Generally, savings accounts offer very low interest rates. So, if you want to earn on your deposits (rather than simply using your account as a temporary “holding tank” or directing to longer-term saving and investing vehicles), a
savings account with a high interest is a no-brainer. However, when shopping for an account, there’s more to consider than just the interest. You can make an informed decision by using the finder tool to compare the fees and features of several different options available. But do scroll down to read our seven editors’ picks for the best high-interest savings accounts (HISA) in Canada. These are rates offered by Ratehub partners. You can find
information about additional product options below. You can compare high-interest rates in the table above or input your estimated account balance to compare the growth between HISAs, tax-free savings accounts, registered retirement savings plans and youth savings
accounts. This HISA may sneak under the radar, but once you see the rate you will be impressed. This online-only financial institution hits in with a strong interest rate on its HISA offering, along with no minimum balance requirements and free transfers. Saven is a division of FirstOntario Credit Union, a financial institution with roots back to 1939, and which currently has more than 126,000 member clients. Note, you will need to invest at least $25 to become a
member of FirstOntario. Motive
Financial, the online banking division of Canadian Western Bank, offers the highest regular interest rate on this list. As such, your eligible deposits are held at Canadian Western Bank, and protected by the Canada Deposit Insurance Corporation (CDIC; see details below). There isn’t a monthly fee, and account holders get two free monthly withdrawals. But additional transactions will cost you. EQ Bank is owned by Equitable Bank, a Canadian institution in business since 1970. Another in the burgeoning online space, EQ Bank offers great returns on their Savings Plus account. There is no fee for the account and no minimum balance.
All services, including Interac e-Transfer, are free. Maxa is a division of Westoba Credit Union, located in Manitoba. But its accounts are open to all Canadians, and it offers an impressive
interest rate on savings. There’s no fee, but account holders can expect to pay service charges for many transactions. The Neo Money Account is a no-fee hybrid account that lets you spend and save—and earn cash back rewards—all in one place. Clients earn 1.80% in interest on every $1 held in the account and can access their money from an app on their phone, making bill payments, purchases, Interac e-Transfer transactions and more simple and seamless.
Best regular interest rate in a hybrid account: Wealthsimple CashWealthsimple Cash was launched in January 2020 by the Canadian online financial services provider Wealthsimple. Joining the fintech’s original robo-advisor offering and its more recently added discount brokerage Wealthsimple Trade, Wealthsimple Cash is a hybrid chequing and savings account. Unlike many of the big banks, this institution offers a high regular interest rate. Plus, as with a good chequing account, this one gives you unlimited transactions with zero fees. From the account, you can make no-fee bill payments and Interac e-Transfer transactions. If you have a Wealthsimple investment account, such as a TFSA or RRSP, you can contribute to them easily using funds from your savings account.
Best promotional rates:Meridian Credit UnionYou can earn a promotional rate of 3% interest for eight months when you open a high-interest savings account between June 9, 2022 and Aug. 31, 2022. Then, it goes back to its regular (pretty decent) rate of 1.25%. The interest in this account is calculated daily and paid out monthly.
Tangerine Savings AccountThis account is known for its flexibility: it doesn’t require a minimum balance, and there are no fees or service charges. The entire Tangerine banking experience is simple and friendly, and its savings offerings are the same. Account holders can set up an Automated Savings Program online to help plan and meet savings goals.
Simplii FinancialYou can earn a promotional rate of 3% interest until Oct. 31, 2022, then it goes back to its regular rate of 0.10%. Plus, no matter how much money you hold in this account, you won’t pay any fees.
Best tiered interest savings account: Scotiabank MomentumPlus Savings AccountWith tiered earnings on interest starting, this product acts like a GIC, giving account holders the opportunity to save more just by leaving their money alone—but with the freedom to make withdrawals if you need to. Provided no debit transactions have taken place during that time; deposits stashed for longer can earn extra interest based on the following calculations: 1.35% +
For the first 5 months after the account was opened, earn Welcome Bonus Interest of 1.70% on eligible deposits. Plus, if you also have an Ultimate Package account with Scotiabank, your earn rate will be 0.10% for a limited time. The account is no-fee and self-service transfers are unlimited.
Also Consider:LBC Digital High-Interest Savings AccountSince 2003, Laurentian Bank has been available only in Quebec, but with the recent launch of a new digital offering at LBCDigital.ca, the institution is tempting clients from across the country. The headline news here is the high-interest rate and the fact the account has no minimum balance and no monthly fees, easily topping the best rates of most financial institutions on GICs, which lock in your money for a specified period of time. With the LBC Digital High-Interest Savings Account, you can access funds whenever you like, and frequently used services including electronic fund transfers, pre-authorized deposits, and transfers between LBC Digital accounts are included. This last is important as it means you can move your money to an LBCDigital.ca chequing account, from which you can make unlimited free Interac e-Transfer transactions.
