Tangerine Savings Account

Tangerine banner
Tangerine

Tangerine is one of Canada’s online banks, which tend to offer much better interest rates than your typical brick-and-mortar establishment. It was called ING Direct for over a decade before being purchased by Scotiabank and rebranding in the mid-2010s.

A Tangerine Savings Account comes with an impressive promotional rate of 2.50% interest for your first five months — plus a $200 bonus if you add your payroll — then drops down to 0.15% after that.

While there’s only a handful of physical locations nationwide, Tangerine customers get 24/7 access to customer service via phone, email or live chat.

Promotional rate: 2.50% for your first five months.

Regular interest rate: 0.15%

Minimum balance: None.

Transactions: Free, plus free deposits and withdrawals at ATMs in Scotiabank’s network with a Tangerine chequing account.

Interac e-Transfers®: Free with a Tangerine chequing account.

Fees for extras: $2 charge for paper statements.

CDIC insured: Yes.

Other restrictions: None.

EQ Bank's Savings Plus Account

EQ logo
EQ Bank

EQ Bank is another big digital bank in Canada, offering one of the highest regular interest rates around.

Its Savings Plus Account gives you a 1.70% * return on your money with no everyday banking fees and no minimum balance.

Savings Plus Accounts also come with free financial planning tools to help you set personal goals and track your savings progress.

Promotional rate: N/A

Regular interest rate: 1.70% *

Minimum balance: None.

Transactions: Free.

Interac e-Transfers®: Free.

Fees for extras: None.

CDIC insured: Yes.

Other restrictions: No ATM access, physical branches or chequing accounts, so you need to have another bank account for deposits and withdrawals. Maximum balance of $200,000 per customer. No paper statements.

*Interest is calculated daily on the total closing balance and paid monthly. Rates are per annum and subject to change without notice.

Wealthsimple Cash

Wealthsimple logo
Wealthsimple

Wealthsimple Cash is a new hybrid account from one of Canada’s most popular robo-advisors, replacing the former Wealthsimple Save.

Cash aims to provide the same versatility you’d get with a chequing account but with a superior everyday interest rate. However, some of the convenient features that make Cash work like a chequing account haven’t rolled out yet.

For now, Wealthsimple says Cash account holders are "connected beautifully" to their automated investing tools through a "sexy-by-financial-standards" app.

Promotional rate: N/A

Regular interest rate: 0.90%

Minimum balance: $1

Transactions: Free, but cash withdrawals and deposits not available yet.

Interac e-Transfers®: Free for a limited number, but not available yet.

Fees for extras: None.

CDIC insured: No, but CIPF insured.

Other restrictions: Direct deposits, Interac e-transfers, physical card and bill payment options not yet available.

Scotiabank Momentum PLUS Savings Account

Scotiabank logo
Scotiabank

Instead of a flat rate, Scotiabank’s Momentum PLUS Savings Account operates on a tiered interest system. You can earn better returns on your savings the longer you leave them untouched in the account.

On top of that, customers who spring for the Ultimate Package chequing account — which gives bonuses to other Scotiabank products — earn an additional 0.10%.

Altogether, customers can get up to 1.25% interest on money left untouched for more than a year.

Promotional rate: N/A

Regular interest rate: 0.05% regular interest, plus

  • 0.55% if left untouched for 90 days.

  • 0.65% if left untouched for 180 days.

  • 0.75% if left untouched for 270 days.

  • 1.10% if left untouched for 365 days.

  • 0.15% with the Ultimate Package.

Minimum balance: None.

Transactions: Free self-serve transfers between Scotiabank accounts.

Interac e-Transfers®: $1 (plus the loss of your Momentum period), but can be free through other Scotiabank accounts.

Fees for extras: $5 per debit transaction that isn’t a self-serve transfer between accounts.

CDIC insured: Yes.

Other restrictions: No paper statements.

LBC Direct Digital High-Interest Savings Account

LBC logo
LBC

For years, Laurentian Bank was only available to Quebec residents. Now that it’s gone digital, Canadians from all over the country can access its services.

LBC’s Digital High-Interest Savings Account offers high everyday interest rates with no monthly minimums or fees.

If you decide to get a chequing account through LBC Digital, you’ll be able to make withdrawals and deposits from ATMs in the Exchange network, which includes HSBC and the National Bank of Canada.

Promotional rate: N/A

Regular interest rate: 1.65% on deposits up to $500,000, 0.65% on deposits over $500,000.

Minimum balance: None.

Transactions: Free, plus free deposits and withdrawals at ATMs in the Exchange network with an LBC Digital chequing account.

Interac e-Transfers®: Free through an LBC Digital chequing account.

Fees for extras: None.

