Also known as the HISA, a High Interest Savings Account is not the first thing that comes to mind when you want to grow your finances. And that’s fair because, in Canada, many other options are more suited to manage your funds.
However, HISAs are not to be written off. First of all, a high interest savings account isn’t your regular savings account. It is a select type of savings account that gives you more for your money than a standard savings account.
In addition to that, high interest savings accounts retain all the right features that can be found in a standard savings account. Before you find out the best high interest savings account in Canada, below are a few ways you can make the most of a HISA.
When you deposit your money in a high interest savings account provided by a lender that’s a member of the CDIC, you just might be eligible for insurance coverage under the CDIC. The consequence of this is that where your financial institution should wind up or cease to carry on operating, you’ll be entitled to compensation from the Canada Deposit Insurance Corporation (CDIC).
When it comes to versatility, you can trust a high interest savings account. Although other choices will give you better returns, the downside is you’d have to lock-in your money for a few months up to several years. For example, you can get higher returns on a non-redeemable GIC. But you cannot channel that money for something else or at will. And what’s more, you’d have to show proof you’re going through exceptional financial hardship. Even after this, the provider of your GIC is not obliged to let you redeem. And if you do redeem, you’re likely to be slapped with penalties that’d affect your interest. On the other hand, you can renew a cashable GIC in a short period. But the interest you get with a cashable GIC is similar to what you get with a high interest savings account. And HISAs don’t have the minimum deposit requirements you’d find with a cashable GIC.
Nobody prays for bad luck, but life can throw out some mean curve balls your way. You can have personal emergencies, expensive repairs, and other unpleasant surprises that can drain your bank account. That’s reason enough to set up an emergency fund for the proverbial rainy day. A HISA is an ideal way to set aside emergency cash while getting a better return on your investment than a standard savings account.
Now you know a few reasons to open a large savings account, its time to find out the top ten HISAs in Canada.
Tangerine High-Interest Savings Account
A subsidiary of Scotiabank, the high interest savings offered by Tangerine has the highest ever rate of 2.80%. Well, that’s not quite true. The rate is for promotion purposes and lasts only five months. However, you can still enjoy 0.40% after the promo runs out. The rates aren’t the only thing you should keep your eye on when you decide to open a high interest savings account. You’d be well advised to check out the fine print for fees. A Tangerine Savings Account does not charge you monthly fees. To sweeten the deal, you also get zero lock-in periods, as well as zero service charges.
EQ Bank Savings
EQ Bank is a bank that specializes exclusively in online banking. The bank has one of the best non-promotional rate of any high interest savings account in Canada. At 2.00%, you’d be hard-pressed to find a bank that can match this offer. What’s more, you get the added benefit of unlimited transactions as well as no monthly charges. EQ bank goes further to provide additional services for clients. And this includes a free transfer of electronic funds, payment of bills without charges, free mobile cheque deposits, zero minimum balance. Although the interest rate is calculated daily, the interest accrues to your account monthly. The bank places a maximum of C$200,000 on each account.
Wealthsimple cash is the name of the HISA operated by Wealthsimple. The financial institution has one of the best high interest savings account rates pegged at 0.90%. With Wealthsimple, you get unlimited free transactions, no monthly charges, and no minimum balance. Wealthsimple is also the institution to “bank” on if you’d like efficient management of your investment portfolio.
One of the newest digital banks on the block, Motusbank is a subsidiary of the third-largest credit union in Canada. The Meridian Credit Union. Motus bank offers customers lots of cool features that include no chequing fees, impressive mortgage rates, investment banking, and lots more. The icing on the cake is the 1.75% rate you get when you open a high interest savings account. The downside and one of the reasons Motus bank isn’t high up the list is the C$1.25 service charge for each Interac e-Transfer.
Motive Financial is an arm of the Canadian Western Bank, a member of the CDIC. Motive Financial has a high interest savings product that’s called Motive Savvy Savings. For accounts that have a maximum of a million and below, you get 2.20% rates. Motive Financial also has a more than decent standard savings account that offers customers 1.25% to a maximum of C$5m. On the flip side, there’s a service charge of C$5 after two free withdrawals. There’s also a fee of 0.25% for balances holding above a million dollars. Before you change your mind though, it’s important to note Motive Financial charges no monthly fees neither does it have a minimum balance requirement.
Wealth One Bank of Canada
Another member of the CDIC, WealthOne Bank of Canada is another new bank that offers one of the best HISA rates in Canada. The bank offers its customers 2.00% while also providing TFSA and RRSP services. The implication of opening a high interest savings account with this bank is that you won’t be charged any monthly fee. Other perks include a zero minimum balance requirement as well as free access to their Automatic Savings Program.
Oakes Financial Savings
A division of Home Trust, Oaken Financial has a high interest savings account that offers customers a decent rate of 2.00%. Apart from HISAs, Oakes Financial offers other financial products RRSP savings and TFSA with better rates. The bank does not have a minimum balance and customers do not pay monthly fees. The good thing about online banks like Oakes Financial is that they’re insured by the CDIC.
An online bank, Ideal Savings has a similar modus operandi with the likes of Motive Financial, and EQ Bank. It is a bank that’s wholly owned by a credit union. Because online banks don’t operate physical offices, they can save costs and offer higher rates than their competitors. Ideal Savings has one of the best high interest savings of any bank in North America. At 2.11%, it’s a tough task to find a Canadian bank with a better offer. Ideal Savings has no monthly charges or minimum balance. Your profit is calculated each day with interest paid monthly. To top it off, you’ve got three fund transfers free each month. And as a member of the CDIC, you can bet your deposit is 100% guaranteed.
It’s no surprise credit online banks litter the list. They have a superior advantage to physical-only banks. Achieva Financial is an arm of the Cambrian Credit Union and was set up in 1998. Although the Cambrian Credit Union exclusively offers its services to Manitobans, Achieva Financial offers its services to all residents of Canada. Achieva Financial has many financial products, and their high interest savings is worth considering at 2.00%. And what you get thrown into the bargain includes zero minimum balance as well as no monthly fees.
Another online bank, Outlook Financial competes on the same field with the likes of Oaken Financial, Achieva, and EQ Bank. It is the banking division of the Assiniboine Credit Union. Outlook Financial offers its services to all residents across Canada despite its Manitoba base. Outlook Financial offers a competitive high interest savings rate at 2.10%. Customers also get to avoid paying monthly fees and no minimum balance. You can be sure your deposits are also 100% secure. Outlook Financial also has other financial products like the RRIF, RRSP, and the TFSA.
Although a high interest savings rate is an excellent way to make money while you save, it won’t make you a millionaire overnight. On the plus side, it has fewer risks than many other investment products on the market. But that’s because your expected ROI is comparative to the risk you assume when you sign up for a HISA. The major drawback of high interest savings is the tax you’d have to pay. Once taxes are factored in, a considerable slice of your profits ends up in the pockets of the CRA. That’s because interest income is more taxed compared to capital gains or dividends. If you’d like to skip with the taxes on a HISA, your best bet is a TFSA savings account.