Best High-Interest Savings Accounts In 2024 - Comparewise

Best High-Interest Savings Accounts in 2024

You can only enjoy the best interests on your savings accounts when you register with the best high-interest savings accounts in Canada. However, this isn’t easy, as most Canadians don’t know the best high-interest savings accounts or what gives them the best.

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Last Updated: Apr 12, 2024

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KOHO High-Interest Savings Account

$0
Monthly Fee
5%
Interest Rate
  • Earn up to 5% interest
  • Get a $20 welcome bonus
  • Earn 5% cash back
Pros & Cons
Extra Details
Popular
Get Started

Tangerine Savings Account

$0
Monthly Fee
1%
Interest Rate
  • No monthly fees
  • No minimum balance
  • Earn 1% interest on every dollar everyday
Pros & Cons
Extra Details
Best Value
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EQ Bank Personal Account

$0
Monthly Fee
4%
Interest Rate
  • Get up to 4% interest
  • Chequing account functionality
  • Free bill payments, Interac e-Transfers
Pros & Cons
Extra Details
Get Started

CIBC eAdvantage Savings Account

$0
Monthly Fee
0.4% - 1.6%
Interest Rate
  • Set up automatic savings
  • No monthly fee
  • Get 0.40% up to 1.60%
Pros & Cons
Extra Details
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Scotiabank MomentumPLUS Savings Account

$0
Monthly Fee
1.40%
Interest Rate
  • Save for multiple goals in one account
  • No monthly account fees
  • No minimum balance required
Pros & Cons
Extra Details
Get Started

RBC High Interest eSavings

$0
Monthly Fee
1.5%
Interest Rate
  • Access your money easily
  • Know that your money is safe
  • Earn interest daily on every dollar
Pros & Cons
Extra Details
Get Started

Neo High-Interest Savings Account

$0
Monthly Fee
4%
Interest Rate
  • Achieve your savings goals
  • Earn 4% interest on savings
  • No minimum balance
Pros & Cons
Extra Details
Get Started

EQ Bank TFSA

$0
Monthly Fee
3%
Interest Rate
  • Unlimited, feeless withdrawals
  • CDIC protected
  • Easy withdrawals & contributions
Pros & Cons
Extra Details
Get Started

Simplii High Interest Savings Account

$0
Monthly Fees
0.4%
Interest Rate
  • No monthly fees
  • Set up automatic deposits
  • No minimum balance required
Pros & Cons
Extra Details
Get Started

BMO Savings Builder Account

$0
Monthly Fee
0.5%
Interest Rate
  • 0.5% base interest rate
  • No monthly fee
  • 2.0% bonus interest rate
Pros & Cons
Extra Details
Get Started

Laurentian Bank High-Interest Savings Account

$0
Monthly Fee
3%
Interest Rate
  • Earn 3% interest on up to $100k
  • No minimum balance
  • Earn interest on every dollar
Pros & Cons
Extra Details

Best High-Interest Savings Accounts in 2024

The best high-interest savings accounts offer incredible interest rates for Canadian savings accounts. With these accounts, you can also enjoy zero monthly fees and CDIC deposit insurance.

The best high-interest savings accounts for Canadians include the CIBC eAdvantage Savings Account and the Oaken Savings Account. Others include the Tangerine Savings Account and the CI Direct Investing High-Interest Savings Account.

To make the most of the best high-interest savings accounts, you’ll need to understand how they work. This article will show you how high-interest savings accounts work and how to improve your earnings from them.

You’ll also learn the merits and demerits of such accounts and how to open one of your own.

The best high-interest savings accounts

If you want to grow your savings faster, you’ll need to select the best high-interest savings accounts. Hence, we’ve done the due research and selected some viable options below:

RBC High-Interest eSavings Account

As one of the best high-interest savings accounts in Canada, this account comes with a 5.5% interest rate. However, this is just a promotional rate that’ll only last three months.

Nonetheless, this high-interest savings account still offers some premium features, like the ability to completely manage an account online.

