In this article, let us take a look at the top 5 High-Interest Savings Accounts in Canada.
While it is clear that keeping your money in a savings account cannot be categorized as a form of investment, people love their money to accrue interest over time, no matter how little, even when the money is just sitting in the bank.
All deposit-taking banks must have their deposits insured by CDIC, so you’re covered up to $100K per account type. This is true for banks of any size be it CIBC or a small bank like EQ Bank. So for EQ Bank, which is highly recommended, it’s the direct banking arm of Equitable Bank, which in turn is one of the largest money lenders in the country.
You’re covered by CDIC as Equitable Bank is a deposit-taking bank, so even on the off chance that Equitable Bank goes under for whatever reason, you know that your deposits are insured for up to $100K per account type.
If you choose a credit union, they also have deposit insurance but instead of with CDIC, it’ll be with their provincial counterpart. So if you say to use a credit union from Ontario, their deposits would be insured by the Financial Services Regulatory Authority of Ontario (FSRAO). Federal credit unions will still have deposits insured by CDIC though.
I would personally recommend having one free online bank (Simplii, Tangerine) or free credit union (Alterna, Meridian, Motusbank), as well as EQ bank to store money there and pay bills from.
You can also pay bills from Alterna’s savings account, so if you go with Alterna you don’t need EQ, though their interest rates are 1.69% instead of 2%.
And that’s the point of a high-interest savings account. Let’s get started.
Are Savings Accounts Really Worth?
Simply put, for the past decade at least, putting money in a savings account in Canada has proven to be counter-productive.
Some of Canada’s big banks even give interest rates as abysmally low as 0.05% and with Canada’s inflation rate at almost 2%, your savings account is actually costing you money.
This is giving savings accounts an increasingly bad reputation among account holders who are shying away from using them.
But for those who can’t help it and still need somewhere else to park their money on a short-term basis without exposing it to the carnage of the current financial climate, you can opt for a High-Interest Savings Account (HISA) instead.
This is a low-risk savings solution that is perfect for short-term projects such as saving for a wedding, a vacation, tuition, and so on.
Neither Alterna nor EQ offers bank drafts, for example, and if you want higher interest in either a taxable or TFSA account you can go to a different bank as well, but that varies according to personal needs. The general advice (free online bank + EQ) is probably good enough for most people.
What Is A High-Interest Savings Account?
A high-interest savings account usually has an interest rate that is on par with the inflation rate or a little higher. And so we’ve collected 5 of the best HISAs operating in Canada at the moment.
Now keep in mind that all the banks or financial institutions mentioned in this article offer an interest rate of almost 2% or higher.
High-Interest Savings Accounts (HISA) interest rates are not the same everywhere in Canada.
For instance, while a High-Interest Savings Account (HISA) with a traditional bank will offer better and higher interest rates than regular savings account with the same bank, you may be restricted to a transaction limit.
The logic behind this is that if you constantly use the high-interest savings account for purchases or any of the daily transactions, your money is not sitting in there long enough for the bank to make a profit with it.
This in turn means that it will be impossible for the banks to give you higher interest rates on your savings account.
How To Pick The Best High-Interest Savings Account In Canada?
While many of the major online-only banks such as EQ do not have any limits on the number of debit transactions you can make per month. (on the HISA account)
What the banks would rather do is introduce a fee for some transactions, should you exceed your stated monthly activity quota on the account. You will also be required to maintain a minimum balance to be eligible for the High-Interest Savings Account (HISA) Interest rate.
For all the good a HISA promises, not all of them may fit into your particular situation. So before you consider any of the HISA options here, you must be sure it makes sense for you.
You should first find out:
Their transactional restrictions and if there are any lock-in periods
If the interest rate you see on a HISA is a promotional rate, an introductory rate, or a steady non-promotional rate
All the account fees (if any) charged for every type of debit transaction and the conditions that trigger them
So without further ado, here are the Top 5 High-Interest Savings Accounts in Canada.
Quick Peek At the Top 5 High-Interest Savings Account (HISA)
Before we actually continue with the article, here’s a quick peek at the five High-Interest Savings Accounts (HISA) we’ll be covering today –
1. EQ Bank’s Savings Plus Account
2. Tangerine’s Savings Account
3. Alterna Bank’s High-Interest Savings Account (HISA)
4. Oaken Financial Savings Account
5. Wealth One’s High-Interest Savings Account
1. EQ Bank’s Savings Plus Account
You receive the interest as a lump sum at the end of every month. Bear in mind though that EQ Bank’s HISA can only hold a maximum of $200,000 at any given time.
This online-only Canadian bank offers one of the most attractive HISA interest rates available in the country.
