Best Savings Account in Canada

November 19, 2020 | Editorial Team

A savings account, especially a high-interest savings account, can be great to save money. Don’t just keep your emergency funds hidden under a mattress or in a chequing account. Instead, you could sign up for a high-interest savings account and start earning a return on your cash.

There are so many options available; it’s challenging to choose the right savings account that best fits your needs. It can feel overwhelming. Don’t worry, Income.ca is here to help. We’ve done the hard work for you. We’ve researched the best savings accounts on the market and compared them for you. All you need to do is read this article and find the offer that best suits you.

Table of Contents

  1. Best Savings Accounts
  2. Compare the Best Savings Accounts for Canadians
  3. How to Choose the Best Savings Account
  4. What is a Savings Account?
  5. How Do Savings Accounts Work?
  6. Types of Savings Accounts
  7. Why You Need a Savings Account
  8. Which Type of Savings Account is Right for Me?
  9. What is the Difference Between a Savings Account and a Chequing Account?
  10. Common Savings Account Fees
  11. The Bottom Line

Best Savings Accounts

When opening a new savings account, there is plenty of information to consider that will factor into what savings account is right for you.

You should understand what your savings goals are, what interest rate you would like, and how much you’re willing to pay in service charges or fees. More importantly, you have an excellent opportunity to find the best bank interest rates in Canada.

Ultimately, finding the right bank boils down to two essential things. Trust and Return. First, you need to look for an institution you can trust to keep your money safe. Secondly, you need to find an institution that will provide you with the best rate of interest in Canada.

Don’t worry, Income.ca has your back. With our financial expertise, we’ve looked at banks not only nationwide, but also online. This helped us get the most accurate and up-to-date information on what the best savings account in Canada are and what they offer!

When choosing the best savings accounts in Canada, we looked at the following information for each:

  • Rates offered
  • Transaction fees
  • Monthly fees
  • Deposit insurance
  • Extras and bonuses

Our goal is to save you time, so you don’t have to go through each bank’s website or contact them all yourselves. We’ve compiled all of that information here for you! If you want to learn more about the savings accounts and the interest rate at Scotiabank, Tangerine, HSBC, EQ, BMO, TD, and RBC, you’ve come to the right place. Keep reading to find out which Canadian bank interest rate and offers suit your needs the best!

Compare the Best Savings Accounts for Canadians

Scotiabank Momentum Plus Savings Account

Scotiabank is a well-known bank in Canada that has always been a little different than RBC, TD, BMO, and CIBC, also known as the other Big Five banks. Their high-interest rate savings account offers are also different, and that’s one of the main reasons we love them.

Local Branches Available

With over 1,000 branches and 3,900 ATMs in Canada alone, Scotiabank is reliable, well-loved among Canadians, and offers a great interest rate.

Competitive Interest Rates

The Scotiabank Momentum Plus Savings account is a high-interest rate savings account. This means it is perfect for long-term savers. The base interest rate is 1.00%, but that rate will double to 2.00% if you do not touch the money for 365 days.

Your interest rate, however, is mostly based on your account’s balance as it is a tiered rate account type. So, if your balance is less than $5,000, your interest rate will be 0.50%. If your balance is more than $5,000, your interest rate will be 1.50%.

Plus, since interest compounds daily, you will be making money in no time. Users also have no monthly banking fee to worry about. You also have unlimited self-service transfers including fund transfers to other Scotiabank account. If you need a different type of debit transaction, expect a $5.00 fee.

This is an excellent high-interest rate account, especially from a big five bank. If you are looking for long-term saving options, then the Momentum Plus high-interest savings account might be for you!

Easy to Use

Opening a bank account with Scotiabank is extremely easy. Just go on their website to fill out an online application form with your email address. Alternatively, you can simply visit a branch or give Scotiabank a call to get more information.

If you instead simply want more information about Scotiabank’s rates, or to learn more about their interest rate, head to their website. You can start putting your savings plans into action today!

