Tangerine Savings Account
Online banking has become increasingly more popular in Canada. In turn, Tangerine Bank has also been growing in popularity. Although Tangerine is an online bank, it is owned by Scotiabank. If you don’t know, Scotiabank is one of the “Big Five” banks in Canada. The other four are RBC, CIBC, BMO, and TD.
Tangerine has been around since 1997 but under a different guise. They launched as ING Direct with telephone banking services. ING Direct was the first bank to offer Canadians a no-fee high-interest savings account. They were then bought by Scotiabank in 2012, and their name was changed to Tangerine Bank in 2014.
Although Tangerine is owned by Scotiabank, they have very different offerings. Tangerine is essentially a no-fee banking option as there are no monthly fees or annual fees to maintain an account with Tangerine. This is, in part, due to the fact that Tangerine has relatively low overhead costs. They do not have branches as most banks in Canada do. Instead, they have five “cafes” in Toronto, Montreal, Vancouver, and Calgary.
Most Tangerine banking is thus done online on their website or mobile app. Banking with Tangerine is easy as they offer many products. They have both chequing accounts and savings accounts. As well as mortgages, mutual funds, and credit cards with cashback.
For this guide, we are going to focus on which Tangerine savings account is the best one for you. So, if you’re looking to switch to online banking and want one of the best bank interest rates in Canada, look no further! Let’s dive into the three main Tangerine savings accounts.
A Brief Overview of Tangerine’s Savings Accounts
Despite being an online bank, Tangerine has a lot of great chequing account and savings account options. As we’re focusing on savings accounts, Tangerine has five. The first is their basic Tangerine savings account. The next is the Tangerine tax-free savings account. The third is the Tangerine retirement savings plan account. The last two, which we won’t cover much in this guide, are the US Dollar savings account and the RIF savings account.
Each Tangerine savings account has interest rates of 0.15%, except for the RIF savings account. The RIF savings account has a high-interest rate of 0.20%. Tangerine, however, has a great welcome offer for every chequing account or savings account. When you open your first savings or chequing account with Tangerine, you will get a 2.50% interest rate for the first five months of banking.
Tangerine Savings Accounts
Let’s start off with Tangerine’s basic savings account, simply named the Tangerine savings account. As we’ve already discussed, all of Tangerine’s savings accounts have a good interest rate, and this one is no different. You can earn 2.50% your first five months if it’s your first account with Tangerine, then 0.15% on your balance going forward.
While the 0.15% interest rate is a bit lower than some banks, Tangerine has many other pros. This savings account has no monthly fees or minimum balance. Transferring money is free as well, but Interac e-transfers are not available with the Tangerine savings account. Their savings accounts also do not come with a debit card. So, this is a great account for savings, not for daily transactions.
That being said, if you want to save even more money, you can set up an automatic savings plan with Tangerine. Remembering to take part in your paycheque every month to put into savings can be hard. But, if you set up automatic savings, it will be done automatically! An amount of money that you choose will be taken from another one of your accounts and deposited into your savings account as often as you want.
This, partnered with Tangerine’s interest rate and their low fees, will have you saving money in no time!
Your money is also safe in this savings account with Tangerine. Tangerine is a member of the Canada Deposit Insurance Corporation (CDIC). This means the money in your account, up to $100,000, is insured. So, if Tangerine ever went out of business, you would still receive your money.
Ultimately, this is a great savings account to store your money in and watch it grow. If you want to access or spend your funds often, pairing this account with a chequing account or credit card with Tangerine is a great idea.
Tangerine Retirement Savings Plan
Next up is Tangerine’s retirement savings plan account. If you’re still young, it may be scary to start thinking about retirement already. But it’s never too early! The sooner you start saving for your retirement, the sooner you’ll be able to stop working!
Tangerine’s retirement savings plan account is thus a great option to start saving. The interest rate for this account is the same as the basic Tangerine savings account, 0.15%. Again, you can also earn an interest rate of 2.5% during your first five months if this is your first account with Tangerine.
The main difference with this account compared to the basic savings account is that your gains are tax-free. This means that whatever interest you earn, you don’t have to pay tax on. That is until you withdraw the money.
