Personal finance is exactly that, personal. Whether you are taking advantage of a Tax Free Savings Account (TFSA), Registered Retirement Savings Plan (RRSP), or a First Home Savings Account (FHSA), there are a number of great vehicles to increase your wealth and plan for your future, whatever that may hold.
High interest savings accounts are another one of those vehicles, and they can easily be used by most Canadians who are looking to increase their wealth with a low-risk savings tool. Most financial institutions in Canada offer high interest savings accounts, and while it can be difficult to compare similar accounts, there are several options that stand out above the competition.
Let’s take a look at the best high interest savings accounts in Canada that you can add value to your personal finance strategy.
What is a High Interest Savings Account?
A high interest savings account, or HISA, is a type of savings account that offers a higher interest rate than traditional accounts. These accounts interest customers who want to keep their money safe while still earning interest monthly, ensuring that the value of their existing cash does not depreciate.
Interest rates on a high interest savings account are presented as an annual percentage yield. This means that if the interest rate is shown as 3%, you will earn that over one year on the money in your account. Interest is compounded in high interest savings accounts, allowing you to earn interest on your total accrued balance.
The Value of a High Interest Savings Account
There are three main aspects of high interest savings accounts that showcase the value they offer: the lower level of risk, the ease of accessing funds, and the lack of fees.
High interest savings accounts offer a low-risk way to generate a return on your cash. Whereas investments in stocks or even broader exchange-traded funds can fluctuate, meaning the value of your investment can increase or decrease, high interest savings accounts only ever increase in value as interest is accumulated and paid monthly.
If you want to fend off inflation, keeping your extra cash in a high interest savings account is a better option than leaving it in a chequing account.
It is easy to transfer funds in and out of high interest savings account, as the money is not locked for any period of time. This is opposite to the concept of Guaranteed Investment Certificates (GICs), where your money is locked up for a pre-determined period of time, making it inaccessible without incurring a penalty. If you need easy access to your cash, a high interest savings account is a better option.
High interest savings accounts usually have no monthly fees which makes them an easy tool to add to your personal finance strategy. Some accounts may incur fees when you perform certain transactions, but there is rarely a fee for keeping the account open and depositing or withdrawing money, and there is no minimum balance requirement.
The Best High Interest Savings Accounts in Canada
Below we have listed the top six high interest savings accounts in Canada, complete with the regular interest rate and promotional or welcome bonus interest rate, plus any other relevant details. All of the below savings accounts include Canada Deposit Insurance Corporation (CIDC) coverage, so you can be confident your money is safe.
If none of these high interest savings accounts fit your needs, check out our Chequing & Savings Account Comparison Tool to see a more comprehensive list of all the best banking accounts in Canada.
Simplii Financial High Interest Savings Account
The Simplii Financial High Interest Savings Account offers varying interest rates depending on the total savings account balance, and a promotional interest rate of 6.25%.
The Simplii High Interest Savings account offers a varying interest rate depending on the total account balance and a promotional interest rate of 6.25%.
Earn 6.25% interest for 5 months + $40 FlyerFunds on approval
Savings
$0.00
Account holders can expect to earn at the following rates:
- Earn 0.40% interest when the total savings account balance is under $100,000.
- Earn 0.65% interest when the total savings account balance is between $100,000.01 to $500,000.
- Earn 1.25% interest when the total savings account balance is between $500,000.01 to $1,000,000.
- Earn 5.50% interest when the total savings account balance is over $1,000,000.01.
This account has no monthly fees. Earned interest is calculated daily and paid monthly, directly to the Simplii Financial High Interest Savings Account.
Readers who sign up for a new Simplii Financial High Interest Savings account through Frugal Flyer can earn an additional $40 cash back. Click here to apply.
Scotiabank MomentumPlus Savings Account
The Scotiabank MomentumPlus Savings Account has a standard interest rate of 1.05% and a current promotional interest rate of up to 5.70% upon fulfilling requirements.
The Scotiabank MomentumPlus Savings account offers a regular interest rate of 1.05% and a promotional interest rate of 5.70%.
Earn up to 5.70%* for the first 3 months + $80 FlyerFunds on approval
Savings
$0.00
This account has no monthly fees. Earned interest is calculated daily and paid monthly, directly to the MomentumPlus Savings Account.