Tangerine Savings Account

Some people are hesitant to get involved with lesser-known or online banks, thinking they may not be reliable. That belief doesn’t apply to Tangerine because they are the best of the online banks. They were even purchased in 2012 by one of the Big Five banks we just discussed, Scotiabank.

Eye-Catching Interest Rates

Tangerine has an excellent high-interest, user-friendly account. The bank has several options available for their savings, including RRSP, Youth, Senior and TFSA’s. For this review, we will focus on standard savings.

Tangerine also works well if you have a different account type or credit card you want to pair your savings account to. This is because Tangerine does not charge any fees or higher rates to move your money around. There are no fees even if you are making a transfer or making deposits to another bank.

The savings account comes with a base 1.05% interest rate, which compounds daily. Tangerine also values new clients, so they have a great offer for new clients. Tangerine is offering a 2.50% interest rate for the first five months.

No Monthly Fees

Tangerine’s Savings Account is an excellent choice as there is no fee to pay per month to keep it open. You will have an unlimited amount of transactions. There is also no minimum balance necessary, so you can open it whenever you want!

Online Banking Only

As Tangerine is an online bank, they don’t have a physical branch you could visit for more information or to sign up. But, you can easily sign up online with your email address, or visit Tangerine’s site for more information today!

This is an excellent option for those who want to store their money and move it around with ease. Tangerine is a reliable bank with a fantastic online portal. You will feel at ease if you choose to go with Tangerine for your savings account in Canada.

HSBC High Rate Savings Account

Even though HSBC is not part of the big five banks in Canada, it is still a great option, and they offer a great high-interest rate savings account. It is a no-frills account type which means it does not have high rates, but it has plenty to offer.

Attractive Interest Rates

If your balance is less than $25,000, you will receive an interest rate of 0.05%, and with an account balance of over $25,000, you will receive an interest rate of 0.15%. The interest rate is lower than other savings accounts we’ve discussed. But, there are some other benefits of getting a high-interest savings account with HSBC.

No Monthly Fees

This savings account has no fees per month to maintain it. You also do not need to have a minimum balance to open it or to earn great rates of interest. You will also get three free transactions per month, including any self-service transfers. This includes transactions like deposits, withdrawals, or bill payments. Similarly, you will have free transfers between HSBC accounts or credit cards in your name. This is great for anyone that already had a chequing account or credit card with HSBC.

Local Branches Available

As HSBC is not solely an online bank like some others we’ve discussed, you could go to their branches. You can also open your high-interest savings account online with your email address.

HSBC’s high-interest savings account does have many great benefits. But, it is also important to note that all transactions over your three free ones per month will be charged a $5.00 fee.

To start saving right away, open this high-interest savings account with no minimum balance or fees per month.

EQ Bank Savings Plus Account

Another relatively new, online bank in Canada is EQ Bank which opened in 2016. They are, however, owned by Equitable Bank, which is the ninth-largest domestic bank in Canada

EQ Bank has established itself as one of the premier savings accounts in Canada. The bank is an online entity and offers banking for clients across the country. Despite being one of the newest banks around, EQ bank has a great high-interest savings account. They claim they can help you earn 30 times more compared to other banks.

No Monthly Fees

There is no monthly fee and an unlimited amount of transactions. There is also no minimum balance required to open an EQ Savings Plus Account. EQ Bank also offers great rates and low service charges on international money transfers. Ideal if you need to send money abroad.

Unlimited E-Transfers

As EQ Bank is solely an online bank, there are some drawbacks and restrictions. One of the main drawbacks of this account type is that there are no cash withdrawals. You can, however, move money through unlimited e-transfers and EQ to EQ electronic transfers. You also cannot access a paper statement, but you can access e-statements.

Similarly, there is no branch for you to go to if you want to open an account in person or get more information. EQ Bank has great information on their site where you can also sign up with your email address.

Finally, banking with EQ means there is no access to bank machines or debit cards. This makes it harder to use their savings account for daily needs. This is most certainly not a negative. The objective is to save money and not having access so readily helps you avoid impulse purchases.

