Finding the perfect savings account in Canada can feel like searching for a hidden treasure. You want a safe place for your money, but you also crave a decent return on your investment. Luckily, there are several high-interest savings accounts (HISAs) in Canada vying for your attention, each with its own set of features and benefits. This article will dissect the top contenders in April 2024, empowering you to make an informed decision.
Understanding Savings Accounts
Savings accounts are bank accounts designed to store your money securely while offering a bit of interest in return. Unlike chequing accounts, most savings accounts don’t have monthly fees, but they may charge transaction fees for withdrawals or transfers.
Interest rates on savings accounts can be flat (a consistent rate regardless of your balance), tiered (offering higher rates for larger balances), or promotional (a temporary, boosted rate). While savings accounts are generally safe, the interest they provide rarely outpaces inflation.
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Here are some key reasons to consider a savings account:
- Emergency Fund: Build a safety net to cover unexpected expenses.
- Short-Term Goals: Save for a vacation, down payment, or upcoming purchase.
- Investment Diversification: Spread your investments across different asset classes for a balanced portfolio.
- Safekeeping with a Return: Earn some interest while keeping your money readily accessible.
Types of Savings Accounts in Canada
Several savings account options cater to various needs in Canada. Here’s a quick rundown:
- Regular Savings Accounts: These accounts offer minimal interest and are often bundled with chequing accounts.
- High-Interest Savings Accounts (HISAs): As the name suggests, HISAs provide significantly higher interest rates than regular savings accounts. They may have limitations on withdrawals to encourage saving.
- Tax-Free Savings Accounts (TFSAs): Canadians over 18 can contribute to TFSAs and grow their savings tax-free. Contribution limits are set annually by the government.
- RRSP Savings Accounts: Registered Retirement Savings Plans (RRSPs) can include a savings account component alongside investments like ETFs and mutual funds.
- Hybrid Savings Accounts: These accounts blend features of savings and chequing accounts, offering more flexibility. Examples include EQ Bank’s Savings Plus Account and Wealthsimple Save.
- US Dollar Savings Accounts: Ideal for holding USD currency and earning interest.
- Children’s or Youth Savings Accounts: Designed for minors, these accounts often come with free transactions and better rates than basic savings accounts.
Choosing the Best Savings Account: Key Considerations
When selecting a HISA, here are some crucial factors to weigh:
- Interest Rates: While interest rates are generally low across the board, online banks typically offer more competitive rates that may even surpass inflation. Be sure to understand how the bank calculates interest and whether there are introductory promotional rates.
- No Monthly Fees: Look for accounts that waive monthly maintenance charges.
- Transaction Fees: Does the account offer free and unlimited transactions? Consider withdrawal fees, Interac e-Transfer costs, and ATM access.
- Minimum Deposit Requirement: Some HISAs require a minimum deposit before your money starts generating interest.
- Convenience: Many online banks operate solely online and via phone. Evaluate if this aligns with your preferred banking style. Is the mobile app user-friendly? What are customer support hours like? Does the account offer mobile cheque deposits and automatic savings plans?
- Deposit Insurance: Savings accounts in Canada are typically insured by the Canada Deposit Insurance Corporation (CDIC) up to $100,000 per insured category. Confirm the insurance coverage amount for your chosen account.
Top HISA Contenders in Canada for April 2024
The Canadian HISA landscape is brimming with options. Here’s a closer look at some of the top contenders as of April 2024:
- Simplii Financial High-Interest Savings Account: This online account from CIBC currently boasts a stellar 6.00% promotional interest rate. There are no monthly fees, and you can open a linked chequing account with unlimited free debits, Interac e-Transfers, withdrawals, and personalized cheques.
New clients who set up a direct deposit of $100 or more for three consecutive months can snag a $400 cash bonus. - KOHO Earn Interest Account: KOHO offers a 5.00% interest rate on your account balance, along with 1% cash back on everyday purchases made with their reloadable prepaid KOHO Mastercard (groceries, restaurants, gas, and transportation).