This rate is not a promotional rate and is available to every HISA holder with EQ Bank.
Well, even more, attractive is the fact that the bank strives to allow customers to open their High-Interest Savings Accounts at no cost.
Benefits Of The EQ Bank Savings Plus Account
1. No Account Fees
2. HISA Interest Rate – 2.30% (Not a promotional rate)
3. No limit on the number of monthly transactions
4. No monthly recurring fees
5. Electronic transfers and free mobile cheque deposits at no cost
6. No minimum balance requirement
7. No monthly limit on free Interac e-transfers
2. Tangerine Bank Savings Account
Like EQ Bank, Tangerine is also a subsidiary of a major bank, in this case, Scotiabank.
While the interest rates on the Tangerine’s HISA is not as attractive as what is on offer from EQ Bank, they make up for it with a mind-boggling promotional rate for new Tangerine customers.
This online-only bank is offering new customers a 2.75% interest rate that will carry for their first 6 months.
After this though, the rate drops to 1.10%. These rates also apply to their TFSA and RRSP Savings Accounts.
Well, the Tangerine Savings Account has no minimum balance requirement, no monthly fees, no service charges, and no lock-in periods.
It also comes with an Automatic Savings Plan feature that transfers money to your High-Interest Saving Account (HISA) from your Tangerine checking account. You just need to set your transfer cycle and amount and let the system handle the rest.
3. Alterna Bank’s HISA Account
Another online-only Canadian Bank Is Alterna Bank.
Alterna Bank’s parent company is Alterna Savings, a reputable Canadian credit union that is well over a century old.
Alterna Bank is the direct banking arm of Alterna Savings and offers mostly online banking services.
However, customers who feel more comfortable with human interaction can still access their services at face-to-face locations in Ontario and Quebec.
Alterna Bank’s HISA is available at a non-promo interest rate of 2.25%.
However, they do have a maximum account balance, which is pegged at $250,000. Like some other banks on this list, this HISA places no limits or fees on transactions, including Interac e-transfers.
4. Oaken Financial High-Interest Savings Account
Oaken Financial is the direct banking arm of Home Bank, which is in turn owned by Canada’s largest trust company, Home Trust.
Like EQ Bank, their HISA option is currently available to both existing and new customers at an attractive interest rate of 2.30%.
Customers of Oaken’s Savings Account enjoy zero monthly fees, unlimited transactions, and a zero balance feature.
Like all the other banks or financial institutions on this list, your account balance is insured by the Canada Deposit Insurance Corporation (CDIC). So you don’t have to worry about losing your money when Oaken uses your money for their investments.
5. Wealth One’s High-Interest Savings Account
Wealth One Bank Of Canada operates under the regulation of the Office of the Superintendent of Financial Institutions (OFSI).
This CDIC-member bank is one of the newest banks on this list. They offer HISA, TFSA, and RRSP savings accounts, with their High-Interest Savings Account offering old and new account holders a non-promotional 2.30% interest rate.
Wealth One’s HISA offers an Automatic Savings Program as well as a zero balance feature and zero monthly fees.
These round up our top 5 HISA options in Canada at the moment.
Credit Unions Offering High-Interest Savings Accounts
You must bear in mind that while the above-mentioned banks or financial institutions were are our top five picks, they may not be for you. And so as an extra source of options, there are also a few credit unions that belong to this list of honourable mentions, especially because of their attractive rates.
Max Savings with a HISA rate of 2.45%
Hubert Financial with a HISA rate of 2.25%
Ideal Savings with a HISA rate of 2.40%
Achieva Financial with a HISA rate of 2.30%
AcceleRate Financial with a HISA rate of 2.30%
Outlook Financial with a HISA rate of 2.40%
Implicitly Financial with a HISA rate of 2.30%
Advantages Of High-Interest Savings Account (HISA Account)
1. Emergency Funds – With HISA accounts you’ll get anywhere between 2-3% interest on a daily basis. We all know the importance of having an emergency fund for the inevitable rainy day, job loss or family emergencies.
So, instead of leaving free money on the table – I mean chequing account or the regular savings account, why don’t you cultivate the habit of parking money in the HISA account.
At the end of the day, your money keeps growing and will return the favour to you.
2. You’re covered under CDIC – Before we get into this, I should have mentioned the term CDIC so many times on this blog. What is CDIC and why do we need it in the first place?
Almost all the HISA accounts we have talked about today are covered by the Canada Deposit Insurance Corporation or CDIC.
You are eligible for CDIC insurance coverage provided the financial institution holding your funds will cease operations. If this is the case, you’ll be entitled to receive payment from the CDIC.
You do not have to contribute anything to the CDIC, if the financial institution you deal with is a part of CDIC, all of your funds invested are automatically covered for the worst days if may come.