That being said, there are still plenty of benefits to banking with EQ Bank. The big reason to pay attention to EQ is the interest rate. EQ Bank offers an unprecedented 2.45% standard interest rate. This is the highest interest rate for savings accounts in Canada. No matter if you are looking for long-term saving, or short-term goals, the Savings Plus Account is worth a look with their great rates.

BMO Savings Builder Account

Next on our list is another Big Five bank, the Bank of Montreal (BMO). BMO offers a great high-interest rate savings account called the Savings Builder account.

Friendly Interest Rates

This is an interesting account type because BMO bases your interest on how much you deposit per month. So, if you deposit less than $200 each month, you will earn an interest rate of 0.25% on your total balance. If you deposit more than $200 each month, you will earn a high-interest rate of 1.25% on your total balance.

With quite a high-interest rate, BMO’s Savings Builder account is an interesting option. Especially for those looking to consistently deposit over $200 every month, when the best rates are triggered.

In addition to the high-interest rate, the Savings Builder account has no monthly fee, and BMO offers a free monthly transfer. Any additional transfers or withdrawals, however, have a fee of $5.00.

Ultimately, BMO’s Savings Builder account is a great option for those looking to save a lot as it almost forces you to save more to get a high-interest rate. If you don’t have a lot of deposits to make, however, it may not be the best option for you.

Local Branches Available

BMO has more than 950 branches and over 2000 ATMs across Canada. This makes setting up your savings with them convenient. You always have easy access to your money to easily pay off credit cards or make transactions while still earning decent rates. Opening a Savings Builder account with BMO can also be done online with an email address and your personal information.

If you want more information about BMO’s Savings Builder or any other account type, head to their site to learn more!

TD High-Interest Savings Account

Another of the Big Five banks in Canada is TD. TD is a well-known bank as it has been in Canada since 1955. Not only do they have time on their side to build up a good reputation, but they also have great deals and relatively high-interest rates.

Mixed Interest Rates

Comparatively, TD’s interest rates may not be considered a high-interest rate as it is only 0.5%. Even then, the interest rate only applies when you have a minimum balance of $5000. Anything below $5000 will not earn any interest rate.

So, if you don’t have the money for at least $5000 worth of deposits, this may not be the best option for you.

That being said, TD is still a great bank, and they are consistently available throughout Canada. With over 1,150 branches around Canada and more than 2,800 ATMs, you won’t be hard-pressed to find a bank. Also, TD’s high-interest rates savings account has no monthly fee.

Fees Waived For Bigger Savers

There are quite a few other fees. These include:

  • $2 fee make a withdrawal in Canada on a non-TD ATM
  • $2 for a paper statement
  • $3 to make a withdrawal at an ATM in the United States or Mexico
  • $5 to make a withdrawal outside of Canada, Mexico or the United States
  • $5 for debit transactions including

withdrawals

transfers

pre-authorized payments

bill payments

cheques

debit payments.

The catch is, if you can maintain a minimum balance of $25,000 or more a month, the $5.00 debit transaction fees will all be waived.

With so many fees and conditions, this savings account isn’t our first choice. The lower rates of interest aren’t the best, either. That is unless you already had a credit card or chequing with TD. Then having everything in one places has some advantages. If not, many other banks we’ve discussed have a better high-interest rate with lower fees.

RBC High-Interest eSavings Account

The last of the Big Five banks on our list is RBC. RBC’s eSavings account does not have a good high-interest rate. Even though that’s how it’s promoted. It is currently during this comparison, only .05%, which is why it is at the bottom of our list.

Canada’s Largest Bank

Many people still decide to bank with RBC. This is no surprise seeing as they are Canada’s largest bank. It has more than 1300 branches and 4800 banks across Canada.

So, if you have a chequing account or credit card with RBC, opening a high-interest rate savings account with them could be beneficial to you.

No Minimum Balance Required

If you did want to open a high-interest rate savings account with RBC, the good news is that there is no minimum balance to maintain the account each month. Users can also withdraw money for free once a month from an RBC ATM or make free self-service transfers online.

Do You Already Bank With RBC?

