The best high-interest savings accounts in Canada for 2020

Ratehub.ca
by Ratehub.ca February 11, 2020 / No Comments

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When it comes to making daily purchases or common financial transactions, using chequing accounts or credit cards are undoubtedly great banking options. But if you have a plan for your future, financial goals, or a little extra money, high-interest savings accounts (HISAs) are excellent financial tools that can have your money earning money for you at a quicker rate.

That’s why finding the best bank or credit union in your province or territory, can significantly improve how your returns over time.

A high-interest savings account is also an excellent savings tool for long-term and short-term savings goals; many of the best high-interest savings accounts in Canada currently offer attractive interest rates, with most options exceeding 2%.

Below, you’ll find some general information about Canada’s best high-interest savings accounts. You’ll also learn more about how savings accounts with high-interest and using one can amplify your capabilities to earn more wealth.

The best high-interest savings accounts in Canada

Rate Account
2.70% Scotiabank Momentum PLUS Savings Account (360-premium) get this rate
2.00% EQ Bank Savings Plus Account get this rate
1.69% Alterna Bank High Interest eSavings Account get this rate
1.65% Oaken Financial Oaken Savings Account get this rate
2.50% Tangerine Savings Account get this rate
2.50% CIBC eAdvantage Savings Account get this rate
0.90% Wealthsimple Wealthsimple Cash get this rate
Want to see how your savings account compares to the rest? Compare Best Savings Accounts

 

Motive Financial High-Interest Savings Account

More details about the Motive Financial High-Interest Savings Account

A division of Canadian Western Bank, Motive Financial is an online bank that serves customers through its website and mobile app. It currently offers an exceptional high-interest savings account, with tiered interest rates on savings accounts.

Clients investing any amount of money can take advantage of an interest rate of 2.05%. Motive Financial also offers a joint savings account option, along with widely loved chequing account and GIC options that provide enhanced flexibility and various banking options to its customers.

Motive Financial is not available to citizens of Quebec.


EQ Bank Savings Plus Account

More details about the EQ Bank Savings Plus Account

EQ Bank currently offers one of the best high-interest savings account rates in Canada. 

The EQ Bank Savings Plus Account currently offers a competitive interest rate of 2% and requires no minimum balance to open an account.

Funds and interest are insured by the Canada Deposit Insurance Corporation (CDIC).  It’s entirely free to open, with no monthly contribution limits as well as unlimited Interac e-transfers and internal transfers.

An EQ Bank Savings Plus Account doesn’t come with a physical debit card or chequing account. The bank only operates online and specializes in savings account and GICs. EQ Bank also has an easy-to-use mobile app for your convenience.

It’s also worth noting that EQ Bank’s Savings Account is the winner of the Ratehub.ca Personal Finance Awards for the category of the Top High-Interest Savings Account.

EQ Bank is not available in Quebec.

There’s a lot more to say about EQ Bank – and it’s all covered in our EQ Bank Review.


MAXA Financial High-Interest Savings Account

More details about MAXA Financial High-Interest Savings Account

MAXA Financial currently offers one of the best high-interest savings account in Canada, at 2.05%. As a digital bank, a MAXA Financial high-interest savings account comes with no monthly fees and one free debit transaction per month. Interest in a MAXA high-interest saving account is calculated daily and paid to customers monthly.

The online bank offers a high-interest savings account that is insured by the Deposit Guarantee Corporation of Manitoba (DGCM). MAXA Financial products are available to all Canadian citizens.


Alterna Bank High-Interest eSavings Account

More details about the Alterna Bank High-Interest eSavings Account

Alterna Bank is a division of Ottawa-based Alterna Savings, one of Canada’s oldest Credit Unions. The online bank offers an interest rate of 1.69%. An Alterna Bank HISA is CDIC insured, comes with no monthly or annual fees, and offers unlimited transactions and internal transfers. The digital bank offers joint account options too.

Each month, clients can use two free Interac e-Transfers to move their money from the account, but transfers from an Alterna Bank chequing account are unlimited. Alterna Bank customers can access any ATM in the EXCHANGE Network, which includes ATMs from the National Bank of Canada.

Alterna Savings is available to all Canadian citizens.

