Most Canadian Banks provide a variety of financial products that enable customers to save money. A savings account is one type of such a product. It allows users to save money without the regular transactions that are synonymous with a chequing account. It is a straightforward process to open a savings account, and you don’t have to open it with the same bank you use for your regular transactions.
The unique nature of a savings account allows customers to earn interest on the money they deposit. Because the money is not readily drawn, the bank can channel the funds into profitable ventures and pay the customer interest over some time.
The downside to a savings account is that the bank encourages you to save. That means if you decide to withdraw your money regularly, you’d be charged a higher transaction fee compared to the average chequing account. Canada has many banks that offer excellent savings products, but before we dive into all that, you must know all the basics about a savings account.
Savings Account Types
There are four types of savings accounts. They are:
- High-Interest Savings Accounts
High-interest savings accounts have the best interest rates of any savings account in Canada. The downside is you get to pay taxes on your interest, which takes a big chunk out of your profits.
- Tax-free Savings Accounts
Unlike the HISA, a TFSA offers lower rates, but the good takeaway is that every cent you earn is tax-free.
- Youth Savings Accounts
A youth savings account is an account that teaches kids how to save. It provides special offers and freebies that teach little kids the art of saving money and carrying out basic financial transactions.
- Seniors Savings Accounts
Not as popular as a youth savings account, a senior savings account is specially designed for individuals who are 60 years or older. These seniors get special rates as well as reduced fees on account of their age.
There are a few banking terms you need to take to heart for you to operate your savings account property. Some of them are stated below.
ROI simply means “return on investment.” It is the amount you earn on the money you deposit. Also known as interest rate, some banks offer a promo rate that starts on a high and tapers off to a low after a period. Your best bet is to ignore such rates and go for those offers with a decent and more stable return on investment.
Because banks want you to save, they discourage you from making transactions by charging a transaction fee. These fees cover various tasks, from depositing money to withdrawals as well as transfers. You should look out for banks that offer free transactions or minimal charges.
Monthly fees are the charges you get for depositing your money. However, not all banks charge a monthly fee, especially for a savings account.
Deposit guarantee simply means your money is under the protection of the Canadian Deposit Insurance Corporation. That means if your bank ceases to operate for any reason, you get your money back. However, not all banks are insured by the CDIC. Ensure you open your account in a bank that has CDIC insurance.
Without further ado, these are the banks with the best interest rates in Canada:
Alterna Bank e-Savings
Alterna Bank is a leading Canadian bank that runs it’s operations online. The bank gives its customers so many different banking services, including saving accounts. And as a CDIC member, you can be sure your money is in safe hands.
Alterna’s TFSA has no minimum deposit criteria, and you get unlimited deposits and withdrawals. The icing on the cake is the 2% rate Alterna offers. And you get to keep what you earn because there are no monthly fees.
Alterna Bank began operations in 2000. Since then, the bank has grown from strength to strength. It is the banking division of Alterna Savings, the first Credit Union in Ontario.
A relatively new bank in the finance industry, you’d need a hard credit check to open an account with motusbank. Your credit score will feel the impact as if you were applying for a credit card.
However, motusbank offers a whopping 2.00% if you open a TFSA. It is one of the best offers out there, with no minimum balance or monthly fees. The interest accrues daily and paid monthly. To sweeten the deal, motusbank insures your deposit up to C$100,000.
motusbank is the banking arm of Meridian, one of the popular Credit Unions in Canada. Apart from TFSAs, motusbank offers other account services, including the high-interest savings account and the chequing account.
EQ Bank Savings Plus
If you desire a bank that provides a good interest rate to its customers, you’d need to check out what EQ Bank has to offer. It is one of the most popular online banks in Canada for a good reason.
EQ bank has an interest rate of 2.00%. It isn’t the best out there, but there’s so much more to the offer than meets the eye. That’s because EQ bank charges no banking fees, zero minimum balance, unlimited e-Transfers, the free electronic transfer of funds, and deposit guaranteed.