So, if you want to leave your money in this account for a long time, the interest you earn will help you earn money every year without you even having to do anything.
The registered savings plan account also has no fees. No minimum balance or deposit, no fees for transfers, and no fee to open or maintain the account.
Also, if you deposit money into this account, you can deduct it from your taxable income. This is because it is going towards your retirement, so you won’t be withdrawing anything to use it right away.
You must be over 18 years old and Canadian to contribute money to your registered savings plan, and thus this account. Canadians start off being able to contribute up to $26,500 a year to their registered savings plan. If you go over your contributions for the year, you may have to pay a penalty and then taxes on the excess.
So, if you fit all the requirements to open a registered savings plan account, you should! As there is no minimum deposit or balance needed for this account. You can start off small and contribute a little more every month or year. You’ll thank yourself in your retirement if you take advantage of this interest rate and start saving today!
Tangerine Tax-Free Savings Account
Last on our list is the Tangerine tax-free savings account. A tax-free savings account is just as it sounds whatever interest you earn (with limitations) on the funds you deposit will be tax-free. We say with limitations because every Canadian can only contribute a certain amount that will be tax-free.
As of right now, Canadians who are over 18 can contribute $6,000 a year into their tax-free savings account. But, if you have never contributed to a tax-free savings account before, you can deposit up to $69,500 into your account as of January 1, 2020. Everyone’s contribution room is different, and keeping track of it can be hard. If you need to check, you can look at your Notice of Assessment from the CRA or login to your CRA account online.
If you contribute more than you’re allowed to for the year, you may have to pay a penalty or, at the very least, pay the taxes you were meant to on the funds. The good news is that your contribution room updates every year, and if you have anything left over, it will rollover. This means if you only used $5,000 of your $6,000, the $1,000 will be added to your contribution room next year.
Tangerine’s tax-free savings account, in particular, has a decent interest rate. Like their other savings accounts, the interest rate is 0.15%. Or, if this is your first account with Tangerine, your interest rate could be 2.50% for the first five months.
This savings account also has no fees. So, you won’t pay for any transactions or transfers you’re able to make. Similarly, there is no minimum balance or minimum deposit, so you can start saving right away.
Many people believe if you put your funds into a tax-free savings account, it’s stuck there. With this account, you have full flexibility to move your funds at any time. You just need to remember what your contribution room is, as it is based on everything you deposit into any tax-free savings account.
To sign up for a TFSA with Tangerine, you simply need to be over 18 and a Canadian citizen. So, what’s stopping you?
A quick side note. If you are a student, you should check out the student bank accounts review article, they have some great options, especially if you want to start saving.
The Bottom Line
If you want to start saving, banking with Tangerine is a great option. Many banks, especially in Canada, have extortionate fees. They often charge you if you don’t have enough in your account. Or if you want to use your funds, they’ll charge you. Do you want to open an account? They may charge you. This is the main benefit of banking with Tangerine, no fees.
Tangerine is clear with their fees, and that’s because there is none! Opening an account, maintaining it, spending your funds, and transferring them, are all free with Tangerine. So, you no longer have to worry about wasting your cash. You don’t have to maintain an account that doesn’t meet the minimum balance.
Tangerine is also quite versatile in everything they offer. They have five different types of savings accounts alone. Three of which we discussed in detail: the basic savings account, the registered savings plan account, and the TFSA.
If you’re instead interested in credit cards or a chequing account, Tangerine has you covered! They offer a money-back credit card with 2% cashback. Their chequing account also has no fees and can earn up to 0.15% of interest as well. You could even pair your credit cards, chequing account, and savings account together and open all of them with Tangerine.
This would make banking super easy as you can easily transfer your funds between accounts. Signing up with Tangerine is also extremely easy, and everything can be done from the comfort of your own home. All you need is your personal information, such as your social insurance number and your employment history. You also need to be a Canadian citizen, and for some accounts, we discussed, over 18 years old.
If you want to learn more about other great savings and chequing accounts in Canada, INCOME.ca is here for you! We have a great team of expert financial writers, and our goal is to help make Canadians more financially literate.