CDIC insured: Yes.

Other restrictions: $25 fee for closing your account within 90 days of opening it.

What is a high-interest savings account

A high-interest savings account is just a savings account that pays better than average interest, allowing you to earn serious returns on anything you set aside for the future.

Whether you’re saving up for a vacation or planning to make a down payment on a house, the extra interest will help you meet your financial goals sooner.

A high-interest savings account is also an ideal place to stash your emergency fund, since you can access the money at any time.

How does a high-interest savings account work?

Savings growth
Singkham / Shutterstock

The everyday rates on high-interest savings accounts typically range between 1% and 2%, with temporary, promotional rates sometimes reaching 2.50% or higher.

However, any interest you earn on the money in your account is taxable as income, so you’ll need to declare it on your tax return.

If you’re saving for a long-term goal like retirement, you might be better off putting your money into a savings account where it won’t be taxed, like a Registered Retirement Savings Plan or a Tax-Free Savings Account.

It’s not as easy to make payments or withdraw cash with a savings account, so you may need to periodically transfer funds to or from a chequing account. And if you want to park your savings with an online-only bank, that chequing account may need to be with another institution entirely.

What other kinds of savings accounts are available in Canada?

Traditional savings account

A traditional savings account is a basic financial product that provides modest amounts of interest on money that you set aside for the future. A high-interest savings account functions just like a traditional savings account, but with a higher interest rate.

Tax-Free Savings Account

A Tax-Free Savings Account (TFSA) allows you to earn tax-free interest on your savings, up to the yearly contribution limit — that’s $6,000 for 2020. TFSAs tend to have lower interest rates than some high-interest savings accounts, but the tax savings may be worth it. You can also store various investments, like stocks and bonds, in a TFSA.

Registered Retirement Savings Plan

A Registered Retirement Savings Plan (RRSP) is a government-registered account that allows you to defer paying taxes on your income until you retire, while also earning tax-free interest. You can put any amount up to your yearly contribution limit into your RRSP. As with TFSAs, you can store cash and various investments in RRSPs.

How to select the right high-interest savings account

Woman on laptop
ESB Professional / Shutterstock

The ease of accessing money means high-interest savings accounts are great for short- and medium-term goals. But in order to find the right account, you need to ask yourself a few questions.

Will the interest rate keep up with inflation?

If your biggest priority is making sure your money holds its value, you should look for an account with an interest rate that will keep pace with Canada’s rate of inflation.

Although inflation fell significantly as a result of the pandemic, the Bank of Canada predicts that it will gradually return to its 2% target within the next few years.

Just double check that the rate on your account isn’t a promotional or introductory offer that will eventually drop. And if you do choose an account with a lower rate, make sure the other perks are worth it.

How often will I need to access my money?

Some accounts have withdrawal limits that can restrict your ability to get at your money when you need it.

Even if you’re planning to park your savings in the account for a long period of time, an emergency situation might come up that requires you to pull some (or all) of your funds out earlier than expected.

If you want to avoid getting dinged with fees, look for an account that offers at least one free withdrawal per month. Some offer unlimited free transactions, which can save you a bundle if you make frequent withdrawals and transfers.

Will I need access to a physical branch?

Since digital banks don’t have to pay for the upkeep of physical branches and in-person staff, they typically offer better interest rates than their brick-and-mortar counterparts.

If you’re comfortable managing your account entirely through your phone or laptop, a digital bank is likely a smart choice.

But if you regularly use cash or enjoy face-to-face customer service, you may find a digital bank annoying to work with.

Do I need other services in addition to a high-interest savings account?

While you’re shopping around for a high-interest savings account, it’s also a good idea to check out what other products the institution offers.

If you think you might benefit from an RRSP or a TFSA, for example, finding a single institution where you can keep all of your savings will make it easier to keep track of your balances.

And pairing your savings account with a chequing account will make it simple to transfer funds so you can make purchases and deposit money.

How much deposit insurance do I need?

You want to store your savings in a safe place. Deposit insurance won’t cost you anything and ensures your money doesn’t disappear if your financial institution somehow goes bankrupt.

The government-backed Canada Deposit Insurance Corporation (CDIC) provides up to $100,000 in coverage to depositors in commercial banks, which include banks and credit unions with physical branches as well as many online banks.

Some non-bank financial institutions are not covered by the CDIC, but may offer protection from other organizations. The Canadian Investor Protection Fund, for example, insures losses of up to $1 million.

About the Author

Shane Murphy

Shane Murphy

Reporter

Shane is a reporter for MoneyWise. He holds a bachelor’s degree in English Language & Literature from Western University and is a graduate of the Algonquin College Scriptwriting program.

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