering this question (12%).

The survey also asked about chequing accounts. In an average month, Canadians pay $14.30 in total for service fees on their main personal chequing account. Of those who have a chequing account, one-third (32%) pay less than $10 in an average month. A similar percentage (33%) pay between $10 and $20 while a further 12% pay fees of $21 or more. One-quarter is unsure of their average monthly fees (23%).

In addition, survey results reveal that half of savings account owners are dissatisfied with the interest rate earned by their primary account (54% with 27% somewhat dissatisfied and 27% very dissatisfied). On the other hand, four-in-ten are satisfied with their current interest rate (41% with 32% somewhat satisfied and 9% very satisfied). A small portion are unsure (5%).

A higher interest rate would likely encourage Canadians to save more money. Three-quarters of Canadians agree with the statement "If savings accounts offered higher interest rates, it would encourage me to save more money than I do right now" (75% with 44% somewhat agree and 31% strongly agree). Still, a sizable minority disagree (19% with 11% somewhat disagree and 8% strongly disagree) and the remaining 6% are unsure of the impact of a higher interest rate. As for the various financial products available to motivate the public to save, many Canadians express interest in opening a no-fee high interest savings account. Described as "a high interest savings account that has no service fees, regardless of the balance you keep in that account and without any other conditions," three-quarters of Canadians indicate they would open this account if given the opportunity (75% with 26% probably would open and 49% definitely would open). Fewer would not open the account (7% with 2% probably would not open and 5% definitely would not open) with the remaining 18% are either indifferent (14%) or unsure (4%).

The survey also shows that many Canadians are aware of the newly available Tax-Free Savings Account (TFSA). After reading a brief description of this new financial product ("As of January 1, 2009, a Tax-Free Savings Account program will be available in Canada. This is a government-registered option that allows for tax-free interest earnings. Contributions to the account are not tax deductable, but interest earnings or investment returns within the plan are tax-free, and withdrawals from the account are not taxable. These investments can be made for any purpose"), half of Canadians tell us they were aware of this type of account prior to reading the description (54%) while 42% were unaware, with the remaining 4% unsure. There is greater awareness of the TFSA among those living in BC (66% versus 52% for rest of Canada).

After respondents were educated about this account, they were asked about their likelihood to open a government-registered TFSA. Half indicate they will open one (48% with 26% probably will open and 22% definitely will open). One-third are undecided (33% might or might not open) while one-in-ten indicate they will not be opening this account (13% with 11% probably will not open and 2% definitely will not open). The remaining 6% are unsure.

Of those who definitely, probably and might or might not open a Tax Free Savings Account, a high interest savings account is the most popular financial product for their TFSA. The following lists, in order, Canadians' likelihood to use various financial products for their Tax Free Savings Account:

• High interest savings account (48% with 30% probably will use and 18% definitely will use).
  • BC residents are more likely to use a high interest savings account (55% versus 47% for rest of Canada).
• Regular savings account (42% with 28% probably will use and 14% definitely will use).
• Mutual funds (20% with 14% probably will use and 6% definitely will use).
• Term deposits (16% with 11% probably will use and 5% definitely will use).
• Government and corporate bonds (16% with 10% probably will use and 6% definitely will use).
  • BC residents are less likely to use government and corporate bonds (11% versus 17% for rest of Canada).
• Publicly-traded securities (11% with 6% probably will use and 5% definitely will use).
• Other (9% with 6% probably will use and 3% definitely will use).
  • BC residents are less likely to use other financial products (5% versus 10% for rest of Canada).

These are the findings of an Ipsos Reid telephone poll conducted on behalf of Coast Capital Savings. The poll was fielded between December 9 and 15, 2008 with a randomly selected sample of 906 Canadians between the ages of 25 and 54 years old, with a chequing and/or savings account (effective national base size of 516 due to weighting). With a sample of this size, the results are considered accurate to within 177 4.3 percentage points, 19 times out of 20, of what they would have been had the entire adult population of Canada been polled. The margin of error will be larger within regions and for other sub-groupings of the survey population. These data were statistically weighted to ensure the sample's regional and age/sex composition reflects that of the actual Canadian population according to the 2006 Census data.