Tax-free savings accounts (TFSAs) are designed to help Canadians get a leg up on their savings thanks to the tax benefits they offer. Any money earned in a TFSA account is hedged against taxation, even when you withdraw the funds. And you can really rack up your savings when the interest rate on your TFSA is higher than a traditional savings account, which is usually the case.
While these accounts are considered a form of savings, they are actually quite versatile and can hold a number of different accounts, like ETFs, mutual funds, GICs, and stocks, among others. The types of accounts you hold in your TFSA will be based on what best suits your particular financial needs.
If you’re looking for a way to store and grow your money without the limitations that can come with traditional registered investments, then you may want to consider investing with a TFSA.
We’ve rounded up some of the best online-only TFSA accounts to help you decide which one stands out for you.
Tangerine TFSA Savings Account
Tangerine is a well-respected online-only bank that offers a ton of banking products to Canadians, including a TFSA savings account. Formerly named ING Direct, Tangerine is now owned by Scotiabank, so it’s got a lot of traction behind it.
While it’s well-known for its high-interest savings account and flexible chequing account, its TFSA savings account is also a popular product that allows Canadians to grow their money without being penalized for withdrawing funds and getting slapped with taxation. You can tap into the same benefits of Tangerine’s regular savings account with no unfair fees or minimum balances while saving tax-free.
- 1.00% interest rate
- No monthly fees
- No minimum balance
- Tax-free savings
- Flexibility to move your money without being locked in
- Automatic Savings Program (ASP) to help you create a savings goal
- Contribute up to $6,000 a year
- Set up automatic contributions
- Free Interac e-transfers
Motive Financial Savings Account
An arm of the Canadian Western Bank, Motive Financial is an innovative online-only bank that offers chequing, savings, and TFSA accounts. The online platform is clean and easy to navigate, and the mobile app makes banking on the go a cinch.
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Right now, Motive Financial offers a very competitive 1.75% interest rate on its TFSA accounts that you can leverage to grow your funds while hedging against taxation on gains. Plus, Motive Financial doesn’t charge any pesky monthly fees and has no minimum balance requirements. And your funds are insured through the CDIC.
Motive also offers its TFSA GIC account that allows you to invest conservatively while growing your capital, tax-free. Interest rates on these accounts range from 1.60% to 2.0% depending on your term.
- 1.75% interest rate
- No minimum balance
- No monthly fees
- Tax-free returns
- Withdraw funds any time
- Available for different account and investment types
motusbank TFSA Account
One of the newer online-only banking players on the scene is motusbank, which is owned by the Ontario-based Meridian Credit Union. As a member of CDIC, up to $100,000 of your deposits are insured for security.
motusbank offers a handful of banking products, including its TFSA savings account that offers a decent interest rate of 1.60%. There’s no monthly fee or minimum balance required, and you can withdraw your funds out of your TFSA account from over 3,700 bank machines across the country.
- 1.60% interest rate
- No minimum balance
- No monthly fees
- Unlimited self-serve transactions
- Earn tax-free money
- Free access to more than 3,700 ATMs across Canada
Alterna Bank TFSA Account
Alterna Bank is the digital arm of Alterna Savings, one of Canada’s oldest credit unions. The online-only bank offers high-interest TFSA accounts. Their clients benefit from the low overhead of the financial institution in the form of competitive interest rates and better opportunities to save.
Right now, Alterna’s TFSA account offers a 1.5% interest rate, without any monthly fees or minimum balance required. You can access your funds via desktop or mobile app. There are no charges for any transfers if you link your account with outside bank accounts. Plus, its membership with the CDIC means your deposits are protected up to $100,000.
- 1.50% interest rate
- No monthly fees
- Tax-free savings
- No minimum balance
- Unlimited transactions
- Deposits secured by the CDIC
- Mobile app
Hubert Financial TFSA Account
Hubert Financial is an online division of Sunova Credit Union that offers a simple online interface to do your banking. The savings of minimal overhead and expenses mean that you can take advantage of higher interest rates, whether on the online bank’s TFSA account or another banking account.