Other than that, RBC does charge some fees to use their high-interest rates savings account. These include $1.00 for every e-transfer, $1.00 for every cross-border debit transaction, and $1.50-$3.00 in fees for every ATM withdrawal.

Ultimately, RBC’s high-interest rate savings account does not have a high fee for usage, but their interest rate is not high either. If you already have a chequing account or credit card with RBC, a savings account with them as well would make sense.

If you don’t have a chequing account or credit card with RBC, opening a new account is super easy. It can be done by visiting a branch or using your email address and personal information to sign up online.

How to Choose the Best Savings Account

INCOME.ca has put together this comprehensive list of high-interest savings accounts, listing 7 of the best Canadian banks. However, you may still have questions or want more information. Don’t worry; we have put our heads together to think of the questions you might want to ask. Here are some of the more common questions people have when opening a high-interest rate savings account.

What is a Savings Account?

If you only have a chequing account or credit card, they are great, but they don’t help you save. That’s where a saving account can help.

A savings account is an account type that allows the user to make deposits of their money to keep it safe and earn a high-interest rate on the money. A savings account rate tends to be higher than a chequing account, but savings also have more restrictions and potentially more fees as well.

A savings account, for example, may limit the number of times or the amount of money you can withdraw a month. They can be a good saving strategy as you won’t constantly be spending the money, allowing the interest to build.

Most banks and credit unions offer savings with varying degrees of low or high-interest rates.

Some people may get confused between savings and investment accounts, but each account type is different. Savings are a much more secure place to put your money as they are federally insured while investment accounts are not. This means that up to $100,000 of your balance is covered if the bank fails.

How Do Savings Accounts Work?

Most banks and credit unions are secure and tend to be insured. However, some people are still hesitant about putting every dollar they own in one place. They want to get all the information possible before taking the leap. If this sounds like you, here is some further information about how savings accounts and their high-interest rate works.

When you put your money into a savings account with a credit union or bank, the credit union or bank is then using your money to pay out loans to other people. In exchange for allowing them to loan out your money, they pay you a high-interest rate, so it is mutually beneficial.

So, the first step would be to open a high-interest savings account at the bank, credit union, or online bank.

Online accounts are the easiest to set up; all you need is an email address.

Then, you will make deposits to the bank or credit union that you chose.

The bank will then take your deposits and loan them to other people. But, they will charge those people a higher interest rate on their loan than the interest rate they offer you.

So, they will earn enough to not only pay you but to earn their own fee as well. So, it differs completely from chequing accounts or credit cards.

The high-interest savings account you chose will likely have compounded interest. Which means they will pay that interest rate monthly. Compounded interest means that you are not only earning your high-interest rate. You are earning that rate on the total balance of your account each month, including the interest paid from the previous month.

Essentially, your deposits will constantly be growing at a steady rate; all you need to do it open your account and watch the interest grow!

Types of Savings Accounts

When opening savings accounts, which bank or credit union you work with is not the only information you need to consider. You also need to consider what type of saving account you want to open. In Canada, there are three main accounts worth considering:

  • High-interest savings accounts
  • Tax-free savings accounts
  • RRSP youth/senior savings accounts

Throughout this article, we’ve been focused on high-interest savings accounts. Mainly as they tend to be the most common option for people looking to save and earn high rates of interest. High-interest savings accounts are great for both short-term and long-term investing. Chiefly because there is typically no limit to how many deposits you can make into them to get the high rates of interest you want.

It is important to note that any money you make in interest from your high-interest rate account, you will have to pay income tax on. That being said, a high-interest savings account is a great, low-risk way to invest.

But, if you don’t want to pay income tax on the high-interest rate you are earning, you can open a tax-free savings account.

A tax-free savings account is exactly as it sounds, a type of account where you can deposit money and earn interest on it that will not be taxed. The interest rate will be lower compared to high-interest accounts, but you will not lose any to tax at the end of the year.

Tax-free savings accounts can only be opened by a Canadian citizen over 18 years old. There is also a contribution limit. This means you can only put a certain amount into your account every year, but the contribution limit will increase every year.

