High Interest Savings account are a great way to have someplace to stash your money so it can be readily accessible. Here are some examples
A High Interest Savings account is a great way to have someplace to stash your money so it can be readily accessible.  These days, their rates are pretty much the same as GIC’s, so might as well keep your cash here to avoid the penalty you would receive for withdrawing a GIC too early.

Some people keep loads of money in their chequing account or “savings” account at the bank so they feel good when they withdraw money from the ATM and it tells you your large balance.  The savings accounts at the bank offers what, 0.3%??  AND they make you have a minimum balance and ‘ding’ you for using too many transactions.  These are not savings accounts.  You want a real one that gives you some substance.


The rates varied – years they were pretty good, at 3%, now with the recession going down they range from 0.8% to 2.1% if you’re lucky.  The ones with higher rates are usually online, so you’d better be comfortable doing internet banking (which without a doubt, I’m sure you are because you are Generation Y)!  I think the way that these financial agencies give such high rates is because there is less “administration cost” with internet banking.  If you notice, the “big banks” HSBC and RBC have lower interest rates.

I personally use Tangerine – an online-only bank (see our Tangerine Review).  I like how you can do a pre-authorized transfer from your regular bank chequing account to this.  If I separate it, I’ll be less inclined to dip my grubby fingers in it when I need cash for my frivolous purchases (like my addiction to traveling).

One great thing is that you can open up a TFSA and keep your high interest saving account in that… to avoid that 100% tax at your marginal rate (which is, by the way, the downside to having too much money in your high interest savings account).  So with the TFSA, you CAN have your cake and eat it too. =)

Check out our in-depth article here on Canada’s online banks.  It talks about who has the best high interest savings accounts, and tips for sort of how to “hack the system” when it comes to shuttling money back and forth between a checking and savings account.  These online-only banks have no brick-and-mortar locations – in other words MUCH less costs.  They can subsequently pass these savings on to consumers in the form of increased interest rates, and excellent online customer service.  You can read all about the online market leader in Canada (and the bank we use) by checking out our Tangerine Review.  Tangerine is the former ING Direct and was really a big time market disrupter when it came to Canada.  They were first out of the blocks with stuff like online high interest savings accounts and depositing cheques via cell phone app.  It also fully integrates with our #1 budgeting app over at Mint.  Finally, when it comes to online lending, Fintech leaders are now offering easy online solutions there as well.  Check out our Borrowell review for more information.

Currently in 2017 Zag Bank has the #1 high interest savings account rate at 2.1%.  They are a great place to park some cash that you might need in the short-to-medium term.  For example, opening up a Tangerine or Zag Bank account to take advantage of high interest rates would be an excellent strategy to boost your housing down payment and get into your own place a couple months sooner.

One trend I really wish I could start is for Canada to have the same rates as Australia – the Canadian economy will have to pick up before we can get our rates there.

Every high interest savings account company (HISA) above is backed by the government, so your money is insured.  You can rest assured.

Which HISA (they should use that term more often- it’s catchy!) do you use?  I’m interested to read which features are most sought after in a HISA?  Do you care if you’re able to conveniently log on and shift money to a chequing account and then use a cheque from that financial institution?  Do you want to be able to use a debit card to withdraw money from your savings account?  Finally, do you only use a HISA with your TFSA or are there even folks out there using it in their RRSP due to the high valuation in the stock market right now?

Either way, having a high interest savings account is a must if you have more than a few hundred bucks lying around. (Why not earn free money?) Shop around and get one open!

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