Didn’t find the perfect savings account?If none of our editors’ picks sound like the right HISA for your exact financial needs, then head to our Savings Account Finder tool to compare the best HISAs in Canada from most Canadian financial institutions side by side. Compare the Best Savings Accounts in Canada > What is a high-interest savings account?A HISA is a savings account that pays a better rate of interest than standard savings accounts. HISAs are offered widely by a variety of banks, credit unions and other financial institutions. This type of account allows you to safely and securely set aside money and earn a modest return without losing the ability to access that money anytime. It’s also great for short or medium-term savings that want to be able to withdraw from than later. People will often use a HISA to save for big costs, like a wedding, the down payments on a home, a vacation or for an emergency fund. HISAs are also smart places to stash some money during times of uncertainty or during economic downturns. How does a high-interest savings account work?The greatest appeal of HISAs is that they are a safe and secure place for savings to grow money slowly. Financial institutions that are members of the Canada Deposit Insurance Corporation (CDIC) insure savings of up to $100,000, while credit unions are insured provincially and usually cover the full deposit, with no limits. Money that is deposited in a HISA account generates interest by allowing the bank to access those funds to loan to others. Interest rates offered by HISA accounts typically vary between rates as low 0.5% and to the 2% range at the upper end. There are usually no monthly service fees associated with savings accounts since they are intended to serve as places for people to park their money for stretches of time. However, it’s not unusual to see the number of withdrawals and transfers limited or to have a fee associated with transactions. (Read more for how CDIC protects you.) How are high-interest savings accounts taxed?Earnings from a HISA are taxable as income. That means any interest you earn from your savings must be declared and will be taxed at your normal rate. It is, however, possible to shelter your savings from taxes if you hold a HISA within either a TFSA or an RRSP. What is the difference between a high-interest savings account and a regular savings account?The main difference between a standard savings account and a HISA is the interest rate. As suggested by their name, HISAs pay a slightly higher rate than standard savings accounts, allowing savings to slowly grow. They may, however, be subject to withdrawal or transfer limits, transaction fees or minimum balance requirements. A standard savings account is a good place to keep surplus cash that you don’t need for everyday transactions (use a chequing or hybrid account for those needs). A HISA, on the other hand, is a better choice for holding savings that are geared toward a particular goal, such as paying for home renovations or university tuition. What is the difference between a GIC and a high-interest savings account?Both guaranteed investment certificates (GIC) and HISAs can be used to save money and earn interest and, indeed, both have their place in a savings plan. The main difference between the two is that when you make a deposit into a GIC, you have to leave it there for a certain amount of time or pay a penalty. The banks can count on having access to your money for a given period (usually GICs are available for terms of six months to ten years), so they tend to pay better interest than HISAs, which are more flexible. HISAs are a safe and secure place to save money in the shorter term. You earn a higher interest rate than in a regular savings account, but can still access the funds if you need them. Putting your money in a GIC locks it away for a specified time period, but can return a more handsome interest rate. These are suitable for medium- to long-term savings. How to choose a high-interest savings accountMost financial institutions in Canada offer HISAs, and you will want to consider which is the best fit for your needs. First and foremost, you should consider the interest rate. Conventional wisdom states that you want to look for a rate of interest that outpaces the rate of inflation or you will wind up with less buying power than you started with. In recent years the rate of inflation has been about 2%. During recessions, however, we can expect both interest rates and inflation to decrease. You also want to carefully look at the HISA terms and conditions. Some may require you to keep a minimum balance, charge fees on transactions, limit withdrawals, or enforce lock-in periods. Look to take advantage of cash signing bonuses or higher promotional rates, but also keep in mind that the long-term interest rate is more important than a short-term introductory rate. Savings account vs. chequing accountChequing and savings accounts are two of the many products offered by financial institutions. While they share some similarities, there are a few differences. Generally speaking, chequing accounts are used for everyday banking transactions while savings accounts are designed to help you reach longer-term goals by offering interest on your deposits without monthly fees. As a third option, hybrid accounts are an increasingly popular choice for those seeking the perks and features of chequing and savings accounts in a single package. Let’s take a closer look. What is a savings account?There are different types of savings accounts, each with their own specific terms. But in general, these accounts are where you put money while working towards a financial goal. Savings accounts do not typically have monthly fees, and you are paid interest on your deposits. Depending on the type of savings account you have, you may be able to use the money in it to make everyday purchases but usually you will have to transfer the money into your chequing account first. You cannot write a cheque from a savings account. What is a chequing account?As the name suggests, you can write cheques against a chequing account, and you might receive your paycheque into this account as a direct deposit. While writing a physical cheque isn’t as popular as it once was, “chequing” accounts are still around. As they are used for everyday transactions, these accounts are accessible from ATMs, at tellers, online and apps. This type