 


Wealthsimple Cash

More details about the Wealthsimple Cash

You probably know Wealthsimple, primarily as one of the best robo-advisors in Canada. Still, the wealth management platform offers much more than managing ETF portfolios and other types of trading, saving, and investment products.Wealthsimple recently switched its high-interest savings account into an incredibly versatile prepaid account known as Wealthsimple Cash. It still works exactly the same as the Wealthsimple Save High-Interest Savings Account, except now, customers can use it like a chequing account and enjoy an interest rate of 0.90%.

The account works like a savings and chequing account combined (also known as hybrid accounts). To make the package sweeter, there are no monthly fees or minimum deposit requirements. Wealthsimple also offers joint accounts with the same interest rate.

Wealthsimple is available to all Canadian residents.


Oaken Financial High-Interest Savings Account

More details about the Oaken Financial High-Interest Savings Account

Oaken Financial is a CDIC-insured bank that operates exclusively online and a subsidiary of its parent company, Home Trust. An Oaken Financial high-interest savings account offers an interest rate of 1.65% on deposits and comes with unlimited withdrawals and transfers. The savings account also comes with no minimum deposit requirement.

Interest is calculated daily and paid out to customers monthly. An Oaken Financial high-interest saving account also comes unlimited Interac e-transfers, internal transfers, and no additional fees for external ATM use. Oaken Financial also offers joint bank account options.

Oaken Financial products are available to all Canadian citizens.


Scotiabank Momentum High-Interest Savings Accounts

More details about the Scotiabank Momentum High-Interest Savings Accounts

One of the highest entries on this list from a major bank, Scotiabank’s Momentum Plus account offers tiered interest rates. Higher rates apply to savings that remain untouched for extended periods. It’s the most efficient high-interest savings account Scotiabank currently provides and requires no minimum balance, allows for unlimited transfers, and is CDIC insured.

Here’s how the Scotiabank Momentum Plus’ tiered interest rate works.

You’ll start out by earning 0.15% and your interest rate will progressively increase as follows:

  • 0.15% + 0.50% after 90 days (total of 0.65%)
  • 0.15% + 0.60% after 180 days (total of 0.75%)
  • 0.15% + 0.75% after 270 days (total of 0.90%)
  • 0.15% + 1.10% after 360 days (total of 1.25%)

Scotiabank will increase your interest rate by 0.10% if you also have an Ultimate Package chequing account along with an additional 1.35% until August 31 as part of a limited-time promotion. Tick off all the right boxes and you’ll earn up to 2.70% for a limited time.

Scotiabank products are available to all Canadian citizens.


Tangerine High-Interest Savings Account

More details about the Tangerine High-Interest Savings Account

Tangerine, Scotiabank’s direct-to-customer bank, offers high-interest savings account with an interest rate of 0.25%. New clients can enjoy a promotional interest rate of 2.50% for the first five months.

The account requires no minimum balances or monthly fees. Tangerine offers a variety of other financial products, and even allows cardholders to use Scotiabank ATMs, should they choose to open a chequing account and withdraw liquid cash.

Tangerine products are available to all Canadian citizens.


National Bank High-Interest Savings Account

More details about the National Bank High-Interest Savings Account

National Bank offers a savings account, which currently provides a nominal interest rate of 0.15%. The savings account permits unlimited transfers and one free withdrawal a month. Customers can use National Bank ATMs or ATMs affiliated with the EXCHANGE Network.

National Bank is available to all Canadians


Laurentian Bank of Canada (LBC Direct) Digital High-Interest Savings Account

More details about the Laurentian Bank of Canada Digital High-Interest Savings Account

The Laurentian Bank of Canada (LBC), also known as LBC Direct, offers its Digital High-Interest Savings Account with the best savings account rate Canadians have seen in years.

Canadians investing $500,000 or less can take advantage of an interest rate of 2.05%. Investments once cent over the half-a-million-dollar mark will receive an interest rate of 1%. This is not a promotional rate, either, meaning LBC Direct customers can enjoy this rate for quite some time.

The best part? There is no minimum balance requirement or monthly account fees. That means basically anyone can get a piece of the high-interest action.

LBC Direct savings accounts include CDIC insurance. The Quebec-based bank also offers various additional banking products and proudly calls itself a member of the EXCHANGE Network.

The Laurentian Bank of Canada Digital High-Interest Savings Account is open to all Canadian citizens.


