When looking for a financial provider that offers high interest savings accounts, you may think one of Canada’s Big Five banks are the way to go. This isn’t always the case—even though they dominate the Canadian marketplace, they’re not usually the leaders in providing the highest interest rates for savings accounts.
The Big Five have seen increased competition in recent years with the emergence of smaller and digital banks. These types of banks have been able to leverage their agile networks and reduce overhead costs (from not having branches) to provide customers with higher interest rates. Since the Big Five have vast branch networks (roughly 1,000 each), they incur higher overhead costs than their digital competitors. This results in not being able to provide the highest interest rates on the market.
Additionally, the Big Five have larger technological hurdles to overcome relative to their digital competitors, mostly because they’ve been operating in the financial space for over 150 years and have larger legacy systems which in turn poses greater challenges when implementing newer software and technology improvements compared to newer digital banks.
As banking increasingly becomes more digital, digital and smaller banks have been able to expand their presence in the financial space. Whether it’s providing more user friendly mobile and online banking solutions or offering higher interest rates, these players have now become a larger threat to the Big Five. Some of these providers are EQ Bank, Alterna Bank and Oaken Financial. Each of these banks are reviewed below to determine the best savings account in Canada.
EQ Bank is a digital bank created by Equitable Bank that provides customers with mobile and online access to their accounts and a customer care centre who has hours not limited to the traditional banking hours. They offer residential mortgages, home equity line of credits, commercial lending, and deposits.
EQ Bank Savings Plus Account offers customers a 2% interest rate on their account balance. Interest on the account is calculated daily and paid monthly. This account can serve as both a chequing and savings account because it has unlimited day-to-day transactions and 5 free Interac e-Transfers per month for no monthly fee.
Alterna Bank was created by Alterna Savings in 2000. They offer many e-banking products and traditional bank accounts through their two branches in Quebec and 23 branches in Ontario through Alterna Savings.
The Alterna Bank High Interest eSavings account offers customers a 1.95% interest rate. The account also offers unlimited bill payments, transfers and debits, two free Interac e-Transfers each month and requires no minimum balance. Customers are also able to access and manage their account through both online and mobile banking platforms.
Oaken Financial was launched in 2013 and is backed by Home Bank and Home Trust Company. They offer banking solutions which include GICs and one kind of savings account. With a focus on online banking, Oaken Financial only has two stores located in Toronto and Calgary which operate with traditional banking hours.
Oaken Savings Account offers customers a 1.75% interest rate for no monthly fee and no minimum balance requirement. Oaken Financial customers are able to transfer money easily to and from Oaken GICs. This savings account is also not restricted to personal banking as it is also available for commercial use.
To get the highest interest savings account in Canada you can open up an EQ Bank Savings Plus Account at an interest rate of 2%. This digital bank provides the highest interest rate and also the most number of account features relative to its high interest savings account competitors. As this bank is completely digital, if you require teller-assisted transactions consider Alterna Bank or Oaken Financial. Both providers have a few branches and offer interest rates greater than banks in the Big Five.
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