Best Savings Accounts in Canada

This article will look at some of the best savings accounts in Canada.

It continues our analysis at savings solutions after I looked at options in numerous countries.

This has included Marcus by Goldman Sachs , Emirates NBD, the best savings accounts in Saudi Arabia and an expat-specific solution.

The article will look at the best options available in Canada, although it remains our position to in an era of 0% interest rates, saving money in the bank doesn’t make sense.

For any questions, or if you are looking to invest, you can contact me using  this form.

Introduction:

Savings Account is nothing but a bank account that provides returns to the customer in the form of interest, on the deposit made by the customer. Savings Accounts are known to be the most reliable investment option when compared to most other types of investments.

However, the profits gained from savings accounts are very when compared to that of other investment options. Banks use the funds to loan them to the people who borrow money from the bank. 

Banks usually charge a higher interest rate to the people who borrow money from the bank while providing a little lower interest to the people who deposit their money in the bank, acting as a middleman.

There are many important things that need to be taken into consideration before selecting a savings account that suits your needs. Some of the important aspects to consider are as follows:

  • The restrictions on transactions such as lock-in periods, where the amount cannot be withdrawn until the completion of the maturity period.
  • Fees or charges applicable to the deposits or withdrawals.
  • Minimum balance requirements, monthly charges, penalties, etc.
  • Accessibility of the account as well as modes of accessibility.

Canada

Canada is a country that is located in the northern part of North America consisting of 10 provinces and 3 territories. The population of Canada, as of the data obtained in 2020, is somewhere around 37.9 million.

The Major religion in Canada is Christianity, which accounts for up to 67.2% of the country’s population. Following that 23.9% population has no religion and some other religions like Islam, Hinduism, Sikhism, Buddhism, etc., can also be seen.

The currency of Canada is the Canadian Dollar and is represented by ‘CAD’ or ‘$’. By the time of writing this article, 1 CAD = US $0.75/£0.59. 

Banking System in Canada – There are two major types of banks in Canada, which are Central Banks and Commercial/Chartered Banks. The Central Bank of Canada oversees the banking activities and acts as an arm of the federal government, while carrying out the monetary policy.

High-Interest Savings Account – A ‘High-Interest Savings Account is nothing but a Savings Account that offers a relatively higher interest rate when compared to the Regular Savings Account. The High-Interest Savings Accounts are also known as ‘High Yield Savings Account’ or ‘HISA’.

Generally, the interest in these accounts is calculated on a daily basis and is credited to the account each month. In general, the High-Interest Savings Accounts have their own set of pros and cons.

Pros – The advantages of a high-interest savings account include Higher Returns, Safety, Guaranteed Returns, Flexibility and Bonuses.

Cons – The major disadvantage of a high-interest savings account is taxation. There also might be limitations regarding the accessibility of funds. 

Best Savings Accounts in Canada:

Saving Money is not enough, people should make money on their savings in order to have financial stability. This can only be done by depositing money into a savings account that provides a higher interest rate to the depositors.

So, in today’s article, we will cover the details such as 

  1. ‘The Best High Interest-bearing Savings Accounts’ 
  2. ‘Best Savings Accounts based on their unique features’
  3. ‘Savings Accounts from the top 5 banks in Canada’ 
  4. ‘Important Aspects related to Savings Accounts’

The Topmost High Interest-bearing Savings Accounts in Canada:

Coming to the High-Interest Savings Accounts, we have collected up-to-date information by the date September 25, 2020. 

The rates given below might differ in reality by the time you read this article, therefore, you can find the accurate information by approaching the bank directly or contacting us.

The list is provided in such a way that we have considered some other unique and exclusive features offered on these savings accounts along with the high-interest rates.

The list of the Best High-Interest Savings Accounts in Canada is as follows:

  1. Tangerine Savings Account
  2. EQ Bank’s Savings Plus Account
  3. Laurentian Bank Digital High-Interest Savings Account
  4. Motive Savvy Savings Account
  5. MAXA Financial High-Interest Savings Account
  6. Implicity Financial High-Interest Savings Account
  7. Oaken Savings Account
  1. ‘Tangerine Savings Account’:  

Tangerine Savings Account does not provide a non-promotional higher interest rate. However, Tangerine Savings Account takes the spot as the number one in our list for the promotional rate it provides.