Implicity Financial High-Interest Savings Account

More details about the Implicity Financial High-Interest Savings Account

The Implicity Financial High-Interest Savings Account comes with an excellent interest rate of 1.75%. The account also comes with no monthly fee and includes unlimited transactions at no cost, with unlimited deposits and withdrawals. The Implicity Financial high-interest saving account also honours joint account options. Interac eTransfers and withdrawals from external ATMs come with a flat rate of $1.50.

Implicity Financial is a digital credit union and insured by the Deposit Guarantee Corporation of Manitoba (DGCM) and available to all Canadian citizens.


Manulife Bank of Canada High-Interest Savings Account

More details about Manulife Bank of Canada’s High-Interest Savings Account

Manulife Bank of Canada Advantage Account offers a high-interest savings account that also doubles as a chequing account. With a minimum balance of $1,000, customers can reap the benefits of high-interest with enhanced flexibility.

If you are using the account with a balance lower than this amount, transactions and e-transfers cost $1. Manulife Bank of Canada is a member of the EXCHANGE Network, which allows Canadians access to 3,300 ATMs.

Manulife Bank of Canada proudly serves citizens of Quebec.


Motusbank High-Interest Savings Account

More details about the Motusbank High-Interest Savings Account

Motusbank is an online bank owned and operated by Meridian Credit Union. It currently offers a competitive interest rate of 1.55% on deposits placed in their high-interest savings account. As a bank that operates exclusively online, Motusbank offers customers the luxury of an easy-to-use online interface and customer service via telephone.

The high-interest savings account is CDIC-insured with no monthly fees, unlimited transactions, and internal transfers. Customers banking with motusbank can use ATMs that belong to the Exchange Network.

Motusbank is available in Quebec.


Luminus Financial Investment Savings Account

More details about the Luminus Financial Investment Savings Account

Luminus Financial is a Toronto-based credit union that currently offers one of the best high-interest savings accounts in Canada. However, the Torontonian credit union may require an in-person visit to open an account. 

A Luminous Financial high-interest savings account comes with a rate of 1.25%.

A fun fact about Luminus Financial is that the credit union was born in the 1950s and created by several employees of the famous Toronto-based newspaper, the Toronto Star. Luminus Financial Investment Savings Account is available to all Canadian citizens.


BMO High-Interest Savings Account

More details about the BMO High-Interest Savings Account

BMO offers three savings accounts with three different interest tiers: the BMO Savings Builder, Premium Rate Savings, and the Smart Saver. The BMO Savings Builder Account is BMO’s best savings account that offers an interest rate of up to 0.70%. Opening a high-interest savings account with BMO requires a $200 minimum deposit each month.

The account also provides one free transfer a month. Additional transfers or withdrawals cost $5 each. The BMO Premium Rate Savings Account comes with an interest rate of 0.05%.

BMO savings account is available to all Canadian citizens.


Simplii Financial High-Interest Savings Account

More details about the Simplii Financial High-Interest Savings Account

CIBC’s direct-to-consumer brand, Simplii Financial, offers an affordable, no-frills banking option to Canadian citizens. It has become one of Canada’s favourite online banks, primarily for its no-fee banking option and its high-interest savings accounts and other financial products. 

Right now, a Simplii Financial high-interest savings account offers an interest rate of 0.30% on savings account deposits. All accounts with Simplii Financial are CDIC insured and offer its customers unlimited withdrawals, account transfers, and Interac e-transfers. The best part? There are no monthly fees or minimum deposit requirements in any account.

Simplii Financial products are not available in Quebec.


RBC High-Interest Savings Account

More details about the RBC High-Interest Savings Account

Royal Bank of Canada’s High-interest Savings Account offers CDIC insurance and on deposits. The account allows one free withdrawal each month from an external RBC ATMs.

Transfers between accounts are free and do not come with a delay and require no minimum deposit requirements. RBC offers endless additional banking and investing options as well as physical branches with various financial resources.

RBC Royal Bank products are available to all Canadians.


CIBC eAdvantage Savings Account

More details about the CIBC eAdvantage Savings Account

CIBC eAdvantage Savings Account offers interest on every dollar deposited at 0.20%. Transactions, such as debit purchases, ATM withdrawals, bill payments, e-transfers, and branch transfers, come with a fee of $5.00 each. Like most major Canadian financial institutions, CIBC does offer CDIC insurance with this high-interest savings account. 

