TFSA Interest Rates
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Overview
Tax-free savings accounts (TFSAs) are a great way for Canadians to invest. It’s important to keep in mind, however, that making a contribution to a TFSA is only the first step. The rate of return you receive comes from the investment you purchase inside the account.
TFSA Investment Options
Individuals have a wide variety of choices available when deciding what to do with their TFSA contribution. The government allows many different kinds of investment products to be held within these accounts. These include:
- Cash in a high-interest TFSA
- Guaranteed Income Certificates (GICs)
- Government and corporate bonds
- Stocks
- Mutual Funds
- Exchage-traded funds (ETFs)
Why a Fixed Interest Rate Won’t Get You the Best Return
Investing, as most people realize, is a trade-off between risk and reward. As a general rule, if an investment has the potential for significant gains, it also probably comes with more risk. The reverse is also true. Lower-risk investments typically don’t offer the chance for higher returns.
Looking at the list of investment options above, there are some choices that are more conservative than others. For example, high-interest savings accounts and GICs come with little risk (other than inflation). However, they also don’t offer the potential for very high rewards given that interest rates are pretty low these days.
In contrast, equity investments (stocks, stock index funds, and stock ETFs) are riskier. Yet historically, they do tend to outperform more conservative products such as GICs and high-interest savings accounts. Whereas the best GIC rates these days are about 2%, Canadian equities have historically returned, on average, 6% per year. Of course, there’s no guarantee those returns will be replicated in the foreseeable future.
Best TFSA interest rates (high-interest TFSAs)
Financial institutions in Canada, such as banks, credit unions, and trust companies offer TFSAs. If you want to put just cash in a TFSA, you have a number of options. Here are the best interest rates being offered on TFSA high-interest savings from the major Canadian banks:
Rates updated:
- No Results
EQ Bank Tax Free Savings Account
2023 Winner!Featured
interest rate$150 first year return based on$5,000 balance- Monthly fee
- $0.00
- Transaction fees
- $0.00 per use
- E-transfer
- $0.00 per use
CIBC Tax Advantage Savings Account
interest rate$35 first year return based on$5,000 balance- Monthly fee
- $0.00
- Transaction fees
- $0.00 per use
- E-transfer
- $0.00 per use
Scotiabank Savings Accelerator Account (TFSA)
interest rate$28 first year return based on$5,000 balance- Monthly fee
- $0.00
- Transaction fees
- $5.00 per use
- E-transfer
- $0.00 per use
- No monthly account fee and competitive interest rates
- Monthly Account Fee: FREE
- Competitive interest rates - up to 1.15%
- Unlimited no-fee self-service transfers to your other Scotiabank accounts using Scotia OnLine®- Scotiabank® Mobile Banking and Customer Contact Centre1
- Available in Tax Free Savings Accounts and other Registered plans2
- Unlimited no-fee self-service transfers to your other Scotiabank accounts
Interest calculated: daily
Interest paid: monthlyMinimum balance: $0 Insurance: CDIC eligibleBank of Montreal BMO TFSA Saving Account
interest rate$3 first year return based on$5,000 balance- Monthly fee
- $0.00
- Transaction fees
- $0.00 per use
- E-transfer
- $0.00 per use
- Interest is not taxable
- Registered plan fees may apply when transferring to another FI
- depending on plan type
- Unlimited transactions, plan restrictions apply with regards to when and how much one can contribute
- Must be age of majority (by province) to open a TFSA
Interest calculated: monthly
Interest paid: monthlyMinimum balance: $50
(required) Insurance: CDIC eligible
Find the best GIC rates in Canada
Watch your savings grow faster, when you invest your money in the GIC products with the best interest rates
How to Get the Best Rates
As with any investment, getting the best rates on TFSA products comes down to doing your homework and shopping around. As you can see in the chart above, rates vary by bank so you shouldn’t feel obligated to stick with your current financial institution if another bank offers a better rate. Smaller financial institutions usually offer higher rates than their larger counterparts.
What to Consider When Opening a TFSA
There are a few things to consider when opening a TFSA. Perhaps the most important is what you plan on doing with the money in your TFSA. Do you plan on using the money for a down payment on a home or a car? Is it the account you want to use to save for retirement? Or do you plan on using it as an emergency fund? What you invest in will depend on your savings goals.
Different people will select different investments for their TFSA. The kind of products you choose and their relative weightings in your portfolio will depend on a number of factors, such as:
- Your risk tolerance
- Your age and years until retirement
- Your level of investment knowledge
- The time you have to manage and keep track of your portfolio
For most individuals, it’s recommended that they maintain a balanced, well-diversified portfolio. Diversification can protect you by spreading your risk around.