With its low fees and easily navigable website, robo-advisor Wealthsimple has been successfully luring people away from traditional investment services for the past several years. Now it’s planning to entice Canadians away from conventional banks with its recently launched Smart Savings account — a high interest savings account in Canada. It’s quickly becoming known as one of the best savings accounts in Canada.
“Our Smart Savings account is a low risk, fixed-income investment portfolio built for today,” said Kate Chippindale, partnerships marketing manager at Wealthsimple, in an email interview. “We thought the tried and true savings plan could use a Wealthsimple makeover.”
With the launch of Wealthsimple’s new product, we decided to take a closer look at this savings account with a premium interest rate.
What’s New About Wealthsimple’s Smart Savings?
There are a variety of features that make Smart Savings unique. Above all is its premium 2% interest rate—and no, that’s not an introductory rate. Many financial institutions attempt to entice new clients to open accounts by offering high introductory interest rates that quickly plummet to miserly earnings once a time threshold—often three months—has been reached.
Wealthsimple’s Smart Savings account, on the other hand, has no introductory rate and offers a standard premium rate of 2% on all deposits up to a $100,000. Once that threshold is reached, any additional funds you deposit will be subject to a variable rate of interest.
“For clarification, your interest rate isn’t tiered,” said Chippindale. “If you have an account with $100,005, your first $100,000 will have the highest rate and the $5 will be on the second highest rate. Your exact interest will be weighted against your total account value and shown in your Wealthsimple account.”
Adding to the account’s allure are the lack of transactions fees. Account holders can make an unlimited number of contributions or withdrawals and never pay a fee. With Smart Savings, there’s also no minimum or maximum account balance needed. Furthermore, as with the bricks-and-mortar banks, your deposits with Wealthsimple are protected by the Canadian Deposit Insurance Corporation up to $1,000,000.
When you consider that most general savings accounts offered by Canada’s big five banks usually hover well below 1.25% and charge fees like an average of $5 per transaction, Wealthsimple’s savings account seems very smart indeed.
What are the Pros and Cons of Wealthsimple’s Smart Savings?
As an online-only financial service, you can’t go into a bank branch or use an ATM to withdraw money. But don’t panic: you can access your Wealthsimple account by linking it to an outside bank account. That way, you can transfer money from your Smart Savings account to your traditional bank account for easy access.
“You can withdraw from your Smart Savings account at any time and we won’t charge you for any withdrawals,” said Chippindale. “It can take up to 2 business days to withdraw your Smart Savings contributions. Most withdrawals are deposited into your destination account within 2 business days, but sometimes it can be slower. We’re constantly working on improving the speed of withdraws so you can have access to your money faster.”
Signing up for a Smart Saver account is pretty easy, and you can do it all online. You simply fill out an application form online by providing some basic information. You’ll also be asked some questions about any investment experience you might have so Wealthsimple can get a full picture of your needs and savings goals. You’ll also need to confirm and securely connect a bank account. On average, it takes about five business days to activate your account.
Personally, I already have an investment account with Wealthsimple and I think their Smart Savings account offers real value to people tired of traditional banks with terribly low interest rates and constantly rising fees. You simply won’t find a conventional bank offering a basic savings account with a premium interest rate along with no fees and unlimited transactions.
While there are some drawbacks to the Smart Savings account like not having immediate access to your cash because you can’t use an ATM or visit a physical location, overall, if you feel comfortable with banking online, it’s a solid savings option.
I also like that the company has a perk called Wealthsimple Black. It gives you additional benefits like VIP airline lounge access, lower investment fees (for those who also have investment accounts) and financial planning services if you have over $100,000 in Wealthsimple investment and savings accounts.
Better yet, there couldn’t be a better time to sign up for a Wealthsimple account because Young and Thrifty readers get their first $10,000 of investments with no management fees for a year when they sign up for their first account at Wealthsimple.
Disclaimer: Young & Thrifty has entered into a referral and advertising arrangement with Wealthsimple US, LTD and receives compensation when you open an account or for certain qualifying activity which may include clicking links. You will not be charged a fee for this referral and Wealthsimple and Young and Thrifty are not related entities. It is a requirement to disclose that we earn these fees and also provide you with the latest Wealthsimple ADV brochure so you can learn more about them before opening an account.