Features of this high-interest savings account

  • Interest rate of 5.50%.
  • $0 monthly fee.
  • One free ATM withdrawal each month.
  • Extra withdrawals attract a $5.00 fee each time.
  • Interac e-Transfer fee of $1.00.

Pros of the RBC High-Interest eSavings Account

  • Free 24/7 account transfers between similar accounts.
  • Free access to telephone, online, and mobile banking opportunities.
  • No minimum deposit is needed to enjoy the high interest that this account offers.
  • Free electronic statement of account.

Cons of the RBC High-Interest eSavings Account

  • The high interest on this savings account only lasts for three months.
  • Interac e-Transfer fee.

Scotiabank MomentumPLUS Savings Account

Scotiabank is currently running a promo on their Savings Accelerator Account. Canadians get to enjoy 5.40% interest within the first three months of opening the MomentumPLUS Savings Account.

When these three months are done, the interest goes back to 1.40%.

Features of this high-interest savings account

  • The minimum age to get the Scotiabank MomentumPLUS account is 18 years old.
  • $0 account fee.
  • $0 Interac e-Transfer fee.
  • $5 transaction fee.
  • Interest rate of 5.40%.

Pros of the Scotiabank MomentumPLUS Savings Account

  • Scotiabank waives all fees and surcharges when account owners use their ATMs at the machines of other members of the Global ATM Alliance.
  • Free, unlimited transfers are available for transactions between Scotiabank accounts.
  • No transaction or Interac e-Transfer fees.

Cons of the Scotiabank MomentumPLUS Savings Account

  • Canadians can only enjoy the Scotiabank MomentumPLUS account 5.4% interest for three months after opening the account.
  • $1.50 transaction fee for using ATMs outside of the Global ATM Alliance.

CIBC eAdvantage Savings Account

The CIBC eAdvantage savings account offers a 5.60% interest rate. However, this high interest only lasts for four months before it reverts to the base interest rate. The base interest rate for this savings account ranges from 0.65% to 1.90%.

Features of this high-interest savings account

  • Interest rate of 5.60%.
  • The 5.60% interest is awarded when you save $200 or more each month.
  • $0 monthly fee.
  • Transaction fee of $5.
  • Interac e-Transfer sending fee of $1.50.

Pros of the CIBC eAdvantage Savings Account

  • Account owners can transfer funds for free between other CIBC accounts and this savings account.
  • Account owners can automate their savings on this account.
  • No monthly fees.
  • Free paperless statement of account.

Cons of the CIBC eAdvantage Savings Account

  • There is a $5 charge on every transaction.
  • No paper statement of accounts in this account.
  • $1.50 fee for sending Interac e-Transfer transactions.

Neo High-Interest Savings Account

Neo Financial is an emerging fintech bank that’s out to bring innovative financial services to Canadians. Although this bank has no physical presence, it boasts an online platform that can serve the needs of Canadians.

The Neo High-Interest Savings account offers a 4% interest rate and demands no fees. As one of the best high-interest savings accounts, Canadians also have the option of using a mobile app to manage their account.

Owners of this savings account can link external accounts from other banks to it for easy funding.

Features of this high-interest savings account

  • $0 NSF fee.
  • Interest rate of 4%.
  • $0 transaction fee.
  • $0 account fee.
  • No one below the age of 18 years can open a Neo High-Interest Savings account.

Pros of the Neo High-Interest Savings Account

  • No minimum balance requirement to receive interest from the Neo Money account.
  • No transaction or account fees.
  • Opening this account gives Canadians a free Neo Money Card.

Cons of the Neo High-Interest Savings Account

  • Neo Financial has no physical branches for Canadians who want to meet them in person.

Laurentian Bank High-Interest Savings Account

French-speaking Canadians won’t easily find a better deal than this if they desire high interest in their savings account. This is one of the best high-interest savings accounts, as it offers a 4.00% interest rate.

However, the only way Canadians can get this interest is when they deposit between $100,000 and $5,000,000 in their account. An account with less than $100,000 in it will only earn 3% interest.

