Here is a post on High Interest Savings Account Rate Comparison in Canada with a table showing the different rates available, of all things! I’m getting fancy on this blog and learning how to input tables onto the website, how cool is that? Now if only I can learn to use Excel. Ha.
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Why Everyone Needs High-Interest Savings in Canada
Everyone needs High-Interest Savings accounts, they are great. I actually have a number of high interest savings accounts myself because I find that they are a great way to hide money from myself so I don’t feel the impulse to spend my money when I see it building up in my main chequing or savings account. I think that HISAs are a great way to earn passive income.
Here are a few ways to use your High Interest Savings Account, o HISA:
- Use it as an Emergency Fund
- Keeping money in a safe place (not under your mattress) with a little interest income to combat inflation
- A place to keep your money if you need it in the short term (e.g. saving up for school, for a down payment)
- A place to keep your money that you plan to invest with
- A place to keep your money other than your chequing account
I like to call them HISA’s simply because HISA kind of sounds like HUZZAH!
I have more than a few HISAs, actually. To be honest, I am a bit of a high-interest savings account collector.
I have one where I funnel money in from my regular no fee chequing account with my primary bank. From this, I funnel money into my investment account or I keep it parked there to collect interest for short-term savings and emergency fund savings. It has been helpful to keep money set aside during my parental leave. I have another savings account for travel and home repairs.
In fact, for the Tangerine Bank high-interest savings, you can choose to put your money towards a goal. For me before 2014, it was to climb Mount Kilimanjaro. I had a Mount Kilimanjaro fund. I ended up using most of the money in that fund but I still have some money left over because I guess it wasn’t as expensive as a trip as I thought it to be. I even have a US Dollar high-interest savings account!
Anyway, I’m a huge fan of high-interest savings account and I like to keep abreast with the recent rates. Since the Bank of Canada’s prime rate has been increasing, the high-interest savings account interest rate should be increasing too. The cost of borrowing is increasing but the interest rate for savings have not been increasing (what gives?!). They have slowly been increasing and some financial institutions are faster than others to increase their rates.
Some high interest savings accounts are even linked to new promotional chequing accounts where you can get $300 cash or a new iPad.
Tax Considerations for High-Interest Savings Accounts in Canada
Of course, one has to be cognizant of the tax considerations for High-Interest Savings Accounts in Canada. Namely, that if your high interest savings account money is kept outside of a registered account (and the nature of these accounts being short terms savings, I would assume that most of the time these will be outside of a registered account), the interest income earned from it will be taxed at your highest marginal rate.
Taxtips.ca has a great chart listing the marginal rates in your province or territory, so you can expect or estimate how much tax you will be paying on your interest income earned from the high-interest savings.
For example, if your marginal rate was a hypothetical 25%, and you earned $1000 in interest income for the year, then you would pay $250 in taxes on the $1000 interest income.
Safety Considerations for High-INterest Savings Accounts
All of the financial institutions and the money is protected by CDIC (Canadian Deposit Insurance Corporation) up to $100,000 Canadian dollars (including principal and interest). The CDIC is a Crown Corporation.
Related: What does CIPF and CDIC Cover?
The coverage is free and automatic, you don’t have to sign up for coverage but it’s good to know that your money is safe when you plunk your hard earned cash into a financial institution. CDIC has over 80 Canadian financial institutions that are members. If the financial institution fails, you don’t have to call CDIC, they will pay you directly.
To be eligible for the CDIC insurance, your deposit has to be to a savings account (or Guaranteed Income Certificate etc.) and the currency has to be in Canadian dollars.
Hopefully, this High-Interest savings account rate comparison in Canada is useful for your money journey!
Here is a comparison of some of the high-interest savings accounts in Canada
Interest is calculated daily (based on the annual rate) and paid monthly.
|Financial Institution||High Interest Savings Account||Rate|
|Tangerine Bank||Tangerine Savings Account||6.00% for the first 5 months|
|EQ Bank||EQ Bank Savings Plus||2.50%*|
|Canadian Tire||Canadian Tire High Interest Savings Account||3.50%|
|Alterna Bank||Alterna High Interest Savings Account||2.25%|
|Oaken Financial||Oaken Savings Account||3.40%|
|Simplii Financial||Simplii Financial High Interest Savings Account||6.00% (promotional)|
|Royal Bank of Canada||RBC Royal Bank High Interest eSavings||0.05%|
For an even more comprehensive list of all the available HISAs available in Canada and the rates, you can check out this HISA chart by CANNEX. CANNEX is an independent and privately held company who provides access and transparency to retirement income products available in Canada.
