Looking for the best high-interest savings accounts in Canada? We’ve got you covered with this comprehensive post that focused on the best rates available with no service fees.
Why cash savings when you could be investing?
Generally speaking, cash will typically earn less than bonds/fixed income, and bonds will typically earn less than equities with longer-term investment timelines in mind, say anything over five years.
So why cash? Why savings at all?
Well, lots of reasons we can think of including how we manage our own money!
1. Cash on hand is essential for managing cash flow.
Haven’t read our Cashflow is King post yet – check it out here!
Negative cash flow is certainly not desirable. That means more cash is leaving your hands than coming in. It won’t take many days, weeks or months to not have enough cash to see if a business is going to fail. Suppliers and vendors will start demanding their money. The same could be said for your household finances. Consider keeping some cash on hand so you don’t have to scramble to meet your expenses.
While savings accounts now offer very low-interest rates, and there are certainly benefits to investing now and staying invested (check out this awesome post: When Should I Start Investing?) most successful investors will tell you that keeping some cash handy to take advantage of market corrections is smart. This way, you have money ready to pounce on lower stock or ETF prices on demand.
2. Cash on hand is great for managing short-term goals. Gone are the days of any “High-Interest Savings Account” (HISA). But, you can still make a bit of interest as you save up for near-term expenses. Whether you are saving up for a future trip, a clothing splurge, or getting a larger TV to binge watch some Netflix, savings for any short-term expenses are smart to avoid dipping into your investments.
3. Cash on hand is great for the “what ifs” in life – things happen.
Emergency funds are important to us at Cashflows & Portfolios since they provide the following:
- Financial flexibility
- Staying out of debt
We believe in a financial emergency, the last stressor we need is any major financial debt.
While we will never be immune to any “what ifs” in life, we believe having some money in cash, ready to use as needed, is a good financial security blanket to use if something short-term needs to be paid.
Where are the best high-interest savings accounts in Canada?
Here are some of our favourite higher-interest savings accounts in Canada and why.
1. Canadian Tire Bank
Yup, Canadian Tire has a bank – a good one! With no monthly fees, no account minimums and no need to integrate a Canadian Tire Triangle credit card if you don’t want to, this bank might have the best deal going in Canada right now. However, while they may offer the highest rate, we’ve heard that signing up for the account takes a bit more effort than other online banks right now.
- Current Interest Rate: 1.55%
- Minimum balance: none.
Learn more about Canadian Tire Bank here.
2. EQ Bank’s Savings Plus Account
EQ Bank is owned by Equitable Bank, a Canadian institution that’s been around for decades.
We love there is no fee for the account and no minimum balance. All services, including Interac e-Transfer®, are free and they are known to provide the highest rates in Canada. Combined with the ease of opening an account and a consistently high interest rate (relative to others) – if we were to open a savings account today, it would be with EQ Bank.
- Current Interest Rate: 1.25%
- Minimum balance: none.
3. Alterna Bank High-Interest eSavings Account
Alterna Bank has been around for many years, a subsidiary of Alterna Savings Credit Union.
We like the fact that regardless of where you are, the Alterna Bank High-Interest eSavings Account is accessible online, via app, without no minimums and of course, no fees.
- Current Interest Rate: 1.10%
- Minimum balance: none.
Learn more about Alterna here.
4. LBC Digital High-Interest Savings Account
You’ve probably heard of Laurentian Bank. Well, to lure all Canadians to their new digital products and services, the parent bank now has LBCDigital.ca.
With the LBC Digital High-Interest Savings Account, you can access funds whenever you like, make use of electronic fund transfers, and more.
- Current Interest Rate: 1.20% (up to $500,000)
- Minimum balance: none.
Learn more about LBC Digital here.
5. Oaken Financial Savings Account
Oaken is owned by Home Trust Company, which started as a trust company back in 1987. Historically, they offer some of the best savings rates to Canadians. As with others above, no monthly fees, no minimum balance and transactions at your fingertips!
- Current Interest Rate: 1.15%
- Minimum balance: none.
Learn more about Oaken Financial here.
