Best High-Interest Savings Accounts In Canada 2021
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There are many saving accounts available on the market, choosing the best one can be a difficult task considering all the factors and choices you have to consider. Before we divulge into that, let’s explain what is a savings account.
What Is A Savings Account?
A savings account is a secure area where you can deposit your money while generating interest on your balance. Though it may earn interest like an investment, a savings account is more secure as it is insured by the Canadian Deposit Insurance Corporation (CDIC), meaning your money is protected (up to $100,000) in the event the bank collapses.
Difference Between A High-Interest And A Regular Savings Account
To put it simply, a high-interest savings account in Canada is an account that allows you to earn more interest than a regular savings account.
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How Does A High-Interest Savings Account Work?
A savings account is a way of growing money with cash that is just “sitting” around. When you open a savings account, the money you store in it is used by the banks to invest and lend to other people and businesses. In return for using your savings, the bank pays you interest. Of course, that doesn’t mean you can’t access your money whenever you want. Your money is always available to you and is also insured by the Canadian Deposit Insurance Corporation (CDIC) as mentioned above.
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Advantages Of Online Savings Accounts vs. Traditional Savings Accounts
- Security: Like a traditional savings account, most online savings accounts are insured up to $100,000 by the CDIC.
- High Interest: Digital banks save on costs that come with owning a physical location. As such, they are able to provide much higher interest rates than traditional banks who have branches.
- Low Fees: Typically require no fees compared to a regular savings account.
- Accessibility: A lot of traditional savings accounts have restrictions on the number of transactions, withdrawals, and deposits you can make. However, online savings accounts generally have few restrictions.
Drawbacks Of Online Savings Accounts vs. Traditional Savings Accounts
- No face-to-face contact. If you’re someone who likes the security that comes with human contact. A traditional brick and mortar bank will probably be best suited for you.
- Accessibility: Many online savings accounts only have electronic transactions. You won’t have access to ABMs or a local branch to access your money.
- Deposit Issues: If you want to deposit cash, you have to find an ABM or turn the cash into a cheque.
- Limited Products: Online banks typically have a limited range of products and services. So, if you want to get a TFSA or a chequing account along with your savings account you may have to go with two different providers.
- Slow Gains: Despite having higher interest rates than traditional savings accounts, your money is still going to grow very slowly in comparison to investing your money in other securities (bonds, stocks, mutual funds, etc).
Factors To Consider When Choosing A High Interest Savings Account Canada
With all the high interest savings account in Canada, how do you choose one that best meets your needs?
How Often Will You Use It?
A savings account is typically meant to store your money for long periods of time. Over time you may withdraw or deposit more money. However, in general, transactions, withdrawals, and transfers are typically limited with savings accounts. Depending on your own personal banking habits and needs, figure out how many withdrawals and transactions you need. Some banks offer a free transaction once a month while others require a fee.
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How Easy Is The Accessibility?
Depending on if you choose an online or traditional savings account, your accessibility will range accordingly. For online savings accounts, you will likely be restricted to dealing with your money through electronic means. If you require access to an ABM or a teller, then a traditional savings account will suit you better.
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Does The Interest Rate Beat Inflation?
When choosing a savings account whether through a traditional bank or an online financial institution be sure to choose a rate that is higher than the current Canadian inflation rate. Inflation affects your purchasing power, by matching your interest rate with the inflation rate your savings won’t lose it’s purchasing power.
Best High-Interest Online Savings Accounts In Canada
Listed are 5 of the best online high-interest savings accounts in Canada. All of the following savings accounts have no minimum balance and monthly fee.
|Account||Interest Rate||Cost||Extra Perks||Insured|
|Tangerine Savings Account||0.10%||None||Unlimited withdrawals, deposits and transactions. |
RSP, TSFA, RIF and U.S savings account available
|Wealthsimple Cash||0.90%||None||Unlimited withdrawals, deposits, transfers and transactions. |
RRSP & TFSA available
Hybrid chequing and Savings Account
|Alterna Bank High eSavings Account||1.5%||None||Unlimited free Interac e-transfer and bill payments. |
RRSP & TFSA available
|Oaken Savings Account||1.5%||None||Unlimited withdrawal, transfers. |
|EQ Bank Savings Account Plus||1.25%||None||Unlimited Interac e-transfer, transactions, transfers, bill payments and cheque deposits.||CDIC|
EQ Bank Savings Plus Account
EQ is an online subsidiary of Equitable Bank; one of Canada’s largest Schedule I Banks. They’ve been in business for over 40 years and are insured by the CDIC, making them a creditable financial institution. They currently offer two products: Guaranteed Investment Certificates (GICs) and High-Interest Savings Account (HISAs). Their highest-interest savings account is one of the best on the market with an interest rate of 1.25%. Unlike traditional savings accounts, EQ extends free withdrawals, transfers, transactions, and bill payments. They also give you the ability to connect to your other bank accounts so you can automate bill payments and transfer funds more seamlessly.
Tangerine Savings Account
Tangerine is an online bank in Canada that was formerly known as ING Direct. They are a subsidiary of Scotiabank; a well-known multinational bank in Canada. They offer a number of products and services like GICs, mortgages, mutual funds, and different savings accounts. Their savings account has an interest rate of 0.10% and does not require a minimum balance or a service fee. They are also easily accessible even though they don’t have branches. You can gain access to your account online and through mobile banking as well as their automated banking machines (ABMs) on the Scotiabank network. They also have an Automatic Savings Program (ASP) to help you reach your financial goals.
Alterna Bank High eSavings Account
Alterna is a digital bank in Canada that is a wholly-owned subsidiary of Alterna Savings; a credit union in Ontario. They offer mortgages and high-interest savings accounts in Canada. You can earn 1.5% on your savings with Alterna, however, the cap balance is set at $250,000. Unlike traditional savings accounts, there is no fee or minimum balance and you have unlimited transactions and interact-transfers.