CIBC also offers the luxury of physical branches, which are a commodity and a necessity for many Canadians. For a limited time, CIBC is offering to boost its interest rate by 2.30% for the first 120 days for new accountholders.


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What is a high-interest savings account?

In the most basic terms possible, a high-interest savings account is an account meant for saving money. A savings account is a financial tool that pays interest on deposits and permits access to your money. Funds in a high-interest savings account are accessible at your own will. Cash in a savings account is not locked in the account.

Depending on the type of savings account you use, the number of daily transactions allowed to you may be limited or costly. That said, savings accounts are suitable for short-term or long-term savings goals, such as a vacation, wedding, down payment, or retirement. 

They also serve as an excellent option for building an emergency fund, known commonly as a rainy-day fund. The purpose of any savings account is to keep savings parked or untouched until needed.

How do high-interest savings accounts work?

A high-interest savings account works like a regular savings account. Generally, a high-interest saving account only differs by it’s provided interest rate. However, savings accounts (and all financial products) differ in terms and conditions from other institutions. The most significant differences between savings accounts generally lie in the number of withdrawals it allows its customers to make.

Some banks and credit unions permit unlimited transactions each month, while other institutions place a limit on transactions. Others offer variations on their accounts, depending on flexibility and transfers.

Banks and credit unions also differ significantly depending on the interest rates, offering fixed rates (one rate that never changes) or a tiered-interest rate option.

What types of savings accounts can you open in Canada?

There are many different types of savings accounts available to Canadians, all of which come with their own unique advantages.

Savings Accounts are accounts meant for saving money that also provide interest.

High-Interest Savings Accounts operate in the same manner as traditional savings accounts but have an interest rate higher than 1.05%.

Tax-Free Savings Accounts (TFSAs) are saving and investing accounts that earn tax-free interest on cash, dividends, and savings. A TFSA comes with a yearly contribution limit that increases each year for all Canadian citizens. It allows people to earn untaxed interest and gains on their investments.

Registered Retirement Savings Plan (RRSP) is a government-registered account purposed for retirement savings. It is a registered savings account that also earns tax-free interest and comes with a contribution limit.

U.S. Savings Accounts are savings accounts that hold American money. These accounts are available with most major banks and ideal for citizens with dual citizenship or ones who visit the United States often.

Hybrid Savings Account is a savings account that offers the flexibility of a chequing account. Typically, a hybrid account allows customers to make transactions and transfers while providing high-interest and additional features like Interac e-transfers and bill payments, along with high interest.

How to pick the best high-interest savings account

High-interest savings accounts generally operate in the same fashion. But choosing an account that accurately suits your saving habits makes a significant impact on your wealth’s long-term growth. Choosing a savings account with a reasonable interest rate, flexible terms and conditions, and ease of accessibility makes saving more comfortable and more impactful.

1. Consider an Interest Rate that beats inflation

 Interest rates are an essential aspect of any financial product—especially when it comes to banking. While getting a reasonable interest rate is something worth keeping an eye out for, it’s also essential to consider an interest rate of over 2%. An interest rate of 2% or more keeps up with Canada’s current inflation rate.

Having a savings account with an interest rate that matches the inflation rate keeps money consistent with inflation. Make sure that the interest rate isn’t an introductory rate that will drop after a few months, either. Banks often offer initial rates as a promotional offer that eventually decreases.

2. Withdrawals, Transfers, and Transactions

As explained earlier in this article, money in a savings account isn’t money meant for daily or frequent use. Putting money in a savings account is better intended for goals with longer terms. That said, savings accounts can have limiting conditions. Finding one that reflects your habits should be a part of the saving account research process. Making cash withdrawals or point-of-sale transactions from our savings is something many of us have to reluctantly do from time to time, in emergencies and other unpredicted circumstances.

Preparing for emergency withdrawals and transactions with a bank account that offers at least one free withdrawal or transaction per month will save money on bank fees. Other bank accounts allow unlimited transactions from a high-interest savings account and additional features, such as free e-transfers. Consider your personal needs and banking habits—it can save you a decent amount of money in fees.

Choosing a bank account with no free transactions might be worth it if the interest rate of the account is high enough and that you sparingly make transactions.

3. Account Accessibility

Understanding your personal banking needs— such as fund access or cash withdrawal—will help determine what savings account works for you.