The last main type is a Registered Retirement Savings Plan (RRSP) youth/senior accounts. RRSP youth/senior accounts are for anyone, but can really benefit youth and seniors as they tend to have good, consistent rates.

Once a youth gets a job, they can open an RRSP youth/senior account with the help of a parent or guardian. Although RRSP youth/senior accounts are for retirement, they have other uses. They are also a great option for youths to help set them up with financial literacy from an early age.

RRSP youth/senior accounts are good for seniors as a bank or credit union may offer special rates of interest or offer a lower fee to those over 60 in Canada. Ultimately, an RRSP youth/senior account is a great account for Canadians of any age. It’s a great way to start saving for retirement thanks to their steady interest rate.

Why You Need a Savings Account

Many people have a chequing account and even a credit card but don’t think a savings account is a necessity. While having a chequing account and a credit card is great, they don’t tend to have a great interest rate, if any. This means that you are simply spending on your credit cards or from your chequing bank account when you could be earning.

A savings account rate will be much better than what you get from chequing accounts. This is because banks want to encourage you to always have a balance in your account. They do this because they can then use it to loan out with interest to others. So, the best reason to have a savings account is that with a good interest rate, you will be earning without having to do anything.

Another a great thing about savings accounts is that your balance will be there when you need it as it silently earns interest. If you find yourself in a pinch, you can easily make some transfers to help yourself out that month. If you need to pay off a credit card, so you aren’t charged a higher interest rate, you can easily complete the transactions with your savings.

Similarly, your account’s balance is slightly harder to touch than say using a debit or credit card is. There are typically more fees to access the balance or make transactions, and your interest rate may go down if your balance does. So, if your funds are harder to use or make transfers with, you will be less likely to spend your balance frivolously.

Lastly, ensuring you always have funds is great for becoming financially secure and for having a great credit score. Many people rely on their credit card to get them through the month, but then struggle to pay off the balance. If you are constantly late on paying off your credit card bill or other loans, your credit score will be poor. This could make it harder to potentially get a house in the future.

If you have savings, you can pay off your credit card bill. You won’t even need to rely on credit cards in the first place so your credit score will be excellent!

Which Type of Savings Account is Right for Me?

Having discussed a variety of banks and savings accounts, you may be overwhelmed by all the information there is to process. The easiest thing to do is start by deciding what your needs are. Do you want to open an account for your kids to start saving for their retirement? Do you want to start saving for your own retirement? Do you have excess money that you want a higher interest rate on? Once you figure out what your needs are, you can pick an account.

So, if your goal is to save more money, opening a high-interest rate account is the best option for you. Many of the high-interest rate accounts that we discussed earlier do not require a minimum balance. This makes them great for anyone to open and start saving right away. It is important to remember, however, that many have a limited number of transactions/ transfers you can make monthly for free or at a low rate.

This means, if you want to frequently make transactions or transfers with your balance, this may not be the best option for you.

Suppose your goal is to set up something consistent with a decent interest rate. Maybe to start saving for retirement or to help your children start saving. The RRSP account is the best option for you. The interest rate will not be as high as it would be in a high-interest rate account, but it will be better than just having your funds sitting around.

Opening an RRSP account can also get you a lower tax rate. This is because whatever you put into your RRSP, you can deduct it from your earnings on your taxes at the end of the year. This means you will have less income to be charged tax on, typically meaning a lower rate.

Similarly, whatever you put into your RRSP will be tax-free until you withdraw it which most people do around their retirement. Even though you will still be paying taxes on it in the future, your tax rate is typically lower when you’re older, so you will end up paying less.

Ultimately, an RRSP savings account is a long-term investment. You could open it in conjunction with another account and split your transactions between them to get varying rates of interest.

Lastly, if you want to save even more, a tax-free savings account either on its own or paired with a different type of account is a great option. A tax-free savings account is called tax-free because you don’t have to pay tax on whatever rates of interest your balance earns. So, if you earn $500 from your interest rates during the year, you won’t need to pay tax on that $500, but you would have already paid tax on the balance you put in.