Features of this high-interest savings account

  • Interest rate of up to 4.00%.
  • $1.00 Interac e-Transfer fee.
  • $0 monthly maintenance fee.
  • $1.00 fee for transfers between accounts in this bank.
  • $0 minimum deposit requirement.
  • $3.00 paper statement fee.
  • Free electronic statement of account.
  • $1.00 fee for pre-authorized payments.
  • Canadians have to reach the age of majority in their province before they can open this account.

Pros of the Laurentian Bank High-Interest Savings Account

  • Canadians don’t need to fulfill any minimum balance requirement before they earn interest.
  • CDIC deposit insurance provides protection for the deposits in this account.
  • Account owners can set up automatic transfers to fund their savings account from a chequing account.
  • Extremely suitable for French-speaking Canadians and those living in Quebec.
  • 4% interest rate.

Cons of the Laurentian Bank High-Interest Savings Account

  • Canadians must have more than $100,000 to enjoy the 4.00% interest.
  • A paper statement of account is only available when the account owner has performed more than five transactions since it was last printed.
  • The physical branches of this bank are only available in Quebec.
  • There are transaction fees for most features on this account.

Tangerine Savings Account

The Tangerine Savings Account is one of the best savings accounts out there, with 6% interest. However, this high interest rate only lasts for five months before going back to the standard 1%.

The Tangerine Savings Account offers an easy registration process, so any Canadian who meets their minimum age requirement can sign up. There’s also the bonus of a $400 cashback for anyone who opens a chequing account 30 days after opening this savings account.

Features of this high-interest savings account

  • The minimum age to open this account is 16 years old.
  • $0 transaction fee.
  • $0 account fee.
  • Interest rate of 6%.

Pros of the Tangerine Savings Account

  • No monthly fees or everyday transaction fees.
  • This account offers an automatic savings program for Canadians who want to automate the savings procedure.
  • The CDIC deposit insurance program insures the deposits in this account.
  • No minimum balance requirement.

Cons of the Tangerine Savings Account

  • The 6% interest rate for this account only lasts for five months.
  • Tangerine Bank has no physical branches for Canadians who want to meet the bank’s officials in person.

EQ Bank TFSA Account

This Canadian bank account offers a 3.0% interest rate. As a tax-free savings account, the Canadian government does tax interest earned from the EQ Bank TFSA Savings Accounts. It’s also easy to open this account, as everything can be completed online.

This savings account is perfect for an everyday account, as it doesn’t charge for fund transfers to and from other bank accounts. You can also link this TFSA account to other external bank accounts to set up recurring deposits.

Features of this high-interest savings account

  • $0 monthly maintenance fee.
  • $0 transaction fees.
  • Interest rate of 3.0%.
  • This savings account pays its interest monthly and calculates it daily.
  • The only Canadians who can open this savings account are those who are 18 years or older.

Pros of the EQ Bank TFSA Savings Account

  • No minimum deposit requirement to enjoy the interest rates offered by the account.
  • CDIC deposit insurance provides protection for the deposits in this account.
  • Interest earned from this account comes with a tax waiver.
  • No account or transaction fees.

Cons of the EQ Bank TFSA Savings Account

  • EQ Bank has no physical branches, so Canadians cannot meet with the bank staff in person.

Simplii High-Interest Savings Account

Simplii Financial is a Canadian bank that opened its doors in 2017, offering better ways for Canadians to save and manage money.

Opening a savings account at Simplii Financial allows you to enjoy a 6% interest rate. However, this is a promo interest rate that’ll only last 5 months. After that, it’ll reduce to 0.4%.

Features of this high-interest savings account

  • $0 transaction fee.
  • $0 account fee.
  • Minimum age requirement of 18 years for account owners.
  • Interac e-Transfer fee of $0.
  • $45 NSF fee.
  • Interest rate of 6%.

Pros of the Simplii High-Interest Savings Account

  • No account fee.
  • Canadians don’t need to worry about any minimum balance requirements to enjoy the interest on this account.
  • No transaction fees.
  • Account owners can set up automatic deposits for their accounts.
  • CDIC deposit insurance provides protection for the deposits in this account.

