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The best TFSA savings accounts in Canada for 2021

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  • A Tax-Free Savings Account (TFSA) is a registered account designed to shelter the interest or capital gains you earn from taxes. With the money in your savings accounts and investments growing tax-free, you can pocket higher returns.
  • A TFSA has contribution limits ($6,000 in 2021, or potentially up to $75,500 if you’ve never contributed before). Unlike an RRSP, you can withdraw the money in your TFSA at any time without owing taxes.

 

 
Want to compare the best TFSA savings accounts in Canada?Compare TFSA Savings Accounts


 

 

The Best Tax-Free Savings Accounts (TFSAs) in Canada for 2021

*In-text rates are current as of December 2, 2020.

EQ Bank TFSA Savings Account

Featured

1.25%

$63 first year return based on

$5,000 balance

Monthly fee
$0.00
Transaction fees
$0.00
E-transfer
$0.00
  • Interest Rate: 2.30%
  • Minimum deposit: None
  • Monthly fees: None
  • Insurance: CDIC
  • Available in Quebec: No

Please note: EQ Bank rate will be changing to 1.25%* effective May 26th, 2021

Read more (+/-)


Tangerine Bank

  • Interest Rate: 2.10% for the first five months, 0.10% thereafter
  • Minimum deposit: None
  • Monthly fees: None
  • Insurance: CDIC
  • Available in Quebec:Yes

Read more (+/-)


motusbank

  • Interest rate: 1.10%
  • Minimum deposit: None
  • Monthly fees: None
  • Available in Quebec: Yes

Read more (+/-)


Steinbach Credit Union TFSA Account

  • Interest Rate: 1.60%
  • Minimum deposit: None
  • Monthly fees: None
  • Insurance: Deposit Guarantee Corporation of Manitoba (DGCM)

Read more (+/-)


Maxa TFSA Savings

Featured

1.00%

$50 first year return based on

$5,000 balance

Monthly fee
$0.00
Transaction fees
$0.00
E-transfer
$0.00
  • Interest Rate: 1.30%
  • Minimum deposit: $5
  • Monthly fees: None
  • Insurance: Deposit Guarantee Corporation of Manitoba
  • Available in Quebec: Yes

Read more (+/-)

 

 

Alterna Bank TFSA eSavings Account

  • Interest Rate: 1.20%
  • Minimum deposit: None
  • Monthly fees: None
  • Insurance: CDIC
  • Available in Quebec: Yes

Read more (+/-)


Motive Financial

  • Interest Rate: 1.55%
  • Minimum deposit: None
  • Monthly fees: None
  • Available in Quebec: Yes

Read more (+/-)

 

 

The best TFSA investing accounts in Canada

 

Reading “tax-free savings accounts” might give off the impression that these sheltered accounts are designed solely to hold savings, but that’s anything but the truth. We would argue the title is a misnomer, as TFSAs can be used to hold virtually any type of investment – from stocks and bonds to mutual funds, and more. And all your capital gains can be collected tax-free.

Below, you’ll find some investment accounts that can help you maximize your earning potential with a TFSA.

Wealthsimple Invest

Details

$50 bonus when you open and fund your first Wealthsimple Invest account* (min. $500 initial deposit)

Various investing options and savings accounts available

Read more (+/-)


Wealthsimple Trade

Details

Get a $25 cash bonus and commission-free trades when you open a Wealthsimple Trade account. Plus, trade Bitcoin and Ethereum.

Read more (+/-)


Questrade

Details

No opening or closing fees. Free account transfer. Registered account options available.

Read more (+/-)

 

Learn more about tax-free savings accounts (TFSAs)

Below, you can learn more about the tax-free savings account, what it is, and how to choose the right one according to your saving and investing needs.

What is a TFSA?

A Tax-Free Savings Account (TFSA) is a bank account and tax-shelter that can hold savings and various types of investments. They aren’t exclusive to cash savings and can also hold GICs, Stocks, Mutual funds, Bonds, and Exchange-Traded Funds (ETFs).

