While the pandemic took a destructive toll on much of the world's economy, a recent report indicates that Canadians may have succeeded in growing their savings.
According to a report by CIBC (Canadian Imperial Bank of Commerce), Canadians may have accumulated more than $100 billion in savings. As families worry about what the future holds, clinging to their cash seems like the wisest choice.
But what if those very same families could make extra earnings from the interest rates? Instead of accumulating just a few dollars and cents every year, might the best high interest savings accounts offer opportunities for those emergency funds to compound? If nothing else, this year taught us to over-prepare and to invite as much room for financial security as possible.
Instead of sitting on your successful pile of savings, why not make your money work harder for you? Compare the best high interest savings accounts, and commit to improving your financial health this year.
What Is A High Interest Savings Account?
A High-Interest Savings Account, or "HISA", is a type of savings account that will result in a higher return than the average savings account through a traditional bank or credit union. They are most often available through an online banking provider or certain credit unions.
High interest savings accounts are best suited for emergency funds, vacation savings, or saving for a future home or vehicle, or the purchase of big-ticket items that require time and that will have the ability to accrue interest. As a HISA is not an investment account, you won't have to worry about losing your principal. Outside of annual fees, there's little downside to this kind of model!
The average savings account typically offers an annual interest rate of 0.01% – 0.05%. With a high interest savings account, it's possible to earn twenty to twenty-five times that amount -- often greater than or equal to 0.5% APY. Pretty nice, right?
Remember -- depending on how the interest is compounded (either daily, monthly or quarterly), you earn interest on top of the interest already earned. The more frequently interest accrues, the quicker your balance will increase.
Some accounts may require a minimum balance in order to qualify for the high interest earnings. Additionally, penalties may occur if you make an excessive number of withdrawals from the account within a certain period. These requirements will be specific to the banking institution, so be sure to review them prior to opening an account.
How Do I Choose the Best HISA for Me?
Like with any financial product, it's important to shop around before opening an account with a banking institution. Not all HISA offerings are "one-size-fits-all." Before signing, you'll need to ask questions like:
What am I saving for?
Is this account compatible with my goals?
How easy is it to access the account?
Brick-and-mortar, online, or credit union?
Is there an opening deposit requirement?
What is the minimum balance I need to maintain?
What is the APV? (annual percentage yield)
Are there account fees?
How many withdrawals can I have a month?
Once you have taken the time to compare the estimated growth of your future HISA, you can determine if it's the best option out of other types of investment accounts, including registered retirement savings plans and youth savings accounts. If you are looking for a way to earn a little extra cash on top of your holdings, look no further! HISA is the way to go.
Best High Interest Savings Accounts in Canada
The right high interest savings account (HISA) will earn five to thirty times more interest than the average savings account. Although this is the main driver for switching from a traditional savings account, you'll want to review all features and fees before taking the leap.
According to the interest rates offered and customer reviews, these are our top six picks for the best high interest savings accounts. We encourage you to perform additional research prior to opening a new account.
RBC High Interest Savings Account
The RBC (Royal Bank of Canada) offers a free high interest savings account for clients looking to earn on an annual interest rate. For those looking to avoid hefty fees, RBC provides generous transfer and deposit policies, and the ability to manage your money through RBC Online, Mobile, and Telephone Banking.
For new customers, RBC is offering an extremely competitive rate RBC High Interest eSavings account and access MyAdvisor for customized financial advice. This offer includes:
1% interest (on balances up to $1,000,000) for the first 3 months
1.5% interest (on balances up to $1,000,000) for the next 3 months if you also sign up or sign into MyAdvisor within 60 days
The RBC High Interest Savings Account does not require a minimum balance to participate.
Accountholders receive one free RBC ATM cash withdrawal every month. Additionally, you may transfer funds from this account to any other RBC Royal Bank personal deposit account in your name without penalty.
TD High Interest Savings Account
The TD High Interest Savings account is a great option for those with $5,000 or more to deposit into a new account. A high interest rate of 0.050% iscalculated daily with an account balance of $5,000 or more.
If you are willing to establish a minimum monthly balance of $25,000, transaction and monthly fees are waived. Additional benefits include:
TD SimplySave program to automate savings
TD Mobile deposit
TD MySpend to track spending habits
Looking for a bank that supports a busy customer? Access TD account information at a physical branch, online, or on the TD mobile app. Filling out an online application today takes most applicants up to ten minutes of their time.
CIBC High Interest Savings Account
24/7 access to your CIBC High Interest Savings Account will give you a front-row seat to your growing balance. With a 0.52% APY interest rate and no monthly account fees, CIBC is a great introduction to the benefits of high interest.
CIBC provides easy access to your funds through the CIBC NetBanking or the CIBC US Mobile Banking App.
Scotiabank Momentum Plus Savings Account
The Scotiabank Momentum Plus Savings Account is a banking package that prioritizes user experience and intelligent design.
With the MomentumPLUS Savings Account, you can earn up to 4.60% interest (for a limited time):
Regular Interest - standard rate calculated daily, paid monthly (1.60%)
Premium Period Interest - calculated daily, paid at the end of each Premium Period as long as no debit transactions have been initiated within that period (1.10%)
Ultimate Package Interest - additional 0.10% annual interest added to any MomentumPLUS Savings Account daily and paid out monthly
Welcome Bonus Interest Rate Offer - calculated daily at the Bonus Interest Rate of 1.80% for 150 days (5 months) on your first MomentumPLUS Savings Account opened between now and March 31, 2023
Scotiabank does not require any monthly account fees or minimum balance to open a Momentum Plus Savings Account. Enjoy unlimited transfers, and find financial freedom.
If you're interested in watching your savings balance grow but are too nervous to try investing, look no further than the Wealthsimple Save account. Unlike most high interest savings accounts, this account is invested in a low-risk investment portfolio of ETFs (exchange-traded funds).
As Wealthsimple Save does not require a minimum, you can open an account any time within the appropriate savings bracket. These brackets offer their own benefits:
Basic Account (0-$100k)- 0.25% WealthSimple save fee and auto-deposits
Black Account($100k+) - reduced fees for investing and a financial planning session
Generation Account ($500k+) - get access to individualized portfolios and a team of advisors
With this flexibility, you have options. Regardless, your balance will earn a 0.5% interest rate -- calculated daily and paid monthly.
Wealthsimple Save does not charge transaction fees or low-balance penalties. Finish your application in five minutes and put your money to work.
Tangerine Savings Account
Tangerine is proud to offer a high interest savings account with no minimum fees, balances, and no service charges. With a 0.10% interest rate, the Tangerine Savings Accounts offers an incredibly popular high interest savings account in Canada -- for any deposit amount.
Feel free to use the automated savings program to build your emergency fund. Reaching your savings goals could be easy!
Open A High Interest Savings Account Today
Rather than keeping your money in a traditional savings account (or under your mattress), treat your funds as an investment. If it's cash that you'd like to hold on to rather than dividend strategies or exchange-traded funds, a high interest savings account with a competitive interest rate will keep your money earning for you.
After you consider the best high interest savings accounts for your circumstances, explore additional roads on your way to financial health. For saving and investment tips to get you started, read more on the Insurdinary blog.