Canadian Tire is now the newest player in the “all-in-one” mortgage market.  Their recently launched One-and-Only product combines your mortgage, chequing and savings, loans, and credit cards into one account.

Here’s how it works:

• Your incoming funds (like your paycheque) are immediately deposited into a variable-interest-rate “combined” account. 
• Interest on the “variable” account is calculated daily.  CT says this can reduce the interest you pay by lowering your total debt level all at once–even if temporarily.
• Interest on all debt in the “variable” account is at prime rate, currently 6.25%.
• You can lock in up to 10 amounts over $10,000 (like a mortgage, car loan, etc.) at a fixed rate–currently 5.84%.  This rate is non-negotiable.
• Credit is automatically readvanceable.  Therefore, once you pay down your debt, you can run it up again. This is handy for the Smith Manoeuvre.
• The One-and-Only is currently only available in Ontario, BC, and Alberta. 
• CT charges no monthly fees
• There are no appraisal or legal fees if you use CT’s partner First Canadian Title to close (instead of your lawyer).

On the downside, the interest rates could definitely be better.  While CT charges 6.25% on the combined account, most people can get 5.35% or less with a traditional variable mortgage.  As Canadian Capitalist notes, “your ‘savings’ from a combined account does not make up for the cost of not opting for a traditional mortgage.”

Nonetheless, CT, which acquired its banking license in 2003, has an eye for growth.  All-in-one products are held by 1/3 of all mortgagors in Britain and Australia and CT think’s it can popularize them here as well.  Last quarter, it spent $18 million marketing its new banking products. 

As long as the combined interest rate is at prime, however, the One-and-Only (and similar products like Manulife’s “One“) might not be adopted as fast in Canada.  There are simply too many alternatives available at rates less than prime.

In any case, if you’d like more information, contact Canadian Tire directly here.  Mortgage planners do not deal in this product.