Accessibility to your money can be a determining factor in how much you can save. If you want accessibility to your funds, it’s essential to consider how often you might need access to your funds.

Saving accounts have a history of being unflexible accounts, often not being able to facilitate simple transactions like bill payments or money transfers. The times are changing, however.

More savings accounts in Canada and across the world are providing increased flexibility when it comes to saving accounts, including savings accounts with the flexibility of chequing accounts.

4. Additional banking products

Looking for the best savings account rate isn’t usually offered at the institution you’re currently doing business with.

After all, that’s why many people seek different high-interest savings account in the first place.

That said, if you aren’t comfortable having more than one bank account, you might want to consider additional products offered by a financial institution before you make the switch.

Consider whether or not the bank or credit union you’d like to open an account with offers additional products that can benefit your day-to-day banking needs.

Keeping all of your money with one financial institution can make it easier for you to track your daily balances and expenses.

Chances are, if a bank offers high-interest on a savings account, they’ll usually offer great rates on RRSP and TFSA savings accounts and GICs, as well as flexible chequing accounts.

5. Branch Access

While bank or credit unions branches are somewhat antiquated features, with the Internet now readily available at the flick of a wrist, it is essential to understand whether or not you’ll require branch access before you open an account.

Since many Canadians tend to live in remote places or use cash, a financial institution that lacks physical branches can often be a deal-breaker.

However, if you find yourself rarely dealing with cash and do not have any requirements for in-branch services, branchless banks such as digital banks and online institutions might be a suitable option for you.

6. Deposit Insurance

Many products offered by banks or credit unions come with deposit insurance, including high-interest savings accounts, TFSAs, RRSPs, and GICs, among other saving, spending, and investing options.

Insurance comes at no cost to the consumer but differs depending on the type of institution offering the account.

There are two types of insurance: the Canada Deposit Insurance Corporation (CDIC), which offers coast-to-coast coverage for banks, and provincial insurance, which protects institutions in the province or territory that the insurance covers.

Generally, both insurances work the same way, differing only by how much coverage they provide.

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What’s the difference between high-interest savings accounts and regular savings accounts?

A savings account is different from a high-interest saving account solely by interest rate. Regular savings accounts usually pay an interest rate of 1.05% or lower, whereas a high-interest savings account exceeds this amount. That said, it might be more suitable to own a high-interest account over a regular savings account.

Placing your money in a high-interest savings account with a return rate of 2% or higher can keep your money’s value in pace with Canada’s current inflation rate.

Depending on the financial institution, every savings account will come with its own restrictions and rules. These rules generally involve accessibility, with restrictions on monthly transfers and transactions. Transactions can mean anything from Interac transfers to bill payments to moving money between accounts.

Are high-interest savings accounts taxable?

Interest earned in a high-interest savings account is indeed taxable. Since a high-interest saving account is a non-registered bank account, it is subject to tax. Unlike the Tax-Free Savings Account (TFSA) or the Registered Retirement Savings Plan (RRSP), a high-interest savings account has no contribution limit and therefore taxable. Other non-registered accounts or investments include GICs, stocks, exchange-traded funds (ETFs), and mutual funds, among other investing products.

Interest earned in a high-interest savings account is considered income and taxed as so. Interest is taxable at the same rate as the account holder’s income tax bracket.

The bank or credit union issuing the high-interest savings account will send the account holder a year-end tax form, similar to a tax form sent from an employer.

Should you open a high-interest savings account?

Of course, everyone is in a different financial situation and has different goals for their future, which means the answer to this question depends. It’s important to know that interest earned in a high-interest savings accounts is taxed, though these accounts tend to yield more interest. On the other hand, TFSAs do not charge tax on interest but tend to yield lower interest rates on average.

If you happen to find yourself saving for a short term goal, a HISA might be a more suitable option for you. TFSAs usually make the most sense for long-term savings.

TFSAs, however, come with a contribution limit, unlike the high-interest savings accounts. This means that if you haven’t reached your limit, it’s probably a better idea to max out your TFSA first before putting all of your money into an account that charges interest.

When it comes to RRSPs, it’s usually a good idea to max out your limit each year before contributing to a HISA as well. RRSPs can provide a tax break, but withdrawals are taxed according to your marginal tax rate, which can be quite costly, depending on your income tax bracket.

Want to see how your savings account compares to the rest?  Compare Best Savings Accounts

 

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