Everyone wants to yield good returns and solidify their finances further. Doing so with a savings bank account that has the best interest rates can be tricky. But worry not as we have the list of high-interest savings accounts in Canada.
The returns of savings have not been great so far. The people have not been satisfied with them for at least a decade. The cause is the benchmark rate of the Bank of Canada (BoC) stagnating at an all-time low due to inflation and other economic causes. The rate hike of BoC has still not transformed into a better savings rate than the ‘Prominent’ banks offer, these rates can go at a very low rate, 0.01% which hardly gets you any earnings. The disadvantage that accompanies these rates is the negative returns that are stricken with inflation.
Hence, a savings account is usually not a preferred place to keep your funds, if your goal is to grow your money and thrive. However, funds with a goal of a wedding, vacation, purchase, down payment, etc. should not be subjected to the knacks of the stock market or a HISA (High-interest savings account) which is an option that keeps your money safe.
A HISA renders good interest and cushions your money inflation. And we have created a list that solves all your problems related to it. Hence, here is a list that brings the top high-interest savings accounts in Canada, which can help you grow your money exponentially. We have done the research for you, all you have to do is pick your ideal bank!
List of High-interest Savings Accounts in Canada
This list brings only the top savings account that will provide benefits and aid your goals. Before you move any further, here are some considerations, essential for choosing a bank.
- Is there any lock-in period or constrictions on the transactions that you are going to make?
- Do you have to maintain a minimum balance?
- The accessibility of your savings account?
- Can you deposit cheques with mobile, and also do automatic transfers.
- Is the interest rate promotional or non-promotional?
- Do you pay added charges or fees on withdrawals or transfers?
Now that the considerations are out of the way, let’s jump right into the list of these banks, so you can claim your high interest without any delay.
KOHO Earn Interest
You can open a free KOHO savings account and earn 1.20% interest on the money that you put in the account and 0.50% cash-back on all your purchases too!
In line with the EQ bank, KOHO is also resembling hybrid banks. It allows you to do free Interac e-transfers, do payments, in-store bills, and online transfers. They also do not have promotional rates that do not end abruptly.
KOHO is also laced with a prepaid Visa Card that is reloadable and gives you a cashback of 0.50% and you can get even lucky and acquire 2% cashback if you upgrade this to a premium, you are also eligible to take benefits of the Early Payroll.
The 1.20% interest is rendered to the customers who have created a direct deposit linked to their bank account.
EQ Bank Savings Plus Account
EQ bank is the subsidiary of Equitable Bank, it is one of the best high-interest savings accounts in Canada whose name is, EQ Savings Plus Account. The rate provided by this bank is 1.25% which is the highest as compared to other banks in the market right now. Hence, your earning will only grow over time in this account.
The account has perks like zero monthly fees, no minimum balance requirement, bill payments without any charges, limitless fund transactions, zero-fee electronic transfers, free bill payments, and free Interac e-transfers monthly.
The 1.25% interest is levied on your daily closing balance and credit monthly to your account. The maximum balance limit is $2000,000. You can also open high-interest rate TFSA and RRSP accounts in EQ bank if you want to grow your money in a registered account. The rates for these are also 1.25%.
Motive Financial Savings
This bank is a branch of Canadian Western Bank and a member of CDIC. The high-interest savings account of this bank is called Motive Savvy Savings, which provides a great rate of 1.10% on your savings, and the basic Motive Savings account provides 0.75% on the maximum amount of $5 million.
You are allowed to make 2 withdrawals without any charge and pay $5 for further withdrawals, there are zero minimum balance or monthly fee requirements.
Tangerine Savings Account
Tangerine or former name (ING Direct) is the hand of Scotiabank and the rate on their savings account is 0.10%.
A new account holder can also get a promotional rate, which is 2.00%, valid for 5 months if the savings account is opened with the checking account. This interest rate will again go down to 0.10%, once the promotional period of 5 months is over.
This account levies zero monthly fees, has zero minimum balance requirement, zero lock-in periods, service charges, and you can also set up an automatic savings plan. You can also open an RRSP or TFSA with the same rate.
Wealthsimple is the best Robo-advisor for your portfolio out there. The high-interest savings account of this bank is also known as Wealthsimple Save and the rate it offers is 0.50%. The account burdens you with no fee or minimum balance requirement.
You can make limitless withdrawals, transfers to the account that are linked to this one. You can also open a Wealthsimple Cash Account, but it does not provide interest, you have to transfer your funds to the HISA to gain 0.50% interest.
Wealth One Bank Of Canada HISA
This bank is a newly added member of CDIC. The rate provided in this high-interest savings account in Canada provides a rate of 1.25%. And you can also open an RRSP or TFSA here.
The monthly fee is zero, there are no minimum balance requirements, you can also access ASP (Automatic Savings Program).
Alterna Bank HISA
The Alterna Bank and Alterna Savings form the Alterna Financial Group. The name for their HISA is also unchanged and their interest rate is 0.90%.
The account requires no minimum balance, and you get to make Interac e-transfers for free every month. New account holders can enjoy this rate on an amount of up to $250,000 and these are also present in Quebec.
This bank is the newly added arm of Meridian Credit Union, which is the 3rd biggest and most prominent credit union in Canada. The HISA offers zero fees on chequing, good mortgage rates, investment accounts, etc.
The savings account at this bank provides a 1% interest rate, and you have to pay $1.25 for each Interac e-transfers.
