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 not always the best when compared to those from 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.
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:
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The information in this article is for general guidance only. It does not constitute financial, legal, or tax advice, and is not a recommendation or solicitation to invest. Some facts may have changed since the time of writing.
The currency of Canada is the Canadian Dollar and is represented by ‘CAD’ or ‘$’.
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.
A ‘High-Interest Savings Account is 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.
The advantages of a high-interest savings account include Higher Returns, Safety, Guaranteed Returns, Flexibility and Bonuses.
On the other hand, the major disadvantage of a high-interest savings account is taxation. There also might be limitations regarding the accessibility of funds.
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.
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.
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.
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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.
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The interest rate offered to the customers having a Digital High-Interest Savings Account at Laurentian Bank is 1.65%.
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The interest rate offered to the customers having a Savvy Savings Account at Motive Financial is 1.75%.
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The interest rate provided to the customers with the help of the MAXA Financial High-Interest Savings Account is 1.60%.
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The interest rate offered to the customers with Implicity Financial High-Interest Savings Account is 1.40%.
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The interest rate offered to the customers with the help of the Oaken Savings Account is 1.40%.
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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%.
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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.
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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.
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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.
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 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 transactions | Premium Period Interest |
| 90 days | 0.55% |
| 180 days | 0.65% |
| 270 days | 0.75% |
| 360 days | 1.10% |
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.
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.
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.
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.
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%.
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).
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.
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.
As we have said earlier in the article, the interest rates provided in this article are up-to-date.