Cons of the Simplii High-Interest Savings Account

  • Simplii Financial has no physical branches for customers who want to meet in person.
  • Interest rate drops very low after the promotion ends.

KOHO High Interest Savings Account

KOHO is a Canadian fintech company that believes Canadians should have access to better financial solutions. Opening a KOHO Earn Interest Account also gives you access to cashbacks and a prepaid card.

This account offers 4.50% on the first $1,000 deposit and 3% on all deposits after that. The KOHO Earn Interest account pays its interest every month, after calculating it on a daily basis.

Features of this high-interest savings account

  • $0 account fee.
  • $0 transaction fee.
  • Interac e-Transfers fee of $0.
  • A minimum age of 18 years is required to open this account.
  • $0 NSF fee.
  • Interest rate of 4.50%.

Pros of the KOHO High Interest Savings Account

  • No transaction fees.
  • Canadians can earn cashback on all purchases.
  • Cashback of 6%.
  • No account fees.

Cons of the KOHO High Interest Savings Account

  • This account requires Canadians to stick to a monthly interest payment if they want to earn high interest.

EQ Bank Personal Account

When you want a joint account, there’s hardly any better than the EQ Bank Personal Account. This means you and your loved ones can run this account together.

As one of the best high-interest savings accounts out there, this account offers 3% interest and this interest lasts for 12 months only.

Features of this high-interest savings account

  • Interest rate of 2.50% to 3.00%.
  • $0 transaction fee.
  • The minimum age for opening this account is 18 years old.
  • $0 account fee.
  • Interac e-transfer fee of $0.
  • $0 NSF fee.

Pros of the EQ Bank Personal Account

  • No everyday banking fees.
  • No transaction or e-transfer fees.
  • No minimum balance is needed to enjoy the interest on the EQ Bank Personal Account.
  • There are no ATM fees required for this account.

Cons of the EQ Bank Personal Account

  • EQ Bank has no physical branches for customers who want to visit.
  • Paper statements of account are unavailable.
  • No overdraft protection.

BMO Savings Builder Account

BMO is one of the biggest banks in Canada, and it’s driven by a commitment to provide a thriving economy. The BMO Savings Builder Account allows Canadians to earn 2.5% interest when they have $200 in their accounts.

Of course, if users do not increase their balance by $200, they can still earn a base interest of 0.50%.

BMO offers online and mobile banking opportunities, allowing Canadians to manage their accounts from any location.

Features of this high-interest savings account

  • Interest rate of 2.50%.
  • $0 account fee.
  • $5.00 transaction fee.
  • The minimum age required to open this account is 18 years old.
  • $5.00 Interac e-Transfer fee.

Pros of the BMO Savings Builder Account

  • No account fees.
  • Online and mobile banking are available.
  • As members of the CDIC, this account offers insurance on all deposits.
  • Interest rate of 2.50%.

Cons of the BMO Savings Builder Account

  • The 2.50% interest rate is only available when you top up your account by at least $200 every month.
  • Transaction fee of $5.00.

CI Direct Investing High-Interest Savings Account

This savings account starts with a base interest rate of 4.0%. This makes a good combination with the absence of monthly fees. CI Direct Investing only allows individual accounts at the moment.

Features of this high-interest savings account

  • $0 account fee.
  • Interest rate of 4.0%.
  • Account owners can only save Canadian dollars in this account.
  • Only Canadians of 18 years or older can open this account.
  • $0 Interac e-Transfer fee.
  • $0 transaction fee.

Pros of the CI Direct Investing High-Interest Savings Account

  • Unlimited deposits and withdrawals each month.
  • Canadians do not need to keep a minimum balance in their account to benefit from the 4.0% interest in this account.
  • Account owners can use a mobile app to manage their accounts.
  • CI Invest Services Inc., the National Bank Independent Network, and Credential Qtrade Securities Inc. are responsible for protecting all accounts.

Cons of the CI Direct Investing High-Interest Savings Account

  • No joint account is allowed for this high-interest savings account.