Oaken Financial Account
This is the arm of Home Trust Direct Banking. The name of their high-interest savings account is Oaken Savings Account and the interest rate that you earn is 1.25%. You can also open an RRSP or TFSA account.
There are zero monthly fees or minimum balance obligations.
Credit Union Interest Rates for HISA
Many credit unions also offer attractive interest rates. And we have not left them out of the list, so here are the rates that might entice you.
- MAXA Savings: 1% HISA
- Ideal Savings: 1.01% HISA
- Achieva Financial: 1.10% HISA
- AcceleRate Financial: 1.10% HIS
- Outlook Financial: 1% HISA
- Hubert Financial: 1.10% HISA
- Implicitly Financial: 1.10% HISA
Big 5 Bank High-interest Savings Accounts in Canada
Now that we have covered the unions, it’s time to move on to the big banks and the savings rates that they provide their account holders with. The big 5 banks in Canada, namely- CIBC, RBC, TD, BMO, and Scotiabank have rates that are disappointing and go as low as 0.01%. Hence, if you are looking to stay ahead of inflation, these might not be the best choice for putting in your savings.
Here are the rates that these banks provide:
- TD High-interest savings account: 0.05%
- RBC High-Interest Savings Account: 0.05%
- BMO High-Interest Savings Account: Tiered rate is 0.35%
- Scotia Bank High-Interest Savings Account: 0.05% and a bonus rate if your funds are retained for 90-360 days
- CIBC High-Interest Savings Account: 0.05%.
A Bit More About High-interest Savings Accounts in Canada
HISA or High-interest savings account is what helps you grow your money and pays a little bit higher interest rate than the generic savings account. This interest rate is based only on the daily closing amount and credit to your balance monthly.
Another name for HISA is a high yield savings account. If you have money that you don’t need right now, these accounts are the best picks to put your money in. These are not long-term funds and their periods are short-term, just like your emergency funds.
The different types of HISAs are:
- US Dollar Savings Account
- Tax-Free Savings (TFSA) HISA
- Registered Retirement Income Fund HISA
- Registered Retirement Savings Plan HISA
HISA versus a Regular Savings Account
The question is, what is the main difference between a HISA and a regular savings account, and account holders often struggle to answer it. We will make it simple. To start, a high-interest savings account renders more interest on your amount than the traditional savings account. A major big 5 bank will provide you with only a 0.05% rate but a HISA will render 0.35% in the account of the same bank.
HISA sometimes is accompanied by limits on the withdrawals that people can make. The reason is that HISAs create income by lending your money to borrowers. Hence, your money will keep growing as long as your funds stay in the account. If you tend to withdraw money often, then this money won’t earn as much interest as the amount is calculated every day, and if there is less amount, the bank won’t be able to offer you the benefits.
Furthermore, you need to be careful because online-only banks do not come with a withdrawal limit, which means you might be enticed to take out your money often because it is allowed by the bank.
If you withdraw beyond the monthly limit, you will also have to pay an additional fee. This can happen when you go beyond the withdrawal, payment, or transfer limit prescribed by your bank. There can be provisions for minimum balance too. However, most banks usually lift over this fee, but there can be charges on additional Interac e-transfers.
In essence, a HISA is not meant for daily transactions, it is more suitable for the short-term. After all, high-interest funds that you don’t need.
Pros of High-interest Savings Accounts in Canada
Safe and usually comes with a guarantee: A high-interest savings account keeps your money safe. If your bank is a member of the Canada Deposit Insurance Corporation (CDIC) then the amount is also insured for up to $100,000 for each customer, lest the bank goes bankrupt. The credit unions are insured provincially and they cover an amount of $100,000 for each customer.
High returns: These banks give you good returns as compared to the regular savings account.
An additional bonus: Many banks also provide a welcome bonus on your savings on opening an account. Some promotional rates often come with these accounts.
Flexible: The HISA does not lock your funds and is accessible and certainly more flexible than Guaranteed Investment Certificate (GIC) which doesn’t let you access your money for 6 months. Hence, if you need your money suddenly, this might be an ideal option for you.
Cons of High-interest Savings Accounts in Canada
The high rate is not double-money in a day scheme. However, it’s less risky than stocks or other investment instruments.
The main con to a HISA is the taxes that are levied upon them. If you are under the high-tax bracket, a big amount of your earnings will go towards taxes as they are calculated on the marginal tax rate. The interest income is taxed lower than the capital gains or dividends. You can avert high taxes on a HISA by utilizing the TFSA savings account.
Are High-interest Accounts taxed?
HISA is taxed, you can avoid this only if you have a TFSA account. The interest you earn will be added to the income that is taxed at the year-end based on the marginal tax rate.
You will receive an income slip or T5 which will inform you about the interest that you will have to pay in a year.
Are HISA’s Safe?
The list that we have created is the member of Canada Deposit Insurance Corporation. Hence, your deposits will be insured for an amount of $1000,000 if your bank goes bankrupt or faces any other issue.
The HISAs at credit unions are also insured provincially, like Deposit Guarantee Corporation of Manitoba which insures 100% of the customer’s deposits in Manitoba’s credit union and Caisses Populaires. You are not obliged to be a resident of Manitoba for this.
Before opening a bank account, we suggest you research well about it. It is always better to take precautions and read T&C than to regret it. All the best!