The promotional interest rate offered to the Tangerine Savings Account holders is 2.50% for the first 5 months and after that 0.15% is offered. This promotional interest rate is the highest among any other savings account.

This Promotional Interest Rate might be subjected to changes after 14 October 2020. Anyhow, customers should consider that the interest rate will drop to 0.15% after the promotional period of 5 months.

Things to consider:

  • There are no monthly fees applicable to this account, adding to which, there is no requirement for a minimum account balance.
  • Unique savings goals as well as special perks on Tangerine credit cards
  • An NSF (non-sufficient funds or insufficient funds) fee of $45 is applicable, along with which, $20 -$40 dormant account fee is also applicable.
  • Customers aren’t able to send Interac e-Transfers.
  1. ‘EQ Bank’s Savings Plus Account’:

This is the actual savings account that is known to offer a higher interest rate, which is 1.70%, and no banking fees making it even better.

Things to consider:

  • No requirement for minimum balance and no banking fees applicable to this account.
  • Free Electronic Fund Transfers are provided on this account along with unlimited free Interac e-Transfers.
  • No dormant account fees or NSF fees make it even better.
  • The EQ Bank’s Savings Plus Account is not available for the customers located in the Quebec region.
  • The maximum balance per account is $200,000 along with the interest accrued.
  1. ‘Laurentian Bank Digital High-Interest Savings Account’:

The interest rate offered to the customers having a Digital High-Interest Savings Account at Laurentian Bank is 1.65%.

Things to consider:

  • No requirement for maintaining a minimum account balance and no banking fees are applicable to this account.
  • Free Electronic Fund Transfers are offered to the customers having this account.
  • An NSF (non-sufficient funds or insufficient funds) fee of $50 is applicable, along with which, $25 -$40 dormant account fee is also applicable.
  • The interest rate offered to the accounts having an account balance of more than $500,000 will be decreased to 1%.
  1. ‘Motive Savvy Savings Account’:

The interest rate offered to the customers having a Savvy Savings Account at Motive Financial is 1.75%.

Things to consider:

  • No monthly fees applicable to the account and there is no requirement for minimum balance.
  • This account offers 2 free transactions per month, either a normal transaction or ATM withdrawal. People who make more than 2 transactions per month will be charged a fee of $5 per additional transaction.
  • Customers will be charged $1 for additional Interac e-Transfers.
  • An NSF (non-sufficient funds or insufficient funds) fee of $45 is applicable, along with a $20 -$40 dormant account fee
  1. ‘MAXA Financial High-Interest Savings Account’:

The interest rate provided to the customers with the help of the MAXA Financial High-Interest Savings Account is 1.60%.

Things to consider:

  • No monthly fees and no requirement for maintaining a minimum balance.
  • Only 1 free transaction per month is offered to the customers.
  • Additional charges of $1.50 applicable to the accounts for making additional debits and Interac e-Transfer.
  1. ‘Implicity Financial High-Interest Savings Account’:

The interest rate offered to the customers with Implicity Financial High-Interest Savings Account is 1.40%.

Things to consider:

  • No monthly fees are applicable to the Implicity Financial High-Interest Savings Account.
  • $1 fee is applicable to the debit card transactions/purchases and $1.50 for Interac e-Transfers.
  • $40 NSF fee is also applicable, which makes it a little bit disadvantageous.
  1. ‘Oaken Savings Account’:

The interest rate offered to the customers with the help of the Oaken Savings Account is 1.40%.

Things to consider:

  • This account offers free and unlimited transactions to the customers.
  • Customers can be able to double their Canadian Deposit Insurance Corporation (CDIC) coverage if they choose the home bank as the issuer for one account and home trust company on another.
  • The details regarding fees aren’t listed on the website of this bank.
  1. ‘Wealthsimple Cash Account’:

Wealthsimple is a Robo-advisor, which is known for the management of customers’ investment portfolios. The savings account offered by Wealthsimple is known as ‘Wealthsimple Cash Account’.

