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||Interest Rate||More Info|
|LBC Digital||Up to 3.30%||Learn More|
|EQ Bank Savings Plus Account||2.45%||Learn More|
|Wealthsimple Cash||2.4%||Learn More|
|Tangerine Savings||Promo: 2.75%* |
|Scotiabank® MomentumPLUS Savings Account||1.00%-2.0%||Learn More|
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
LBC Digital has been a disruptor in the banking world, offering up to 3.30% (!) interest for its high-interest savings account. How it works: you’ll get a 3.30% interest on deposits up to $500,000, and 1.25% on anything above $500,000. It’s an incredible rate…while it lasts. LCB Digital recently announced that, as of March 1, 2020, the annual interest rate for the LBC Digital HISA on deposits up to and including $500,000 will drop from 3.30% to 2.80%. But still, that’s a fabulous 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.
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 2.45%*, 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.
For those just starting out, Tangerine offers a great savings account with competitive perks such as no fees or service charges, and no minimum balance required. 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 1.05%, however, right now Tangerine is offering new clients 2.75% interest 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.
Wealthsimple is another great choice. The big draw here is the high interest rate which is 2.40%. That’s not a promotional rate or a limited time offer: it’s just their everyday awesome rate. If that isn’t enticing enough, there are no fees or minimum/maximum balance requirements. Plus, despite the fact that it’s an online-only bank, Wealthsimple deposits are protected by the Canadian Deposit Insurance Corporation (up to $1,000,000). For these reasons, it’s one of the best high-interest online savings accounts in Canada.
Scotiabank® MomentumPLUS Savings Account
The Scotiabank MomentumPLUS Savings Account is ideal for those who have a lower balance or are happy to leave their money alone for an extended period of time. This savings account has no monthly fee, no minimum balance, and unlimited self-service transfers to other Scotiabank accounts ($5 fee does apply for external transfers). As for the interest rate: the base rate is 1.00% however, that rate will increase (thanks to the premium period interest) the longer you leave your money untouched (minimum 90 days). If you don’t disturb your balance for 360 days or more, you can make the top rate of 2.0%.
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!
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