Manulife Bank Tax-Free Savings Account

Manulife Bank offers one of the best interest rates (4.50%) with their tax-free savings account. You can open a tax-free savings account easily with this bank and enjoy no maintenance, transaction, or monthly fees.

Keep in mind that the Manulife Bank Tax-Free Savings account is only for existing customers of the bank. However, new customers can also join through a licensed financial advisor.

Features of this high-interest savings account

  • $0 monthly maintenance fee.
  • Interest rate of 4.50%.
  • TFSA contribution limits also hold for this account.
  • $0 minimum deposit requirement.

Pros of the Manulife Bank Tax-Free Savings Account

  • No taxes are imposed on interest earned with this account.
  • No minimum balance is needed to earn interest on the Manulife savings account.
  • CDIC deposit insurance covers all deposits in this account.

Cons of the Manulife Bank Tax-Free Savings Account

  • This high-interest savings account is only available to Canadians who already have a Manulife account.

Alterna Bank High-Interest eSavings

Alterna Bank is an online-only bank that’s operated by Alterna Savings and Credit Union. Hence, the bank has no physical presence. The Alterna Bank High-Interest eSavings Account offers a high-interest rate (2.25%) that isn’t dependent on promotion.

Canadians can access this account and manage it via online banking or through the Alterna Bank mobile app. As one of the best Canadian high interest savings accounts, you can completely open this high-interest savings account online.

Features of this high-interest savings account

  • Interest rate of 2.25%.
  • $0 transaction fee.
  • $0 account fee.
  • Unlimited free Interac e-Transfers.
  • Unlimited free debits and bill payments.
  • Interest in this Alterna account is paid on a monthly basis.

Pros of the Alterna Bank High-Interest eSavings

  • CDIC deposit insurance provides protection for deposits in this savings account.
  • There is no minimum deposit requirement to receive the interest that comes with this account.
  • No monthly maintenance fees.
  • Transfers from this account to those of another financial institution are free.

Cons of the Alterna Bank High-Interest eSavings

  • Alterna Bank doesn’t have a physical location where account owners can meet in person with bank staff.

Oaken Savings Account

Oaken Financial offers a 3.40% interest rate for their savings account. As one of Canada’s best high-interest savings accounts, the interest rate of this account doesn’t change. This makes it better compared to other high-interest savings accounts that offer promotional interest rates.

Oaken Financial also offers a mobile app that Canadians can use to manage their accounts at any time. Canadians can also use this account to invest in Oaken GICs. This will allow investors in Oaken GICs to easily transfer their interests or matured balances to their savings accounts.

Features of this high-interest savings account

  • Interest rate of 3.40%.
  • Unlimited transactions.
  • $0 transaction fee.
  • $0 account fee.
  • Interest in this account is released on a monthly basis.

Pros of the Oaken Savings Account

  • CDIC deposit insurance is in place to protect deposits in this account.
  • No minimum balance requirement to enjoy the interest rate on this account.
  • No transaction or account fees.
  • Canadians can set up automatic contributions to automate their savings process.
  • Account owners can access the funds on their account at any time and enjoy the interest paid up to that point.

Cons of the Oaken Savings Account

  • Interac e-Transfers are not supported with this savings account.
  • Canadians who prefer banking in person will be severely restricted, as Oaken Financial only has four branches.
best high-interest savings accounts in canada - comparewise

Motive Savvy Savings Account

This is an online bank that offers services that are accessible to people all over Canada. This bank offers an online banking platform and a mobile app that customers can use to manage their accounts.

This high-interest savings account offers 4.10% interest for Canadians with less than $5,000,000 in their accounts. Those with more than that get 0.50% interest. In this account, the interest is paid out on the last day of each month.

Features of this high-interest savings account

  • $0 monthly fee.
  • Unlimited deposits.
  • Two free transactions each month.
  • Extra transactions in a month attract a $5.00 fee for each transaction.
  • All withdrawals from ATMs outside THE EXCHANGE network attract a $1.50 fee.
  • $1.00 fee for all Interac e-Transfer transactions.
  • Interest rate of 4.10%.