The interest rate offered via Wealthsimple Cash Account to the customers is 0.90%.

Things to consider:

  • No monthly charges are applicable to this account and there is no requirement for minimum balance.
  • Unlimited free transactions are offered to individuals with this account.
  • The Wealthsimple Cash Account also offers many other perks and features that are considered to be highly beneficial to the individuals.
  1. ‘Motus Bank Savings Account’:

Motus Bank Savings Account offers a non-promotional interest rate of 1.30% to the customers. Motus Bank is a digital bank that specializes in competitive mortgage rates, investment accounts, etc., other than the savings accounts.

Things to consider:

  • There are no monthly fees or a requirement for a minimum balance that needs to be maintained.
  • Interac e-Transfers are not free with this account are charged at a rate of $1.25 per each transfer.
  1. ‘Wealth One Bank of Canada High-Interest Savings Account’:

The high interest savings account of Wealth One Bank of Canada offers an interest rate of 1.60% to the customers. They are also known to provide TFSA and RRSP savings accounts.

Things to consider:

  • There are no monthly fees or a requirement for a minimum balance that needs to be maintained.
  • Customers also get access to the Automatic Savings Program offered by Wealth One Bank of Canada.

Some other honorable mentions:

  1. Alterna Bank High-Interest Savings Account – Interest Rate of 1.40%
  1. Ideal Savings High-Interest Savings Account – Interest Rate of 1.46%
  1. AcceleRate Financial High-Interest Savings Account – Interest Rate of 1.50%
  1. Achieva Financial High-Interest Savings Account – Interest Rate of 1.50%
  1. Outlook Financial High-Interest Savings Account – Interest Rate of 1.50%

Best Savings Accounts based on their unique features:

  • Best Savings Account that offers a high-interest rate – The best high-interest savings account, not including the promotional interest rate, is the ‘Motive Financial Savings Account’.
  • Best Savings Account with no service fees – The best savings account that provides interest rate while having no service fees is ‘EQ Bank Savings Plus Account’
  • Best regular interest rate at a credit union – The best savings account that offers a regular interest rate and is a part of a credit union is ‘MAXA Financial High-Interest Savings Account’.
  • Best e-Savings Account – The best e-Savings Account available in Canada is ‘Alterna Bank High-Interest Savings Account’.
  • Best regular interest rate offered with a hybrid account – The best savings account that offers a regular interest with the help of a hybrid account is ‘Wealthsimple Cash Account’.
  • Best Promotional Interest Rate – The best savings account that offers the highest promotional interest rate is ‘Tangerine Savings Account’.
  • Best tiered Interest Product – The best tiered interest product in Canada is ‘Scotiabank Momentum Savings Account’.

Savings Accounts offered by the 5 big banks in Canada:

Even though some people prefer making use of savings accounts depending on the benefits they offer, most people would like to avail of banking services from reputable banks.

Therefore, we are providing the details of the savings accounts offered by 5 of the big banks in Canada. 

These banks are known to be offering good features to customers, but the customers are required to follow certain conditions to obtain the highest interest rates.

The 5 big banks’ savings accounts that we will be discussing are the savings accounts provided by ‘Scotiabank’, ‘TD’, ‘RBC’, ‘CIBC’ and ‘BMO’.

  1. ‘Scotiabank High-Interest Savings Account’:

The highest interest rate that can be obtained from savings accounts while banking with Scotiabank is through their ‘Momentum Plus Savings Account’. This account will offer an interest rate of around 1.25% to the customers.

However, the general interest rate is very low, which is 0.05% and people can access a higher rate of interest by not making debit transactions for a specific period of time. 

The details of the tiers of the premium period interest are as follows:

Number of days without debit transactionsPremium Period Interest
90 days0.55%
180 days0.65%
270 days0.75%
360 days1.10%

People who opt for the ultimate package will get an additional 0.10% interest. 

Therefore, the customers can get an interest rate of 1.25% (normal interest 0.05% + Premium Period Interest 1.10% + Ultimate Package Bonus 0.10%), only if they don’t make debit transactions for 360 days.