TFSAs allow for an unlimited number of penalty-free withdrawals and contributions at any time of the year. There are limits to the dollar amount you can contribute to your TFSA, however.

In 2009, the Government of Canada introduced the Tax-Free Savings Account as an initiative to encourage Canadians to save and keep more of their money. The effort resulted in one of the most popular and useful savings and investing tools among Canadians. However, considering that interest accumulated without taxation, a contribution limit was set in place.

Savings placed in a TFSA can help make a significant impact on your savings and the amount of tax you’ll have to pay come tax season—especially if you select a tax-free saving account with a competitive interest rate.

The benefits of TFSAs don’t stop there, either. You can also put different types of investments in a tax-free savings account, such as GICs, Bonds, Mutual Funds, Stocks, and more. All of these investments can grow tax-free.

A TFSA also permits withdrawals and contributions. However, this exception only applies to cash deposits. There is no penalty or taxation on the number of times you contribute or withdraw funds from the account.

TFSAs vs. RRSPs are often compared, as both hold significant benefits to reducing your yearly tax burden. Differentiating and strategically using both accounts properly can alleviate your tax burden even further.

Unless the bank or financial institution issuing the tax-free savings account has its own terms and conditions, TFSAs generally work in the exact same way.

However, Canadians should choose a TFSA with an interest rate above 2%. This interest rate keeps with Canadian inflation. Any interest rates below 2% mean the amount deposited loses value over time, as it does not compete with steadily-rising inflation.

How does a TFSA work?

As a registered account, a tax-free savings account comes with a yearly limit on the amount that an account holder can and hold in an account. This limit is known as a TFSA contribution limit.

A TFSA contribution limit increases at the beginning of every new year for every Canadian resident that owns an account.

Anyone who wishes to open an account must be a Canadian resident and the age of the majority in their province or territory.

For residents of Alberta, Ontario, Prince Edward Island, Quebec, and Saskatchewan, residents who wish to open a tax-free savings account must be 18 years of age.

Residents of British Columbia, New Brunswick, Newfoundland and Labrador, Nova Scotia, Northwest Territories, Nunavut, Yukon must be at least 19 years of age.

What is a TFSA contribution limit?

A TFSA Contribution Limit is a yearly limit to what you can contribute to tax-free savings accounts. The limit increases for every Canadian each year, and any unused amount from the previous year carries over to the following year.

At the beginning of 2021, Canadians received an additional $6,000 in contribution room for their tax-free savings accounts.

Since the introduction of the account, the cumulative contribution in 2021 is $75,500.

Each year, your unused contribution limit is added to the next year’s tax-free savings account contribution limit. Canadians will receive another increase in their contribution room at the beginning of 2022 — and at the beginning of every year following.

Should you exceed your contribution limit, your savings or investments will be taxed at 1% each month. You’ll receive a notice that your limit has been exceeded, however.

What is my TFSA contribution limit?

The TFSA contribution limit is different for every Canadian. While the contribution limit increases each year for every Canadian, your age plays a significant factor in your total contribution room.

If you were 18 or 19 years old—depending on the province in which you reside—or more former in 2009, your total contribution room as of 2021 is $75,500.

Your limit starts the year you turn 18 or 19, and increases the contribution room with each new year.

If you turned 18 or 19 after 2009, your total tax-free savings account contribution limit includes every year’s deadline since you turned 18 or 19. For example, if you turned 18 or 19 in 2021, your TFSA contribution limit is $6,000.

The unused contribution room from previous years carries forward each year. Still, your entire deposits across all TFSAs must remain beneath your cumulative limit.

Below is a chart of every contribution limit since the introduction of TFSAs in 2009. To calculate your limit, add up the amounts since you turned 18 or 19, depending on the province in which you reside.

YearContribution Limit
2009$5,000
2010$5,000
2011$5,000
2012$5,000
2013$5,500
2014$5,500
2015$10,000
2016$5,500
2017$5,500
2018$5,500
2019$6,000
2020$6,000
2021$6,000

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