Pros of the Motive Savvy Savings Account

  • Free withdrawals from all ATMs within THE EXCHANGE network.
  • Deposits made in this account are insured by CDIC deposit insurance for up to $100,000.
  • Transfers between accounts in this bank are unlimited.
  • No monthly fees for this account.
  • Interest rate that goes as high as 4.10%.

Cons of the Motive Savvy Savings Account

  • Only two free monthly transactions are allowed with this account.
  • Automatic monthly electronic statements of account are not available on this account.
  • No physical branches are available for Motive Financial.

What is a high-interest savings account?

This is a special account that gives you a higher interest rate for every dollar you deposit than an ordinary savings account. A high-interest savings account also bears the acronym HISA.

The best high-interest savings accounts in Canada offer higher than normal interest through the power of compound interest.

Although high-interest savings accounts from different banks have differing features, there are some that are common. These accounts don’t have any monthly fees or account fees. Most times, the interest on these accounts is calculated on a daily basis and then paid on a monthly basis.

How does a high-interest savings account work?

This type of account works by combining the features of an ordinary savings account with other unique qualities. Leaving your money in a high-interest savings account means that you leave your funds at the mercy of the bank.

The bank uses these funds for a variety of purposes, including loans and investments.

Interest is the payment that the bank gives you for allowing them to use your funds like this. The best high-interest savings accounts come with CDIC deposit insurance, which protects account owners from any loss.

With this insurance, if the bank invests your funds and the investment collapses, you’ll still be able to recover your money.

Some of the unique characteristics of a high-interest savings account are its compound interest and its ability to discourage spending.

This includes taking away the ability to use ATMs or limiting the number of withdrawals that you can make in a month. All of this helps prevent account owners from dipping into their savings.

How does compound interest work in a high-interest savings account?

Compound interest is one of the most defining properties of this type of account. We’ve already established that when you deposit money into your savings account, you get to earn interest.

In a high-interest savings account, this interest that was earned is added back to your account balance. The new amount is also used to earn interest, allowing you to earn more interest than usual.

The beauty of a high-interest savings account is that this process occurs every day, weekly, or monthly, depending on the bank. So, the interest that you’ll be earning on your account will be increasing steadily without your interference or an extra deposit.

How to take advantage of compound interest in a high-interest savings account

Many Canadians have made the wrong decision and treated compound interest like regular interest. This has caused them to miss prime opportunities to earn more with their accounts. In this section, you’ll find a few tips on how to maximize the compound interest of the best high-interest savings accounts.

Always fulfill the monthly balance requirement

While the monthly balance requirement is not considered by some financial institutions, there are others that use it. If you’re using such a bank, you should ensure you meet their minimum balance criteria. This way, you can receive interest on that account.

Avoid transaction fees whenever you can

Transaction fees are one of the biggest mediums through which Canadians lose money that would have enhanced their compound interest. Since the highest-interest bank accounts in Canada are eager to discourage spending, transaction fees are usually one of the highest account fees.

However, there is a way to avoid these transaction fees and that is by qualifying for a fee waiver. Many banks waive transaction fees when account holders connect their high-interest savings account to a chequing account. So, when you do this, you can save on transaction fees.

Fund your account whenever possible

Since you earn more interest with more money in your account, it’s necessary to always increase your account balance whenever possible.

For this purpose, it’s better to set up automatic deposits from a chequing account to your savings account. This will keep your account funded regularly, allowing you to enjoy the biggest interest.

Advantages of a high-interest savings account

Many Canadians are interested in picking the best high-interest savings accounts because of the many benefits that such accounts offer. When you open such an account, you stand to enjoy many benefits, like:

No monthly fees

The best high-interest savings accounts do not demand any monthly fees. This means you can just deposit your funds in an account and watch it grow without worrying about losing money to monthly fees.

Easy usage

The high-interest savings account is very easy to open and use. Most of these accounts can be completely opened on the internet without visiting a physical branch.

Sometimes, these institutions that offer high-interest savings accounts also provide mobile applications and online platforms. This allows Canadians to use their account without the need to go to any physical branch.