  1. ‘TD High-Interest Savings Account’:

Known also as the Toronto Dominion Bank, TD bank is among the choice of many loyal customers. The savings account at TD offering the highest interest rate is ‘TD ePremium Savings Account’, which offers 0.10%. 

This is a tiered savings account and the customers would only become eligible to earn this interest after they have made a deposit of at least $10,000. 

People who seek a lower deposit amount can earn an interest rate of 0.05% with the TD High-Interest Account by just making a deposit of $5,000.

Adding to that, customers need to have at least $25,000 in their account to make transactions free of cost, otherwise, they will be charged with $5 per each transaction.

  1. ‘RBC High-Interest Savings Account’:

Royal Bank of Canada, which is called RBC, is yet another big bank of Canada which is known for the huge reputation in Canada. The RBC High-Interest eSavings Account is known to offer an interest rate of 0.05% to the customers.

This account offers 1 free ATM cash withdrawal/debit transaction per month which is considered to be better than what TD offers. 

Additional debit transactions cost $5 per each transaction and Interac e-Transfers cost $1 per each transaction.

  1. ‘CIBC High-Interest Savings Account’:

Canadian Imperial Bank of Commerce (CIBC) offers a high-interest savings account, which is known as the eAdvantage Savings Account. The interest rate offered to the customers with the eAdvantage Savings Account is 0.05%.

However, a beneficial thing is that the customers can get a bonus interest rate of 1.50% for the first 2 months. 

There are no free transactions offered with this account and each transaction will cost $5 per each transaction.

  1. ‘BMO High-Interest Savings Account’:

Another big bank in our list of the 5 big banks is Bank of Montreal (BMO) and their high interest savings account is somewhat similar to the account offered by Scotiabank.

Scotiabank offers an increased interest rate when a person does not make any debit transaction, whereas, BMO offers an increased interest rate when the customer makes deposits.

The base interest rate is 0.05% and when the customer makes a deposit of $200 every month, they will be presented with an interest rate of 0.50%.

Important aspects related to Savings Accounts in Canada:

Safety – Mostly, the accounts having higher balances are only eligible to fetch higher interest rates. Therefore, only people who can manage to deposit a hefty sum of money into their account can acquire higher interest rates.

However, there is a disadvantage in depositing larger amounts of money. The Savings Accounts are only insured by the CDIC (Canadian Deposit Insurance Corporation) for an amount of up to $100,000 per account.

The average deposit amount that needs to be deposited in order to obtain a substantial amount of interest rate is $250,000. This leaves more than half of the money not insured and it won’t be backed by CDIC.

Therefore, people who deposit huge amounts of money might be at risk during the time of financial crisis (if it were to occur).

Tax Issues – The interest earned from savings accounts is generally taxed at a marginal tax rate. The tax is also applicable to the interest earned from the account, which means a significant amount of money will get deducted in the form of taxes.

Especially people having a huge amount of money in their accounts would lose a considerable amount of money in the form of taxes. Moreover, the taxes applicable to the interests are taxed less favorably when compared to dividends and capital gains.

High-Interest Savings Accounts are taxable and if any person wants to maintain them tax-free, they should hold these accounts in a Tax-Free Savings Account (TFSA). 

The interest is included in the taxable income of the person by the end of the year and is taxed at a marginal rate. Banks send an investment income slip or T5 demonstrating how much income has been earned by the person for that year.

Bottom Line:

The high-interest savings accounts are better in terms of maintaining a balanced portfolio when compared to the regular savings accounts. 

If you are searching for a savings account with the flexibility of making unlimited withdrawals, it is better to go with a digital bank rather than a traditional bank because in most cases they offer unlimited withdrawals.

By the information provided above, you can be able to get an idea about which savings account suits you better. As we have said earlier in the article, the interest rates provided in this article are up-to-date.

If you are in search of accurate information about these savings accounts, you can obtain it by contacting us. We personally suggest that you acquire the banking-related services from a professional like us before opening a savings account.

If you require further information regarding this topic or you require professional banking-related services, you can contact us, and avail of the expert banking services offered by us.

That being said, we assume that you have been able to find the relevant information in the article, which you have been looking for. We wish for you to have a bright and successful career with great profits arising from all of your assets. Happy Banking!!!

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