Readers who sign up for a new Scotiabank MomentumPlus Savings account through Frugal Flyer can earn an additional $80 cash back. Click here to apply.
Wealthsimple Cash Account
The Wealthsimple Cash Account is a bit different than the standard high interest savings account, as account holders can make purchases using the Wealthsimple Cash card, send bill payments, and more. They will also receive 1% cash back on all purchases.
The Wealthsimple Cash account offers a regular interest rate of 3.50% on all deposits.
Savings
$0.00
The standard interest rate on any money in the Wealthsimple Cash account is 3.50%. However, account holders who have at least $100,000 in Wealthsimple will receive 4% interest, and those who have at least $500,000 in Wealthsimple will receive 4.5% interest.
RBC High Interest eSavings Account
The RBC High Interest eSavings Account has a standard interest rate of 1.50% and a current promotional interest rate of up to 5.40%.
The RBC High Interest eSavings account offers a regular interest rate of 1.50% and a promotional interest rate of 5.40%.
Earn 5.40% interest for 3 Months
Savings
$0.00
This account has no monthly fees. Earned interest is calculated daily and paid monthly, directly to the RBC High Interest eSavings Account.
Neo High Interest Savings Account
The Neo High Interest Savings Account has a high standard interest rate of 4.00% with no minimum balance requirements.
The Neo Financial High-Interest Savings account offers a regular interest rate of 4.00% and unlimited transactions.
Earn $10 FlyerFunds on approval
Savings
$0.00
This account has no monthly fees. Earned interest is calculated daily and paid monthly, directly to the Neo High Interest Savings Account.
Readers who are new Neo Financial customers and who sign up for the Neo High Interest Savings account through Frugal Flyer can earn an additional $10 cash back. Click here to apply.
Laurentian Bank High Interest Savings Account
The Laurentian Bank High Interest Savings Account earns a set interest rate depending on how much money is held in the account.
The offers a competitive annual interest rate of up to 3.85%1 with no management fees.
Earn $50 FlyerFunds on approval
Savings
$0.00
Account holders can expect to earn at the following rates:
- Earn 2.85% interest when the total savings account balance is under $100,000.
- Earn 3.85% interest when the total savings account balance is between $100,000 to $5,000,000.
- Earn 1.00% interest when the total savings account balance is over $5,000,000.
This account has no monthly account fees but does charge transaction fees for sending Interac e-Transfers and making pre-authorized payments. Earned interest is calculated daily and paid monthly, directly to the Laurentian Bank High Interest Savings Account.
Readers who sign up for a new Laurentian Bank High Interest Savings account through Frugal Flyer can earn an additional $50 cash back. Click here to apply.
The Optimal High Interest Savings Account Strategy
The best strategy for earning via a high interest savings account is to simply open an account with the institution that offers the highest promotional interest rate for the longest period of time. The standard interest rates on many of these accounts are nothing to write home about, and the best return for holding your cash is to benefit from promotional interest rates.
Many customers find it worth it to move their money between high interest savings accounts, especially when the promotional or bonus interest rate period expires on an account. Simply put, you should never settle for anything less than what is being offered on the market. If there is a better interest rate elsewhere, you should pursue that with the goal of maximizing your return.
Conclusion
High Interest Savings Accounts are a great option for Canadians who want to keep their money accessible and safe, while still earning a sizable amount of interest on their cash monthly. For the past few years, we’ve been in a period of high interest rates, and as a result, financial institutions have made it highly desirable for consumers to open these accounts thanks to promotional interest rates and ease of moving money around.
If you are saving money for a short-term need, such as a down payment on a house, a high interest savings account might be the best thing to add to your personal finance strategy.
Frequently Asked Questions
Yes, any interest income that is earned through a high interest savings account will generate a T5 tax slip issued through the financial institution. This T5 tax slip will need to be entered when completing your annual taxes.
High interest savings account interest rates may fluctuate, based on the broader market. Financial institutions usually provide notice if a rate is increasing or decreasing.
If the new interest rate is lower than what is offered by other financial institutions, it can make sense to move your money to a different high interest savings account.
The majority of high interest savings accounts in Canada calculate interest daily, and pay interest monthly. Refer to the terms of your high interest savings account to determine how frequently interest is paid.
Josh Bandura
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