High-interest savings accounts allow you to reach your goals faster

A high-interest savings account allows you to earn more interest on the interest that has already been earned.

This means you make more money when your funds rest in your account for a long period of time. This will allow you to earn more money and take you one step closer to accomplishing your financial goals.

CDIC insurance

Most high-interest savings accounts come with CDIC insurance. This means that depositing money in such accounts is a venture with little risk. All CDIC-insured accounts are insured for up to $100,000 per person.

Disadvantages of a high-interest savings account

Opening a high-interest savings account comes with a few demerits and you’ll see them below:

Transaction limit

Since the best high-interest savings accounts are designed to encourage a saving culture, transactions are usually limited. Hence, the account will only allow a few free transactions every month. When these free transactions are used up, subsequent ones will attract transaction fees.

Hence, a high-interest savings account can’t function well for Canadians who withdraw funds regularly from their accounts.

Fluctuations in the interest rate

The interest rate of a high-interest savings account is dependent on the federal rate. If the federal rate drops, all financial institutions have no choice but to reduce their interest rates as well.

This means that the high interest rates you see on some savings accounts are not really permanent; they can change at any time.

Various terms and conditions

This type of savings account comes with a high interest rate and many exciting features. However, most of these benefits are governed by strict rules outlined in the account’s terms and conditions.

Some of these terms and conditions include a minimum balance requirement to enjoy high interest rates. If Canadians do not meet this minimum balance requirement, they might earn a lower interest rate or no interest at all.

Other terms and conditions include a time-bound high interest rate that’ll change back to normal a few months down the line.

How to choose the best high-interest savings account

Choosing the best high-interest savings account isn’t easy, as there’s a lot to consider. Many Canadians have only considered things on a surface level and made the wrong choices, causing them to regret them.

Hence, we’ll be sharing a few tips that can guide you in choosing the best Canadian high-interest savings account.

What is your purpose for getting a HISA?

When you want to open any account, you should always consider the purpose of doing so. Many Canadians have made the mistake of opening a high-interest savings account when they only need a regular account.

Sometimes, their needs warrant a GIC (Guaranteed Investment Certificate), not a high-interest savings account.

This question of purpose is one that all Canadians should ask before they start their search for the best high-interest savings accounts. This way, they’ll be certain that their needs warrant a high-interest savings account.

Consider the fees and limits

The best high-interest savings accounts in Canada are those that don’t demand any monthly fees. However, this doesn’t mean you won’t pay ATM fees, inactivity fees, excessive withdrawal fees, or the like. So, you should go through the fees for the account to ensure that they’re at an acceptable level.

Deposit limits are also present in some high-interest savings accounts. This is a minimum level of funds that an account owner must possess; if not, they’ll be penalized.

Sometimes, withdrawal limits for withdrawing funds from the account are also present. If an account owner goes over this limit, they’ll be penalized, and this penalty comes in the form of a fee. Hence, it’s important to consider all the limits on an account so you’re better prepared to avoid them.

Frequency of compounding interests

Interests in Canadian financial institutions compound on a daily, weekly, monthly, or yearly basis. This means savings account owners in those institutions are paid interest according to the rate at which the interest compounds.

So, if you’ll be withdrawing funds from your savings account regularly, you should choose an institution with a faster frequency.

Compare interest rates

The interest rates for high-interest savings accounts are not the same in Canada. Even for the best high-interest savings accounts, their interest rates can differ, as some institutions can offer a higher interest rate than their competitors.

Before you go about choosing the institution with the highest interest rate, consider their terms and conditions. Most times, the highest interest rates are only accessible when Canadians leave specific amounts of cash in their accounts.

One more thing to consider regarding interest rates is checking the base interest rate for that account. That’s because most of the interest rates that you see for many high-interest savings accounts are promotional offers. Hence, the interest rate will go back to a lower value once the promotion ends.

Go through the account features

Before you choose the best high-interest savings account, you need to look at the account offerings. This includes the chequing account linking process for the savings account. Check the terms of the institution to see if they only accept linking from chequing accounts within the institution.