The downside to the EQ Bank Savings Plus offer is that it isn’t available to Quebec residents.
Tangerine TFSA Savings
Tangerine is arguably the most well-known online-exclusive bank throughout the length and breadth of Canada. The unique nature of their TFSA allows customers to enjoy huge rates at 2.80%.
However, it drops down to a paltry 0.40% after five months. On a positive note, customers who open a savings account with Tangerine do not have to pay a monthly fee. There’s also no minimum balance requirement, and your money is insured up to C$100,000.
Motive Financial TFSA
Motive Financial is an arm of the Canadian Western Bank. The Canadian Western Bank is a member of the CDIC. That means your money is insured should you choose to open an account. Motive Financial offers customers a tidy rate of 2.40% on their deposits. Furthermore, the bank has no minimum balance requirements and provides unlimited transactions for free.
However, Motive Financial will charge you C$50 if you close your TFSA within twelve months of opening the account. You also pay C$50 if you choose to transfer your TFSA to another bank without notice. Although Motive Financial has a strong customer base, it isn’t available to individuals who reside in Quebec.
Hubert Financial TFSA
Hubert is an online bank that’s the property of the Sunova Credit Union. The bank provides its customers with a savings account TFSA that has an interest rate of 2%. And to lure customers, the bank guarantees its deposits through the Deposit Guarantee Corporation of Manitoba. But that’s not the end of it.
Hubert Financial charges no monthly fees and has no minimum balance requirement. The bank calculates the interest on a day-to-day basis while it’s paid out monthly.
Another online bank that’s owned by a Credit Union, Implicity Financial operates a TFSA that stands at a competitive rate of 2.10%. The Deposit Guarantee Corporation of Manitoba also insures the deposits.
Wholly owned by the Enter a Credit Union, customers do not pay monthly charges, and they also get a free withdrawal each month. Additional transactions will cost you C$1.
CIBC TFSA Tax Advantage
One thing about the big banks is that they offer lower rates. But if online banking isn’t your idea of banking, then the CIBC Savings Account just might be what you’re looking for. The CIBC TFSA provides its customers with a fair rate of 1.75%.
Wealthsimple became popular by simplifying banking. Today this online bank offers numerous financial services, including the TFSA. The bank offers a competitive rate of 1.40%, which is more than you can get at many regular banks.
What sets Wealthsimple apart from the rest is that the bank insures your money up to C$1,000,000. The bank has no minimum balance and unlimited free transactions. That’s as good a deal as you can find anywhere in Canada.
Oaken Financial TFSA
Established in 2013, Oaken Financial offers an interest rate within the range of 2.50% to 2.95% depending on the term and length. Deposits also receive insurance from the CDIC.
However, Oaken Financial has a minimum deposit of C$1,000. And if your account is inactive for two or more years, you get to pay an extra C$20. On the other hand, the bank doesn’t charge a fee if you’re transferring your funds to another bank.
Scotiabank is, without a doubt, one of the Big Five. It has the Savings Accelerator that provides an interest rate of 1.00% to its customers. If you like the allure of banking with one of the biggest banks in Canada, then you should consider ScotiaBank. But if you’re interested in the highest rates you can get, you should consider other banks on this list.
That being said, your money is insured as Scotiabank is a member of the CDIC. The bank charges up to C$20 for dormant accounts for up to two years and for transferring funds to another bank.
The last on the list is the Bank of Montreal TFSA. The interest rate is the lowest on the list at 0.75%. However, this does not deter customers from patronizing the bank.
BMO has two types of TFSAs. One for regular cash deposits and the other for GICs and other investments. Customers do not pay fees for withdrawing, although the bank does charge a C$50 fee if you transfer your funds to another institution.
All TFSAs are not made equal. Some may look flashy to the eye but offer less value than you think. It’s important to look at the terms and conditions before deciding on a bank to deposit your hard-earned funds.
HSBC High Rate Savings Account
The bonus interest rate earned on new deposits is 3.50% per annum, calculated daily on the daily closing balance of the new deposits and paid monthly.