A tax-free savings account is great in conjunction with another account because you have a limit on how much you can contribute every year. If you go over that limit, you will have to pay a penalty.

What is the Difference Between a Savings Account and a Chequing Account?

If you already have a chequing account or credit cards, you may be wondering how it differs from your savings account. A chequing account is designed for your everyday transactions. Like buying groceries, going out to eat, maybe even paying off credit cards or other bills. Chequing gives you more freedom as there are typically no, or low rates to make transactions or transfers. There is also less likely to be a minimum balance necessary.

A savings account, on the other hand, is not meant for daily use as your funds are meant to stay in the account, earning more from higher interest rates. Thus, they tend to have higher interest rates than chequing, but there are also more restrictions.

You will not be able to make a transfer or a withdrawal, as easily with your savings as you do with chequing accounts. You will also likely have a minimum balance and potentially small fees/ rates to pay to upkeep the account every month.

If you have credit cards you want to pay off every month to avoid paying high rates, you will not be able to do so from your savings unless you make transfers. Similarly, you will not get a debit card for your savings account as you do with a chequing account, making it harder to spend your savings.

Ultimately, the main difference is that you can easily spend, make transfers, pay off credit cards, or other bills with your chequing. You can not do any of these things from your savings without making transfers first. This means your savings are harder to use, but your rates of interest will be higher.

Most people tend to have both a savings and a chequing account. They split their funds between the two and just spend what’s in their chequing, leaving the savings to earn from their higher rates of interest.

Common Savings Account Fees

As we’ve mentioned before, the benefit of having higher rates of interest on your savings also comes with some restrictions and fees. Rates you pay to maintain and use your savings vary from bank to bank. But there are some limits and fees that tend to be found with most savings accounts.

The most common type of fee is the monthly maintenance fee. On average, the rates are $5 a month. Many banks, however, will waive the rates if you have a certain balance or you make a certain amount in deposits a month. Or, banks may waive the rates if you have other accounts or credit cards with the same bank.

The next type of fee is a withdrawal fee. Banks want to discourage people from withdrawing cash. They do this by offering higher rates of interest and higher rates to pay in order to make withdrawals. Some banks will offer a certain number of withdrawals a month for free, then start charging higher rates to make withdrawals. Typically, anywhere between $1 to $5 or more.

Lastly, since banks want you to keep your funds in the same place, their rates to make transfers or other transactions may be high as well. Often, anywhere from $5 to $15 per transaction. These rates can sometimes be lowered or eliminated if you are making transactions within the same bank. For example, transferring from your savings to chequing or paying off credit cards with the same bank.

The Bottom Line

When you are opening a savings account, whether it be at a bank or credit union, there is a lot of information and plenty of things you need to consider. In Canada, bank interest rates vary, and you need to find the bank that best suits your needs. In terms of the seven banks we talked about, Tangerine has the best rates for new customers. EQ Bank has the best rates overall, and Scotiabank offers the best rates for long-term savings.

The next thing you should consider is how accessible the bank is for your needs. For example, if you want to visit a branch for more information about rates, you won’t want to bank with an online institution such as EQ Bank. If you’re okay without having a physical branch to go to, EQ Bank is a great choice with their high rates of interest and low monthly rates for you to pay.

The last thing to consider is the fees you will be paying to use your accounts. You don’t want to sign up with a bank and find out you have to pay extortionate fees every time you want to use your own funds. Most banks will charge fees to make transactions or transfers with your savings account to help you stop dipping into your savings. But, Tangerine does not.

Tangerine has no minimum balance, unlimited transactions, and great rates of interest. It is a great overall choice if you don’t mind online banking.

Ultimately, each bank we discussed has great savings accounts with good rates of interest. Which you decide to go with will be entirely up to what you want to use your account for and how you want it to function. If you have a chequing account or credit cards with these banks already. Perhaps keeping all of your accounts and credit cards in the same place may be a good option. They will want to reward you with better rates and lower fees. Check out the information about each savings account and get saving.