3. TFSA Investment – Did you know that your HISA accounts can also be your TFSA? Yes, that’s tight. You can choose this option if you don’t have the money to invest separately and your HISA interest can be tax-free. Isn’t that something you’ll like?
4. Flexible Withdrawals – Now, imagine this scenario – Your money is parked in a 3-year GIC and you need funds urgently for something which can’t wait.
What do you do? You don’t have a choice but to close the GIC, pay the penalties and take the remaining amount. This is not the case with a HISA account – What happens here is, it’s just like any other normal chequing or savings account, easy to withdraw and contribute back.
Also with the options of online banking, you don’t even have to step out of your home to do the transactions. You can just transfer the money to your other bank accounts via e-transfer at no additional cost.
5. Auto-Invest Flexibility – You might have heard of Wealthsimple, Mylo, WealthBar? Right? If not, that’s ok. They are the leading auto-investment programs in Canada.
What these companies do is, they take a portion of your spending every week and invest in ETF portfolios. These small fragments grow into bigger chunks over time and yield amazing results.
Now, why am I talking about this here?
There’s a reason and the reason is HISA accounts have an option for auto-investing.
Every month you can contribute say $50 on a bi-weekly basis and over time with the interest earned, you’ll have an awesome emergency fund ready for the tough times. Do check out this feature from the bank you deal with or choose one of the banks on this list and open an account. This is something that I will recommend anyone to start with.
Forget $50, even if you start with $20 bi-weekly, that’s 20*26 biweekly which is $520 per year + the HISA interest.
Disadvantages Of High-Interest Savings Account (HISA Account)
When there are a bunch of advantages, there has to be something on the wrong path as well. One of the main disadvantages of holding money in the HISA account is taxes. Yeah, that’s right.
You see taxman is everywhere. He needs your taxes from your payslips to your HISA interest earnings.
The sad reality is, the interest you earn from HISA is taxed on the marginal rate. You cannot avoid this, as its auto-debited from your bank account.
With the interest you earn at 2% and the taxes a part of it, you’ll only be left with pennies. But, hold on a second, there is a work-around here.
You will definitely be making something at least over a period of time. At least you don’t have anything to lose at all. The interest you’ll earn with the HISA account is better than leaving money on the table with chequing and the regular savings account – where you don’t earn any interest at all.
The other disadvantage is – Most of the online-only banks offer the HISA accounts with good interest rates.
You might have already noticed this from the list above, most of the banks offering good competitive interest rates are online banks such as Motive, EQ Bank, Oaken, Alterna etc.
But, the good thing is – sending e-transfers is a breeze and your money can be moved from online banks to your main bank account in a matter of a few minutes.
And, all these online banks are offering e-transfers for free. So, don’t think all negative.
HISA’s are good in-fact. No wonder millions of Canadians are using HISA accounts to park their hard-earned money as emergency funds/savings for the rainy day.
Well, that was the list of the top 5 High-Interest Savings Account In Canada right now and the daily interest rates they offer.
Besides the fact that all of these HISA options in Canada offer much higher interest rates and that your deposits are insured by the CDIC, some of them do have unique offers too.
Tangerine, for instance, offers its new customers a cash bonus, while some others (including some of the credit unions) offer a referral program that you can take advantage of to boost your balance. The choice is yours to make.
Thanks for reading. If you found this article helpful, please share it on social media. Also, let me know your thoughts and comments below.
Top 10 Latest & Popular Posts
- Top 30 Canadian Blue Chip Stocks You Should Own
- How To Use A My Service Canada Account
- Top 7 Personal Finance Apps You Should Install In Canada
- How To Watch Free TV Shows In Canada – List of 10 Best Sites
- 10 Costco Membership Benefits You Need To Know Today
- How To Open A CRA My Account – Helpful Step-By-Step Guide
- Retirement Benefits & Old Age Security Pension (OAS) In Canada
- 7 Quick Ways To Maximize Your PC Optimum Points
- WestJet Rewards Review – Everything You Need To Know
- How To Get An Emergency Canadian Passport – Complete Guide
Sagar Sridhar is an accomplished personal finance blogger hailing from Canada. With a unique blend of quirkiness and enthusiasm, he has established himself as a prominent figure in the personal finance industry. Sagar’s passion for finance, coupled with his engaging writing style, sets him apart from his peers. While he has a background in computer engineering and a Master’s in Project Management, Sagar’s true passion lies in helping others manage their money. His writing has been featured in several top Canadian finance publications, solidifying his status as a sought-after voice in the field. Despite juggling his work and blogging schedule, Sagar remains resolute in his mission to make a lasting impact on the personal finance world.