Of course, there are many other institutions that offer decent savings accounts. We won’t cover the entire list but some others to check out for promotional deals and various limited-time offers are the following (no affiliations):
- Wealthsimple Cash – This is a great regular interest rate account, including if you already have your Wealthsimple investment account, such as a TFSA or RRSP, with Wealthsimple.
- Tangerine – This is also a great regular savings account; there is no minimum balance and the online experience is very user friendly. We like that owners can set up an Automated Savings Program for any specific savings goals.
- Simplii – This discount bank, like Tangerine, offers a wide range of saving and chequing account solutions, including many without any fees. This bank offers many incentives from time to time for new accounts.
- Motive Financial – Motive Financial was launched recently as a division of Canadian Western Bank. They often have leading rates on savings accounts.
- Motusbank – Motusbank is a subsidiary of Meridian Credit Union, launched in the last few years.
We’ve focused on our top-5 above and some honourable mentions to ensure any place you put your hard-earned money is CIDC insured.
Why is CDIC important?
Financial institutions that are members of the Canada Deposit Insurance Corporation (CDIC) insure savings of up to $100,000, while credit unions are insured provincially and usually cover the full deposit, with no limits. Money that is deposited in a savings account generates interest by allowing the bank to access those funds to loan to others.
We’re also a fan of no monthly service fees since short-term savings could be months or years in the making.
Savings Account FAQs:
Question: Will I be taxed on my savings?
Earnings from a savings account is taxable income. That means any interest you earn from your savings must be declared and will be taxed at your normal rate. It is, however, possible to shelter your savings from taxes if you hold an interest-bearing investment inside a TFSA or an RRSP.
Question: Is there a big difference between a high-interest savings account or a general savings account?
We feel “High-Interest Savings Accounts” are a bit of a misnomer because they really only make sense when you actually earn a higher interest!
Ultimately, you need to find the best product that meets your needs. Again, we’re a fan of no fees, no account minimums, free transactions including e-transfers and more when it comes to savings accounts in general.
Since changes in the Bank of Canada lending rate can change your savings account interest rate, we suggest you pick a good plan and plan to keep that account active to meet your savings goals. You can also look into Guaranteed Investment Certificates (GICs), but prefer the flexibility that cash provides – you’re not locking up your money (as done in GICs) for a term. While GICs offer guaranteed interest rates for a given term they are not as liquid as cash.
Shop around and get the best plan above for your needs!
Best high-interest savings accounts in Canada – Summary
We believe cash savings has huge benefits including keeping some more cash on hand as you enter retirement.
After you get some cash savings in place and keep it there, we strongly encourage you to put any additional savings hard to work – as part of an investment plan.
Check out these posts in succession if you haven’t already done so!
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11 thoughts on “Best High-Interest Savings Accounts in Canada”
What do you think of the Canadian Tire Bank High Savings Account at 1.55 %. I believe it is the highest.
You know, we considered adding that one since it might have the highest in Canada, with no monthly fees, no minimum balance required, and no lock-in period – we probably should Gavin since I just checked at 1.55%. Updated with thanks!
It has recently lowered the interest rate t 1.25 %
Thanks for the update. Always going a bit lower it seems?
I don’t think Tangerine should be included. 0.1% is less than 1/10th the others listed. They were a great bank when they were ING Direct but have gone downhill steadily since ScotiaBank bought them. A steady decrease in interest rates and increase in fees. After my last RRSP GIC expires, I am out.
I also use Hubert. Savings account rate is 1.0%. 1 year GIC is 1.3%.
We included Tangerine given the simplicity to move $$ around between accounts but I fully support what you are saying Trevor and for purely a higher interest savings account we believe it’s best to focus on other accounts – although Tangerine does have the odd promotion.
Are you keeping GICs in your RRSP as part of your fixed-income plan?
I found both Alterna & Hubert online banks are easy to move money around and the websites are quicker than Tangerine.
I used to receive promotions from Tangerine, but they became new-money-only promotions once I paid off my mortgage with them.
Yes, GICs are part of my fixed income along with preferred shares.
How about Achieva Financial on the Credit Union side. It is at 1.30 % at the present
Humm, we can look into that one!
I like Achieva. They are very responsive (compared to Canadian Tire) Achieva’s customer service is excellent).
Great feedback and good to know for future updates on this one!