The TFSA account does not come with any fees nor are there any minimum balances required. Plus, your funds are insured by the Deposit Guarantee Corporation of Manitoba.
- 1.75% interest rate
- No minimum balance
- No monthly service fees
- Interest calculated daily and paid monthly
- Deposits guaranteed by the Deposit Guarantee Corporation of Manitoba
EQ Bank
Equitable bank; a Canadian federally regulated Schedule I Bank that was established in 1970, is the parent company of EQ Bank. EQ Bank was created to provide a better online banking experience. Their services include a variety of personal banking and investment products such as a Savings Plus Account, a Joint Savings Plus Account, GICs, an RSP Savings Account and a TSFA Savings Account.
EQ Bank is one of the best online-only TFSA savings accounts due to its easy signup process, no fees, and no minimum balance. Moreover, they offer one of the high-interest rates at 3%* and you can opt for a TFSA GIC and earn guaranteed interest, tax-free.
- No fees
- No minimum balance
- One of the highest rates at 3%
- Flexible terms between 3 months and 10 years for the TFSA GIC
- CDIC insured
*Interest is paid monthly and calculated daily on the total closing balance. Rates are subject to change without notice
Overview of the Best Online-Only TFSA Account
| Fee | Minimum Balance | Interest rate | Insured/Protected | |
| Tangerine | $0 | $0 | 0.10% | Yes |
| Motive Financial | $0 | $0 | 1.75% | Yes |
| motusbank | $0 | $0 | 1.60% | Yes |
| Alterna Bank | $0 | $0 | 1.50% | Yes |
| Hubert Financial | $0 | $0 | 1.75% | Yes |
| EQ Bank | $0 | $0 | 3.00%* | Yes |
Why Would a Consumer Need an Online-Only TFSA Account?
While a traditional savings account may provide you with a slightly better interest rate than a checking account to grow your money a little faster, a TFSA has the edge. In addition to helping you save, a TFSA account allows you to put money aside in investments that will grow steadily and tax-free over time.
Any capital gains earned with your account are never taxed, which translates into healthy savings over your lifetime. You can withdraw your funds whenever you want without being penalized with taxes, unlike most other investment gains.
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An online-only TFSA account takes things a step further by adding the convenience factor to the situation. You can deposit, transfer, and monitor your investing progress in your account all from your computer or mobile device.
Plus, you’ll have customer support available via telephone, email, or chat. And the no-fee feature makes things even more attractive compared to traditional banks that typically charge monthly fees.
How Do I Choose an Online-Only TFSA Account That Suits Me?
When looking for an online-only TFSA account to park your money and invest, keep the following features in mind:
Interest Rate
The rate that you’re offered will make a big difference in how quickly your deposited funds will grow over time.
Monthly Fees
Look for TFSA accounts that don’t come with any monthly fees so you can keep more money in your pocket.
Minimum Balance
You don’t want to be charged any fees if your account dips below a specific minimum balance amount, so look for a TFSA account that does not require a minimum balance to be maintained.
Are Online TFSA Accounts Safe?
All the online-only banks mentioned above are associated with established financial institutions and insure client deposits, so you can be confident knowing that your funds are safely deposited.
Plus, these banks come with robust encryption features that make it extremely difficult for hackers to access your account. To make things even more secure for yourself, be sure to choose a strong password for your account.
Final Thoughts
Investing in a TFSA savings account can afford you decent interest rates to grow your money while providing you with access to eligible investment vehicles. The fact that they are hedged against taxation makes these types of accounts even more attractive.
And with online-only options, you get the convenience of banking from the comfort of your home coupled with the advantage of growing your money tax-free. If you’re looking for an online-only TFSA account to deposit your funds, any one of the above accounts makes the cut.