of account is where you store money you intend to spend on routine transactions, including Interac e-Transfer, bill payments, withdrawals, deposits, pre-authorized payments and point-of-purchase payments, like using your debit card at a store. The best of both worlds—the hybrid accountHybrid bank accounts combine the interest of a savings account with the flexibility of a chequing account—all for low or no fees. Money in this kind of account earns interest but it can also be accessed for purchases, pay bills, buy money transfers, make Interac e-Transfer transactions and so on. For those who want to simplify how they bank, a hybrid account could be the solution. Note that not all banks offer hybrid accounts, so you may have to shop around. What kind of account is my money in?After reading the above options, you might be wondering what kind of account you have already. The easiest way to find out is to call or visit your bank. Speaking with a banking teller can clarify your current structure and give you the opportunity for help should you want to make a change or move your money. Other types of savings accountsA standard HISA is a very safe and secure way to squirrel away some money and earn a small amount of interest in the meantime. For medium or long-term savings, Canadians should consider holding their HISA in one of two types of registered plans that will help mitigate the amount of tax you will owe on your interest earnings. Tax-free savings accountTFSAs are registered with the federal government, like an RRSP. More than just a savings account, a TFSA allows you to invest up to $6,000 per year and not pay any taxes on the earnings. You are free to withdraw the money, tax-free, at any time. The savings plans available within a TSFA may have somewhat lower interest rates than some other HISAs, but could be a better choice after considering the tax savings. (You can also hold other kinds of investments inside a TFSA, such as stocks and ETFs.) Registered retirement savings planAn RRSP is a tax-deferred retirement savings plan, registered with the federal government, that allows Canadians to defer paying taxes on their income until after retirement. Canadians can defer paying taxes on up to $29,210 this year and instead hold that money in a savings account (or other types of investments, including stocks, bonds and ETFs) within an RRSP where earnings will accrue tax-free as well. When you withdraw the money to use for living expenses in retirement, it’s typically taxed at a lower rate, assuming your income in retirement is lower than when you made the original contribution. How does the Bank of Canada’s overnight rate affect interest rates on high-interest savings accounts?Changes in the prime rate (which is based on the Bank of Canada’s overnight rate) affect the interest earned in high-interest savings accounts (HISAs) as well as on guaranteed investment certificates (GICs) and other investment vehicles. When the overnight rate increases, individuals can earn higher interest on the aforementioned types of savings, because financial institutions have more flexibility to compete on the interest rates they offer. On the other hand, people who are retired or living off fixed income from a savings fund can be negatively affected when the overnight rate drops. Is having a savings account really necessary?Even when the economy is strong, the interest rates on savings accounts tend to be in the low single digits. If you compare this to real estate or stock portfolio returns, you might wonder why you should hold a savings account at all. The thing to understand is that these aren’t comparable products. They’re apples and oranges, each used for different specific reasons. A savings account is an essential part of everyone’s personal finance portfolio. Why? They are a place to keep your money safe—and liquid!—while earning guaranteed returns. Although these returns tend to be modest, they can help your money grow steadily to combat against inflation. Having a savings account is important if you want a safe way to set aside money in case of emergencies or for an upcoming major purchase, like a car or a down payment on a house. Stocks do well in the long term, but short-terms fluctuations make them unsuitable places to store money for a purchase in the near future because you may well be forced to sell during a downturn. If you’re lucky enough to have real estate, you already know that it is anything but liquid. Savings accounts hit the sweet spot by providing interest, while your money is protected by CDIC or similar deposit insurance coverage, up to specified limits. Related articles
If a link has an asterisk (*) at the end of it, that means it’s an affiliate link and can sometimes result in a payment to MoneySense (owned by Ratehub Inc.) which helps our website stay free to our users. It’s important to note that our editorial content will never be impacted by these links. We are committed to looking at all available products in the market, and where a product ranks in our article or whether or not it’s included in the first place is never driven by compensation. For more details read our MoneySense Monetization policy. Related ArticlesWhich bank is good for savings account Reddit?I looked at the options online & previous posts on this sub & found people recommending digibank by DBS, Kotak 811 & Axis ASAP account.
What Bank has the best savings account?Best Savings Accounts:. Fitness Bank - 3.50% APY*. DollarSavingsDirect - 3.11% APY.. UFB Direct - 3.11% APY.. CFG Bank - 3.10% APY.. Ivy Bank - 3.10% APY.. North American Savings Bank - 3.10% APY*. Bask Bank - 3.05% APY.. BankPurely - 3.01% APY.. Which bank is best for zero savings account?Best Zero Balance Savings Account Of October 2022. Featured Partners.. Best Zero Balance Savings Bank Account.. IDFC FIRST Bank Pratham Savings Account.. Axis Bank PRIME Savings Account.. Indus Delite Savings Account (IndusInd Bank). Kotak 811 Full KYC Account (Kotak Mahindra Bank). Jupiter Savings Bank Account (Jupiter). What is the interest rate on my Chase savings account?The Chase Savings℠ account interest rate is 0.01% effective as of 07/02/2022. Interest rates are variable and subject to change. Rates for the bank's premium relationship savings accounts are slightly higher but still don't compare to online savings accounts that have rates of 1% or higher.
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