The average monthly balance requirement is Rs 2,000 to Rs 5,000. Ujjivan Small Finance Bank is offering interest rates up to 7 percent on savings accounts. Equitas Small Finance Bank is offering interest rates up to 7 percent on savings accounts. The average monthly balance requirement is Rs 2,500 to Rs 10,000.Where can I get 5% interest on my money? ›
- Varo: 5% up to $5,000.
- Current: 4% up to $6,000.
- Aspiration: 3-5% up to $10,000.
- NetSpend: 5% up to $1,000.
- Digital Federal Credit Union: 6.17% up to $1,000.
- Blue Federal Credit Union: 5% up to $1,000.
- Mango Money: 6% up to $2,500.
- Landmark Credit Union: 7.50% up to $500.
Digital Federal Credit Union offers 6.17%, Blue Federal Credit Union offers 5.00%, Landmark Credit Union offers 7.50%, online bank Mango Money offers 6.00% and Consumers Credit Union and online bank T-Mobile Money, both offer 4.00%.Which bank pays highest interest on savings account? ›
|Name of Bank||Rates of Interest (p.a.)|
|Kotak Mahindra Bank Savings Account||3.50% to 4.00%|
|State Bank of India (SBI) Savings Account||2.70%|
|Yes Bank Savings Account||4.00% to 5.25%|
|Citibank Savings Account||2.50%|
Currently, money market funds pay between 0.85% and 1.05% in interest. With that, you can earn between $85 to $105 in interest on $10,000 each year.Can I live off the interest of $100000? ›
Interest on $100,000
If you only have $100,000, it is not likely you will be able to live off interest by itself. Even with a well-diversified portfolio and minimal living expenses, this amount is not high enough to provide for most people.
- High-yield savings accounts. ...
- Short-term corporate bond funds. ...
- Money market accounts. ...
- Cash management accounts. ...
- Short-term U.S. government bond funds. ...
- No-penalty certificates of deposit. ...
- Treasurys. ...
- Money market mutual funds.
The 2022 federal funds rate increases are bringing a boost to savers. It will cost more to borrow money, but you might see your savings account annual percentage yield rate increase.Is there a 5% savings account? ›
The APY is the Annual Percentage Yield of an investment. This measures your return on investment over a year, including compounding interest. Currently, no savings account offers a guaranteed interest rate of five percent. However, you may be able to get close by investing in a fixed annuity.
- Paying Off Debts Is Similar to Investing. ...
- Stock Trading on a Short-Term Basis. ...
- Art and Similar Collectibles Might Help You Diversify Your Portfolio. ...
- Junk Bonds. ...
- Master Limited Partnerships (MLPs) ...
- Investing in Real Estate. ...
- Long-Term Investments in Stocks. ...
- Creating Your Own Company.
Can I Withdraw $20,000 from My Bank? Yes, you can withdraw $20,0000 if you have that amount in your account. But with an amount this large, it will be reported. What is this?What is the best savings rate at the moment? ›
- Easy access savings account: 2.81%
- Notice savings account: 3.20%
- One year fixed-term bond: 4.60%
- Sharia savings account: 5.10%
- Regular savings account: 5.12%
High-Yield Checking Accounts
There are high-yield checking accounts that offer better interest rates than savings accounts. Some of these checking accounts offer up to a 2% annual percentage yield, in contrast to lower savings account rates.
- Open a high-yield savings account. ...
- Open a money market account. ...
- Open a certificate of deposit. ...
- Build a CD ladder. ...
- Find a bank bonus. ...
- Look for a rewards checking account. ...
- Consider investing in I-bonds.
- Year. 7.75 % 8.5 % Fincare Small Finance Bank FD.
- Year. 7.75 % 8.25 % Bajaj Finance Ltd FD.
Certificates Of Deposit With The Highest Interest Rates
If you're looking for a safe investment with a solid return, you may want to consider a certificate of deposit (CD). A CD is a type of savings account that typically offers a higher interest rate than a traditional savings account.
