But what exactly is a high interest savings account? How does it work, and more importantly, do you really need one? Read on, because we’re sharing everything you need to know about the best savings accounts in Canada.
Summary of the Best High Interest Savings Accounts in 2020
High Interest Savings Account Promotional Interest Rate Everyday Interest Rate Apply Tangerine Savings
2.50%* 0.25% Visit Site EQ Bank Savings Plus Account
N/A 2.00%* Visit Site HSBC High Rate Savings Account
Up to 2.25%* Up to 0.25%* Visit Site LBC Digital
N/A Up to 2.05% Visit Site
*Terms and conditions apply.
There is no shortage of options for high interest savings accounts in Canada. Here’s a breakdown of the best savings accounts in Canada.
Review of the Best High Interest Savings Accounts
Tangerine also lets clients set up an automatic savings program and doesn’t lock in the money – you are free to move it around as you please.
The current interest rate with Tangerine is 0.25%, however, right now Tangerine is offering new clients 2.50%* on their first Savings Account for 5 months, up to a maximum of $1,000,000. With no fees and 24/7 customer service, it’s no wonder we selected Tangerine as the best online bank in Canada.
EQ Bank Savings Plus Account
When it comes to high-interest savings accounts in Canada, EQ Bank Savings Plus Account really is a great choice. The everyday interest rate is 2.00%*, making it one of the highest rates in Canada.
Additionally, there is no minimum balance requirement (though there is a maximum balance of $200,000), and it’s a savings account with no monthly fees.
EQ Bank Savings Plus Account offers free Interac e-Transfers®, as well as unlimited free transfers to other EQ accounts and unlimited bill payments.
*Interest is calculated daily on the total closing balance and paid monthly. Rates are per annum and subject to change without notice.
HSBC High Rate Savings Account
The HSBC High Rate Savings Account (HRSA) appeals to a wide range of savers because of its simplicity.
There are no minimum balances required and no monthly fees. Customers can open an HRSA online and enjoy a competitive interest rate of up to 2.25%* on New Deposits until August 6, 2020*.
Here’s how it works: A Bonus interest rate of 2.00%* is earned on New Deposits in an HRSA of up to a maximum of $1,000,000. On top of that, regular rates are earned on the entire HRSA Balance. That means New Deposits will earn 2.05% if your HRSA Balance is less than $25,000, or 2.25% if your HRSA Balance is $25,000 or more.
Interest is calculated daily and paid to you each month. Flexibility is key with account holders able to do three free transactions within each monthly statement period.
After the promo period ends, balances of less than $25,000 will earn 0.05% interest, while balances of $25,000 or greater will earn a higher 0.25% rate.
* Limited time offer until August 6, 2020. Rates are per annum and subject to change without notice. Terms and conditions apply.
How it works: you’ll get 2.05% interest on deposits up to $500,000. It’s an incredible rate worth considering!
In addition, there are no monthly account fees, no minimum balance required, and you can transfer funds at any time.
A few annoyances though: although this bank is entirely online, we found the sign-up process and linking external accounts unnecessarily difficult and slow. It took a call to customer support to set up the account.
Also, we found it takes a while for any transferred funds to hit your account.
Save this HISA for funds that you don’t need to easily access within 24 hours but want to earn an outstanding interest rate.
What is a High Interest Savings Account?
The goal with a high interest savings account is to help you save money. This benefits not just you as the client, but also the bank itself. With day-to-day chequing accounts, the bank needs to be able to move the money. However, with a high interest savings account, clients are “incentivized” to leave their money alone, therefore allowing the bank to loan it out to other customers.
In order to encourage customers to do this, banks offer high interest rates on specific savings accounts – which means that you, as the client, can earn money for keeping your money in one place. There are even some savings accounts without fees! However, there are often some restrictions in place with these types of accounts regarding withdrawals, access, and minimum deposits. Despite these restraints, having money in a high interest savings benefits you in the long run.
Anyone, at any age, can benefit from opening a high interest savings account. Whether you have some extra money sitting around with no immediate plans to use it or are saving for something specific in the future like retirement, a high interest savings account is a great place to put your money.
It’s an especially good option for those who aren’t comfortable with taking risks. That being said, the key to a successful high interest savings account is being able to leave it untouched, which does require some discipline.
How to Choose a Best Savings Account
There are several options when it comes to choosing a high interest savings account in Canada – so you will need to shop around and compare to find the best option for your personal needs. There are several factors to consider when choosing the best savings account in Canada including:
- Minimum/maximum balance
- Monthly fees
- Transaction fees
- Interest rates
- Access to your funds (how easy is it to move or withdraw money between accounts?)
You also need to pay attention to the fine print when it comes to the interest rate: is the rate you’re getting an introductory rate that will disappear in 3-6 months? Take the time to look into these details, as they vary from bank to bank and don’t immediately knock out the little guys – you’d be surprised at how much they have to offer.
A high interest savings account is really essential when it comes to personal finances and banking. As the above summaries indicate, you don’t necessarily need to have a ton of money to start one. Just make sure to take the time to read up on the pros and cons of each before choosing the best high interest savings account for your needs. Set up an automated savings plan, and you’ll be a savvy saver in no time!