You’ll enjoy unlimited free Interac e-Transfers, free credit score checks, and access to 0% APR cash advances. KOHO’s Essential account comes at a $0 monthly cost if you set up a recurring direct deposit or regular savings contributions.
EQ Bank Personal Savings Account: EQ Bank’s high-interest savings account, also known as EQ Bank Savings Plus, offers a tiered interest rate structure. You can earn up to 4.00% on balances up to $200,000 if you set up a direct deposit.
Even without a direct deposit, the base rate is a respectable 2.50%. There are no monthly fees, unlimited Interac e-transfers, bill payments, and electronic fund transfers. EQ Bank boasts a user-friendly mobile app and provides a prepaid Mastercard with unlimited 0.50% cash back on purchases free ATM withdrawals and foreign currency transaction fees. - Neo Financial High-Interest Savings Account: Sign up for a Neo High-Interest Savings Account and earn a standard 4.00% interest rate on your savings. This account has no monthly fees, and the rates are not promotional. You can also apply for a free Neo Money account with a prepaid card for online and in-person purchases and bill payments.
The Neo Money Card offers up to 5% cash back on purchases and includes a $20 bonus. While Neo doesn’t allow mobile cheque deposits, setting up direct deposits and making unlimited transactions is a breeze. They also offer a no-fee cash-back credit card and a secured credit card. - Wealthsimple Save Account: Wealthsimple, a popular robo-advisor in Canada, offers a high-interest savings account called Wealthsimple Save. This account boasts no monthly account fees, no minimum balance requirement, and a 1.50% interest rate. When you open a free Wealthsimple Cash account, you can potentially earn up to 5.00% interest.
Challengers from Big Banks and Credit Unions
While Online Banks Often Dominate the Hisa Landscape with Their Competitive Rates, Traditional Big Banks and Credit Unions Shouldn’t Be Completely Disregarded. Here Are a Few Contenders to Consider:
- Scotiabank Momentum Plus Savings Account: This Account Stands out As One of The Better Savings Options from A Traditional Bank in Canada. It Boasts No Monthly Fees or Minimum Balance Requirements, and You Can Even Deposit Cheques Using Your Smartphone.
The Momentum Plus Savings Account Offers a Regular Rate of 1.40% with The Potential to Earn a Premium Rate (up to 1.25%) if You Maintain a Consistent Balance for 90 to 360 Days. Customers with Premium Chequing Accounts from Scotiabank Can Qualify for Additional Interest Rate Boosts. - Achieva Financial High-Interest Savings Account: This subsidiary of Cambrian Credit Union Offers a High-Interest Savings Account with A Compelling 3.60% Rate. There Are No Monthly Fees, and You Get Free Deposits, One Free Cheque, Direct Transfer, or Monthly Pre-Authorized Payment.
Additional Transactions Cost $1.00 Each. Deposits at Achieva Are Protected by The Deposit Guarantee Corporation of Manitoba (dgcm).
Final Thoughts
Finding the Perfect Hisa in Canada Depends on Your Individual Needs and Priorities. Consider Factors Like Interest Rates, Fees, Convenience Features, and Minimum Balance Requirements. Remember, Online Banks Generally Offer the Most Competitive Rates, but Traditional Banks and Credit Unions Can Still Be Viable Options, Especially if You Value In-Person Banking Services.
Additional Tips
- Shop Around and Compare Rates: don’t Settle for The First Hisa You Come Across. Take Some Time to Research Different Options and Compare Their Features.
- Read the Fine Print: Understand all the Terms and Conditions Associated with An Account Before Opening It. Be Mindful of Potential Fees and Limitations.
- Consider Your Long-Term Goals: are You Saving for A Short-Term Goal or Building an Emergency Fund? Knowing Your Goals Can Help You Choose an Account that Aligns with Your Needs.
- By following these tips and leveraging the information provided, you can confidently choose a high-interest savings account in Canada that will help your money grow.