Bank Savings Account
The average national interest rate for savings accounts is only 0.17%. If you leave $1,000,000 in a standard savings account, you'd only get $1,700 after a year. High-yield accounts will pay more interest. With a 2.5% high-yield savings account, you'd get $25,000 in interest in a year.
Bank Savings Accounts
As noted above, the average rate on savings accounts as of February 3rd 2021, is 0.05% APY. A million-dollar deposit with that APY would generate $500 of interest after one year ($1,000,000 X 0.0005 = $500).
Bond interest rates vary widely, but an investor can expect to receive between 2.00% and 5.00% interest each year, which provides an income of $5,000 to $12,500 per year on a $250,000 portfolio.
With an average life expectancy of 77, the $2 million you've saved will need to stretch from retirement until your death. You'll be able to supplement it with Social Security, but you can't apply for that until at least age 62, and that's at a reduced benefit.Can a couple retire on $1 million dollars? ›
You can retire on one million dollars. Annuities can provide a guaranteed income for both spouses' lifetimes.How long will $2000000 last retirement? ›
Assuming you will need $80,000 per year to cover your basic living expenses, your $2 million would last for 25 years if there was no inflation.Should we take your money out of the bank 2022? ›
There are a lot of better choices than holding cash in 2022. Inflation will deteriorate the value of your savings if you decide to stash your cash in a bank account. Over the long run, you'll be better off investing now, even if expected returns are lower than they've been historically.Where do millionaires keep their money? ›
Mutual funds and stocks are the most common options that some millionaires and billionaires go through first. Once they're in a stable position, they often buy property to diversify their portfolio and increase their wealth through real estate investment.What will saving interest rates be in 2023? ›
This is the Bank's eighth successive rate rise – it's hard to believe that we started 2022 with rates at 0.25%. Market expectations are now that the interest rate will peak at 5.25% in Q3 2023.What will interest rates be in 2023? ›
The experts we polled expect average 30-year mortgage rates to land anywhere between 5.0% and 9.31% in 2023 — a huge potential range. Predictions fall between 4.5% and 8.75% for the 15-year fixed mortgage rate.Will interest rates be better in 2023? ›
But the upshot for homebuyers is that mortgage rates are expected to come down next year, Fratantoni said. MBA is forecasting mortgage rates to end 2023 at around 5.4%. The average rate for a 30-year fixed rate mortgage is currently 6.94%, according to Freddie Mac.Is there a 2% savings account? ›
Credit Karma is the newest entrant to the savings game, with a savings account with a 2.03% APY. Credit Karma does not charge any fees, and there's no minimum requirement to open. Like Betterment, it is partnering with banks that will hold savers' money.How much money is a lot in a savings account? ›
How much is too much? The general rule is to have three to six months' worth of living expenses (rent, utilities, food, car payments, etc.) saved up for emergencies, such as unexpected medical bills or immediate home or car repairs. The guidelines fluctuate depending on each individual's circumstance.
- JP Morgan Chase (Private Bank) This bank is one of the oldest and most well-known banks in the United States. ...
- Bank of America (Private Bank) ...
- Citigroup (Private Bank) ...
- Wells Fargo (Private Bank) ...
- HSBC (Private Banking)
You can achieve 20 percent ROI by using debt to amplify the success of your investments, by investing in extremely high cash flowing assets like online business, or by becoming an expert stock investor.How can I make 10k in a week? ›
- Sell your car.
- Sell everything else.
- Flip other people's stuff.
- Trade stocks. Other Ideas for How to Make 10000 in a Week.
- Start a blog.
- Publish ebooks.
- Sell online courses.
- Offer freelance services.
- Take part in research (up to $150/hour) ...
- Get paid to take surveys. ...
- Get paid to watch videos online. ...
- Answer questions for money. ...
- Download this app and make money by going online. ...
- Get paid to play games online. ...
- 7. Make an extra $100 pet sitting. ...