Oaken Savings Account
Oaken is a digital banking company that is powered by the Home Trust Company. They were first established in 2013 to provide a savings product that the customers could control. Hence, Oaken does not charge any fees or require a minimum balance. They also have unlimited withdrawals, transfers, and deposits. Their savings account also has one of the highest interest rates available (1.5%), along with Equitable Bank (2.00%). If you’re looking for different sorts of savings accounts, Oaken also offers high-interest TFSA and RRSP. They also offer GICs for those looking to invest.
Wealthsimple is an online investment firm in Canada that was established in 2014. They manage investments through their Robo advisors and manage money to help their clients save. Now, they’ve launched Wealthsimple Cash, which is a hybrid of a chequing and savings account. This allows you to earn high interest on your money while having the freedom of chequing account, which includes unlimited transactions with no fees. Wealthsimple also has TSFA and RRSP if you prefer to save using those accounts. Unlike the other online banks mentioned, Wealthsimple is not insured by the CDIC but the Canadian Investor Protection Fund (CIPF) up to 1 million.
Best High-Interest Traditional Savings Accounts In Canada
|Interest Rate||Cost||Min Balance||Extra Perks||CDIC Insured|
|Scotiabank Momentum PLUS Savings Account||– Up to 2.70% (limited time offer)|
-0.05% base + premium period interest
|No monthly fee||No minimum balance||– Unlimited self-service transfers|
– Automatic savings plan
|TD High Interest Savings Account||– 0.05%||No monthly fee||$5,000+||– Unlimited transactions |
– Automatic savings program
|BMO Smart Builder Savings Account||– Up to 0.50% |
– 0.05% base interest + 0.45% bonus interest
|No monthly fee||$200+ per month||– 1 free transfer out of account||Yes|
|CIBC eAdvantage Savings Account||– Up to 2.10% (limited time offer)|
– 0.10% base
|No monthly fee||No minimum balance||–||Yes|
|RBC high-interest savings account||– 0.05%||No monthly fee||No minimum balance||– No minimum deposit required|
– 1 Free ABM cash withdrawal per month
– Automated savings program
TD High-Interest Savings Account In Canada
TD is one of the biggest and most well-known banks in Canada. It was founded over 65 years ago and since then has grown into a multinational financial institution. They have over 1,100 branches and serve over 10 million Canadians. They offer a range of products and services like credit cards, mortgages, insurance, GICs, savings accounts, and much more. Their high-interest savings account offers an interest rate of 0.05% if you have a balance of $5,000 or more. Anything less will result in an interest rate of 0%. This account does not charge a monthly fee, however, there are a few transactions fees you should note:
- $5.00/ per transaction
- $2.00/ per non-TD ABM transaction
- $3.00/ per U.S. or Mexico ABM transaction
- $5.00/ per ABM transaction in any other country
- $2.00/ per month for paper statement fee
These transaction fees can be waived if you maintain a monthly balance of $25,000. When you bank with TD, you also have access to mobile deposit, TD’s spending tracker app, automated savings programs, and more.
Scotiabank Momentum PLUS Savings Account
Scotiabank is one of the largest banks in Canada. They have a wide range of products and services like credit cards, loans, mortgages, insurance, investments, savings accounts, and more. Their high-interest savings account is called the Momentum Plus Savings account; a savings account to help you meet all your savings goals. This savings account tracks your earnings and rewards you with higher interest rates the longer you save. They pay you a regular interest of 0.05% monthly plus a Premium period interest if no debit transactions were made during the premium period. This premium interest is designed in a way that compels you to not touch your money unless you have no choice. The rise in interest is an advantageous reward that you can work toward. There is no monthly fee, however, there is a $5.00 charge for every debit transaction that is not a self-service transfer.
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BMO Smart Builder Savings Account
The Bank of Montreal (BMO) is a multinational financial institution that offers a number of financial products and services like credit cards, insurance, mortgages, lines of credits, savings accounts, and more. BMO’s Smart Builder Savings Account is a great account for those consumers who are looking for extra motivation to save. It’s designed in a way that compels you to continuously put money into your savings. If not, you lose out on a whole percent of earnings on interest. The BMO savings account has a base interest rate of 0.05% plus 0.45% if you deposit $200 or more every month. There is no monthly fee and you are granted 1 free transfer out of the account every month. However, if you require any more withdrawals, it will cost you $5 per withdrawal.
CIBC eAdvantage Savings Account
Like the other big banks, CIBC offers a wide variety of financial products and services like credit cards, mortgages, loans, insurance, investments, savings accounts, and more. Their eAdvantage savings account offers a 0.10% interest rate with no monthly fee. However, there is a 5$ charge for any transaction like debit purchases, withdrawals, bill payments, branch transfers, Interac e-transfers, and cheques.
RBC High-Interest eSavings Account
The Royal Bank of Canada (RBC) offers numerous financial products and services. Their High-Interest eSavings account allows you to earn 0.05% interest on every dollar, which is a fairly balanced rate in comparison to the other banks. No monthly fee or deposits are required in order for you to earn interest on your savings. You also have unlimited transfers between this account and your other accounts with RBC. They also offer an automated savings program called Save Matic, which can help regulate your savings so that you can reach your savings goals faster.
Whether you choose to go with an online or traditional savings account, having one, in general, is most important. Proactively working on building your savings is key to managing unexpected expenses and future financial crises. A savings account will not only help keep your money secure but will grow your money and help you meet your future financial goals. The list above will help you narrow your options and choose a savings account that best suits your needs.
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