While savings accounts aren’t ideal for generating significant returns and achieving substantial capital growth, they serve a valuable purpose. They’re a low-risk option for parking funds earmarked for short-term goals, such as a vacation, wedding, tuition, or a down payment on a home. Here’s how high-interest savings accounts (HISAs) can help you:
- Outpace Inflation: The best HISAs offer interest rates that keep pace with inflation or even surpass it, helping your money retain its purchasing power.
- Easy Access to Funds: Unlike some investment options, HISAs allow for easy and penalty-free access to your money whenever you need it.
Top High-Interest Savings Accounts in Canada
Here’s a comprehensive list of some of the best high-interest savings accounts in Canada as of April 2024, categorized based on their key features:
High-Interest Savings Accounts with Promotional Rates
- Simplii Financial High-Interest Savings Account (6.00%) This account boasts a compelling promotional interest rate of 6.00% for the first five months from opening. It comes with no monthly fees and no minimum balance requirement. Additionally, Simplii offers a free chequing account with unlimited debits, Interac e-transfers, withdrawals, and personalized cheques. New clients can also unlock a $400 cash bonus when they open a chequing account and set up a direct deposit of at least $100 for three consecutive months.
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High-Interest Savings Accounts with Regular Interest Rates
- KOHO Earn Interest (5.00%) KOHO’s Essential account offers a regular, non-promotional interest rate of 5.00% on your savings balance. It functions similarly to a hybrid bank account, allowing for unlimited Interac e-Transfers, online and in-store bill payments, and free credit score checks.
You’ll also have access to a reloadable prepaid Mastercard for making payments and earning instant cash back on purchases. There’s a $20 welcome bonus when you open an account and make your first purchase using a referral code. - EQ Bank Savings Plus Account (Up to 4.00%) EQ Bank, the online arm of Equitable Bank, offers a competitive non-promotional interest rate of 2.50% on its high-interest savings account, rising to 4.00% if you set up a direct deposit. This account comes with no monthly fees, unlimited transactions, free electronic fund transfers, no minimum balance requirement, and free mobile cheque deposits. You can also combine it with the EQ Bank Card to earn an additional 0.50% cash back on all your purchases.
- Neo Financial High-Interest Savings Account (4.00%) Neo Financial’s recently launched HISA boasts a non-promotional interest rate of 4.00%. There are no monthly fees associated with this account, and it can be seamlessly integrated with other Neo Financial accounts, including a no-fee prepaid card, cash-back credit card, secured credit card, mortgages, and investment options.
High-Interest Savings Accounts with Bonus Offers
- Scotiabank MomentumPLUS Savings Account (Up to 6.05%) This account offers a tiered interest rate structure that can add up to 6.05% for a limited time. The breakdown includes:
- 1.30% regular interest rate
- 3.40% welcome bonus interest for the first 3 months
- Premium period interest ranges from 0.85% to 1.25% when you maintain your funds for 90-360 days
- An additional 0.05% to 0.10% bonus interest for having an eligible Scotiabank chequing account
Other High-Interest Savings Account Options
- Wealthsimple Save and Cash (1.50% to 5.00%) Wealthsimple, better known for its robo-advisor services, also offers a HISA called “Wealthsimple Save” with a 1.50% interest rate. There are no monthly fees and no minimum account size requirements. Additionally, you can open a Wealthsimple Cash account, which offers a higher interest rate and allows for instant money transfers to your phone contacts.
- Motive Financial Savings (4.10%) Motive Financial, a CDIC member, offers a HISA known as “Motive Savvy Savings” with a current interest rate of 4.10%. It comes with two free withdrawals per month (with a $5 fee for each additional withdrawal), no monthly fees, and no minimum balance requirements.
- Wealth One Bank of Canada HISA (4.00%) Wealth One Bank of Canada is a relatively new member of CDIC offering a HISA with a current interest rate of 4.00%. They also offer TFSA and RRSP savings accounts. This account comes with no monthly fees, no minimum balance requirements, and an automatic savings program (ASP) for easy and convenient deposits.
- Motusbank Savings (2.50%) Motusbank, a subsidiary of Meridian Credit Union, offers a high-interest savings account alongside no-fee chequing, competitive mortgage rates, and investment options. Their general savings account boasts a non-promotional interest rate of 2.50%. However, there’s a $1.25 fee per Interac e-Transfer.
- Tangerine High-Interest Savings Account (0.70%) Tangerine, a subsidiary of Scotiabank, offers a HISA called the “Tangerine Savings Account” with a current interest rate of 0.70%. This account comes with several appealing features, including no monthly fees, no minimum balance requirements, no lock-in periods, and an automatic savings plan. Tangerine also offers TFSA and RRSP savings accounts with similar interest rates.
- Alterna Bank HISA (2.25%) Alterna Bank and Alterna Savings, collectively known as the Alterna Financial Group, offer a HISA with a non-promotional interest rate of 2.25%. There’s no minimum balance requirement, and you’ll enjoy unlimited free bill payments and Interac e-Transfers each month. The maximum balance for new customers is $250,000, and this account is also available in Quebec.
- Oaken Financial Savings Account (3.40%) Oaken Financial, the direct banking arm of Home Trust, offers a HISA known as the “Oaken Savings Account” with a current interest rate of 3.40%. They also offer TFSA and RRSP savings accounts. This account comes with no monthly fees and no minimum balance requirement.
Choosing the Right High-Interest Savings Account
With a plethora of high-interest savings accounts available, selecting the most suitable option requires careful consideration of your specific needs and priorities. Here are some key factors to ponder:
- Interest Rate: Naturally, the interest rate offered is a significant factor. However, remember that promotional rates may not be permanent. Look for accounts with competitive non-promotional rates as well.
- Fees: Be mindful of any potential fees associated with the account, such as monthly maintenance charges, transaction fees, or fees for exceeding withdrawal limits.
- Minimum Balance Requirements: Some accounts may have minimum balance requirements to qualify for the advertised interest rate. Ensure you can comfortably maintain this balance to avoid missing out on potential earnings.
- Accessibility: Consider how easily you’ll need to access your funds. If you foresee frequent withdrawals, choose an account without limitations or penalties for withdrawals.
- Bonuses: Some institutions offer signup bonuses or introductory bonuses for opening a new HISA. While these can be attractive, ensure the ongoing interest rate and account features align with your needs.
Understanding High-Interest Savings Accounts
What is a High-Interest Savings Account (HISA)?
Simply put, a HISA offers a higher interest rate on your deposited funds compared to a traditional savings account. The interest is typically calculated daily on the closing balance and paid out monthly.
Benefits of a High-Interest Savings Account
- Earn Higher Returns: Compared to traditional savings accounts, HISAs provide a better return on your money.
- Safe and Secure: Your money is generally safe in a HISA, particularly if the financial institution is a member of the Canada Deposit Insurance Corporation (CDIC). CDIC insures deposits for up to $100,000 per customer in the event of a bank failure. Deposits at credit unions are typically insured provincially, often covering the full deposit amount.
- Flexibility: Unlike Guaranteed Investment Certificates (GICs) that lock in your funds for a specific period, most HISAs allow for easy and penalty-free access to your money whenever needed, making them ideal for emergency funds.
- Bonuses: Some banks offer enticing signup bonuses or introductory rates to attract new customers.