I’ll highlight the top three. The highest rate that is ‘consistent’ without a limited time promotional period or anything is actually EQ Bank.
This is the original ‘online-only bank’ and was originally called ING Direct (which opened up in 1997). They are now owned by Bank of Nova Scotia and have been renamed to Tangerine Bank. I have had a Tangerine account for over 10 years and am a big fan.
With the Tangerine Savings Account, you get:
- A High Promotional rate for the first 5 months
- After you open a Tangerine account, you will get an Orange Key assigned to you, and you can refer friends and family to Tangerine Bank. If your friend or family signs up for Tangerine Bank and deposits $250, they get $50 and you will get $50 too!
- There are no minimum balances required
Tangerine has 24/7 telephone coverage and has a live chat function which operates Monday to Friday 8:00 am – 8:00 pm EST
on Weekends from 9:00 am – 5:00 pm EST.
Tangerine frequently has Tangerine promotions and referral codes to use. Right now it’s up to $200 when you open up a Tangerine account.
EQ Bank is a trademark of Equitable Bank and they are a federally regulated Schedule I bank with over $25 billion in assets under management. It is a Canadian company and has been around for over 45 years. They came out with astounding HISA rates a few years ago and I kept waiting for them to decrease their rate, thinking that it was a promotion or ‘too good to be true’. Well, they still have one of the highest rates (non-promotional period) in Canada and haven’t taken away their good rate.
With the EQ Bank Savings Plus Account, you get:
- UNLIMITED INTERAC e-TRANSFERS® (email money transfer)
- Unlimited electronic fund transfers, so you can funnel your money online however which way you want without having to worry about getting dinged.
- There is also no minimum balance
- The maximum balance is $200,000 (plus accrued interest)
- EQ Bank has mobile cheque deposit (take a picture of your cheque to deposit it)
EQ Bank also has Unlimited Free Interac e-Transfers®! At around $2 a pop (for my day to day big bank anyway), this is like 10 dollars a month + saved! It is $1.50 for additional e-Transfers after your limit.
They have 7 days a week phone coverage and they have an online chat function as well. They are based out of Toronto, Ontario.
To sign up for 2.50% every day interest rate* with EQ Bank, click here!
*Interest is calculated on the total closing balance and paid monthly. Rates are per annum and subject to change without notice.
Alterna Bank has a High-Interest eSavings Account that also is high interest. They are a credit union and their parent credit union is Alterna Savings. They state that $0.85 of every $1.00 at Alterna Bank is reinvested back to into local communities through partnerships with non-profits and community events. The headquarters is located in Ottawa, Ontario.
With this bank you have:
- No minimum balance
- Unlimited Interac e-Transfers®
- The maximum balance is $250,000 (plus accrued interest)
- You can deposit cheques with your smartphone by taking a picture
- Allow for joint accounts
Alterna Bank’s contact centre hours are: Monday to Friday: 8:00 am to 8:00 pm EST and Saturday 9:30 am to 4:00 pm EST
Canadian tire High INterest savings Account
Canadian Tire Bank has a high interest savings account with 1.10% rate.
The rate is 3.50%, there are no fees, and there is no minimum balance.
You can open an account if you are older than 12 years of age and you do not live in Quebec.
Some of the downsides include no no email transfers, but you can do free electronic fund transfers to a linked bank account and via online banking or via phone.
There are no personal cheques with this account and there are no physical ATMs or banks that you can withdraw your money from.
When you apply, you will need a signed personal cheque and your Social Insurance Number, to open a joint account, you will need both of your signatures on the personal cheque or two personal cheques with your own signatures.
High-Interest Savings Summary
- If you have large friends and family network, signing up for Tangerine may be a good idea because you can capitalize on the referral bonuses and the massive promotional rate for the first six months
- If you like to have mobile cheque deposits and Interac e-Transfers® then either Alterna Bank or EQ Bank may be better for you
- If you like to have one of the highest rates without having to worry about promotional periods, then EQ Bank is probably preferable for you (provided you don’t have more than $100,000 to deposit). All rates are subject to change without notice!
How many high-interest savings accounts do you have?
Are you a HISA collector like me or are you able to be more streamlined and minimalist with your HISAs?
GYM is a 30 something millennial interested in achieving financial freedom through disciplined saving, dividend and ETF investing, and living a minimalist lifestyle. Before you go, check out my recommendations page of financial tools I use to save and invest money. Don’t forget to subscribe for blog updates, a free dividend yield spreadsheet, and the free Young Money Bootcamp eCourse.