One more thing to consider regarding account features is the accessibility of the account. As some banks are built without physical branches, users can only access their services online. Some high-interest savings accounts don’t support the use of ATM cards, so you should also consider this.

You’ll also notice deposit insurance is present in certain high-interest savings accounts. This is common for members of the CDIC (Canadian Deposit Insurance Corporation).

You should also check if your chosen high-interest savings account has this feature. This means that your funds are safe in the face of eventualities.

Consider the bonus offers

There’s high competition among Canadian financial institutions in a bid to attract more customers. As such, it’s not uncommon to see some institutions offering bonuses for customers who open savings accounts with them.

These bonuses can include increased interest for a few months, cashbacks, free credit cards, transaction limits and fee waivers, and many more.

What makes a high-interest savings account so different from a (GIC) Guaranteed Investment Certificate?

A high-interest savings account allows you to earn money from the interest that financial institutions pay on the funds in your account.

The interest rates used in most high-interest savings accounts are variable, and their value reflects the federal interest rate. This means that the interest that your financial institution promised is subject to change.

A Guaranteed Investment Certificate (GIC), on the other hand, offers a fixed interest rate on your deposits. This is unlike a high-interest savings account, where interest can change at any time.

Unlike high-interest savings accounts, where funds can be stored for as long as the customer wishes, a GIC requires a stipulated period.

This means Canadians can only store funds within the periods that they specify. A long-term storage period can last from one to ten years, while a short-term storage period only lasts months.

In the best high-interest savings accounts, account owners can withdraw the funds in their account at specified intervals. However, the GIC doesn’t allow account owners to touch the funds until the stipulated investment period is over.

Of course, you can still access the funds in your GIC account outside the stipulated withdrawal period if you wish. However, you’ll have to pay steep penalties when you do this.

How can Canadians open a high-interest savings account?

You can open the best high-interest savings account in Canada within minutes, as account opening procedures are becoming easier every day.

The only thing to watch out for is to check if you meet the criteria for opening an account in Canada. This involves reaching the age of majority, possessing a SIN, having a permanent address, and more.

If you can meet these requirements, then you only need to visit the online portal of your chosen bank to open an account. On these platforms, you’ll find “Open Account” buttons that can be used to start the account creation process.

This usually requests personal information like your name, age, email address, etc. Most times, the account opening procedure can be completed online, but in rare cases, you’ll need to visit a physical branch.

After providing the required personal information and supporting identification documents, your high-interest savings account will be opened.

Final thoughts on the best high-interest savings accounts in Canada

A high-interest savings account is a fine addition to any Canadian’s investment. Sure, the gains are small compared to other investment options, but their advantage is the absence of risks. Hence, a high-interest savings account is the way to go for a long-term or short-term investment goal.

Canadians who should open a high-interest savings account are those who have funds to invest and can keep up their contributions regularly. The best high-interest savings accounts are also perfect for those who want to invest but still have easy access to their funds.

Opening the best high-interest savings accounts gives you access to emergency fund reserves. It also serves as a stockpile for huge goals like building a house, buying a car, or paying for a college education.

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January 11, 2024
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FAQs about the Best High-Interest Savings Accounts

Can a Minor Open a High-Interest Savings Account?

Yes, minors in Canada can open a high-interest savings account; even the best of these savings accounts are not exempt. However, this is only possible when the financial institution offers a youth account. In this case, the guardians of the child need to register the account for them.

Can a Visitor to Canada Open a High-Interest Savings Account?

Yes, visitors in Canada can open high-interest savings accounts, as they’re not limited to only residents. However, the type of visitors that can open such an account depends on the length of stay, visa type, and other criteria. Sometimes, proof of residency is also required.

Is the Interest from a High-Interest Savings Account Taxed?

Yes, the interest from a high-interest savings account is taxed, and this also holds true for children's accounts. Although children are not of tax-bearing age, transfers from their parents, which they invest in, can be taxed. The only type of high-interest savings account that cannot be taxed is a TFSA.

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