- Become a shopper.
refuse to cash my check? There is no federal law that requires a bank to cash a check, even a government check. Some banks only cash checks if you have an account at the bank. Other banks will cash checks for non-customers, but they may charge a fee.How much money can I withdraw without being flagged? ›
Banks are required to report any single transactions involving the withdrawal of $10,000 or more in cash or cash equivalents, such as cashier's checks or money orders. This rule applies to lump-sum withdrawals or deposits and related payments that occur within 24 hours.Can banks seize your money? ›
The answer is yes. If you owe creditors, collectors, or anyone else money, they can obtain a money judgment and have the funds in your bank account frozen, or they can seize them outright.Where should I put 50k savings? ›
- Savings Account.
- Peer to peer lending.
Pay down debt:
One of the best long-term investments you can make is to pay off high-interest debt now. This is especially true of credit card debt, which is likely costing you between 10% and 15% a year, which is much more than you can reliably make by investing your money.
- Stocks & ETFs. Unsurprisingly, one of the best ways to invest $30,000 is to invest in a variety of stocks and exchange-traded funds (ETFs). ...
- Real Estate. ...
- Index Funds. ...
- Mutual Funds. ...
- Cryptocurrency. ...
- Alternative Assets. ...
- Fixed-Income Investments. ...
- Capital One – APY: 3.00%, min. ...
- Bread Savings – APY: 3.00%, min. ...
- CIT Bank – APY: 3.00%, min. ...
- Citizens – APY: 3.00%, min. ...
- Synchrony Bank – APY: 2.75%, min. ...
- Marcus by Goldman Sachs – APY: 2.50%, min. ...
- Popular Direct – APY: 2.50%, min.
Savings accounts keep your money safe because they are insured for up to $250,000 by the Federal Deposit Insurance Corporation. Your cash is more accessible in a savings account than in other savings methods. Savings accounts do not help you grow wealth; you may also lose purchasing power to inflation over time.How can I get 10 interest on my money? ›
- Real Estate.
- Paying Off Your Debt.
- Long-Term Stocks.
- Short-Term Stock Trading.
- Starting Your Own Business.
- Art snd Other Collectables.
- Create a Product.
- Junk Bonds.
A sum of $50,000 in cash can earn about $65 a year in an average bank savings account or as much as $2,250 if you put it into a high-quality corporate bond fund. Other options include money market accounts, money market funds, certificate of deposits and government and corporate bonds.Which bank has savings account interest rate? ›
|Ujjivan Small Finance Bank Limited||6.00%|
|Fincare Small Finance Bank Limited||6.00%|
|RBL Bank Ltd.||5.50%|
|YES Bank Ltd.||4.50%|
Savings accounts are a safe, reliable place for a lump sum of money. Your funds will not only be safe from daily spending, but your deposits will be guaranteed by the Federal Deposit Insurance Corporation (FDIC) for bank accounts or the National Credit Union Administration (NCUA) for credit union accounts.What's the safest investment with the highest return? ›
- Short-term certificates of deposit.
- Money market funds.
- Treasury bills, notes, bonds and TIPS.
- Corporate bonds.
- Dividend-paying stocks.
- Preferred stocks.
- Money market accounts.
- Fixed annuities.
The historical S&P average annualized returns have been 9.2%. So investing $1,000,000 in the stock market will get you the equivalent of $96,352 in interest in a year. This is enough to live on for most people.Where should I invest 100k right now? ›
- Investing 100k In Real Estate. Many seasoned investors will argue that the best investment for 100K is in real estate. ...
- Individual Stocks. Stocks are a great way to diversify your investment portfolio. ...
- Investing 100k In ETFs & Mutual Funds. ...
- Investing 100k In IRAs. ...
- Investing 100k In Peer-To-Peer Lending.
If you're used to living on $100,000 per year, then you can absolutely live off the interest of $20,000,000. All you'd have to do is earn 1% on 20 million dollars and you would earn $200,000 a year, which is double the amount you'd need!