Are you tired of earning nothing on the money sitting in your chequing account? Or have you started saving up an emergency fund but are not sure where the best place to keep it is? If either of these statements sound familiar, then a high-interest savings account may be the answer you’re looking for.
Unfortunately, saving interest rates have taken a dive lately. But as a Canadian, there are still many account options that offer better rates than your regular chequing account.
The best high yield savings account in Canada is at EQ Bank. Not only does EQ Bank have one of the best HISA rates in Canada, but it also has the best overall features.
But before we get into why EQ Bank has the best savings account. Let’s talk about what a high-interest savings account is.
What is a HISA?
A HISA or high-interest savings account is an account designed to provide a higher yield on your money than a regular chequing account. Essentially this means you will earn more interest on your money in a high-interest savings account than you would in a chequing account.
HISA’s are meant to be for savings and therefore will have less regular transactions than a chequing account. Because they are more hands-off than your day-to-day account they can offer a higher interest rate.
But a lot of the best high yield savings accounts in Canada are a bit of a hybrid. They offer a higher interest rate than a regular chequing account. But they also provide unlimited transactions and bill payments.
Are high-interest savings accounts safe?
In a word yes. Although the majority of banks with the best HISA rates in Canada are online options and do not have brick and mortar locations. They are still protected by the Canada Deposit Insurance Corporation (CDIC).
The CDIC is a crown corporation (part of the Government of Canada) who’s mandated to protect your deposits up to a maximum of $100,000 should a Canadian bank or financial institution fail. Think of it like banking insurance that you don’t have to pay for.
Check out the CDIC website for more information on coverage eligibility.
Are high-interest savings accounts taxable?
If you are using your high-interest savings account strictly as a non-registered savings account, then yes the interest earned is taxable.
If you earn more than $50 interest a year in your HISA then you will be issued a T5 for your earnings. This amount needs to be declared on your taxes and the interest will be taxed at your marginal tax rate.
If you are using your HISA to house your tax-free savings account (TFSA) then as the name suggests you will not have to pay tax on the interest earned.
Realistically, I think that you can do better and earn more money in your TFSA than only keeping it in a high-interest savings account. But that’s just me, and I’m a bit of an over-optimizer.
Why do you need a HISA?
The two most important reasons you need a high yield savings account in Canada is because your money will earn more money than in a chequing account. And your money will be easier accessed in an emergency than if it was invested.
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There is no point in holding lots of money in your chequing account if that money is earning you next to nothing in interest. When inflation is factored in, your money is actually losing buying power over time.
With a HISA, your money will make more money than in a chequing account. More interest means more money in your pocket.
Not only does your money earn money in a HISA account, but it is also liquid. This means that when you need that money in an emergency it will be fairly easy for you to access. This is not the case if your money is invested.
Will I be penalized for withdrawing from a high-interest savings account?
If you are using your HISA for saving after-tax dollars, then no you will not be penalized for withdrawing from a high-interest savings account.
The majority of high yield savings accounts offer unlimited transactions – no penalty here for withdrawing.
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What is the best use of a HISA?
One of the best uses for a high yield savings account is for keeping your emergency fund. This money will earn interest and be liquid meaning you can access it easily in an emergency.
Short term savings are also great to keep in your high yield savings account. This may include saving up for a new (to you) vehicle or the latest iPhone (yes you should be saving up for this and not buying it on credit).
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I keep my emergency fund in my HISA account at EQ Bank. My money is earning 2.5% sitting there waiting for an emergency. I can sleep much better at night knowing that my money is making me money while I sleep.
And that I can get it quickly in an emergency if I need to.
How to open a high-interest savings account
Because the best HISA accounts in Canada are from online banks, opening an account is very easy. All you have to do is go to the website for the bank you want to open your account in and fill out the online application.
I’ve done the first step for you. Below every bank listed is linked to the bank’s website so you can easily open your high-interest savings account as soon as you are done reading this article.
Then depending on the bank you will need to verify your identity somehow.
When I opened a high yield savings account at EQ Bank I had to go to my local post office to verify my identity by showing them my driver’s license. From there my account was authorized and set up.
Often with an online bank, you can link external accounts to it to make it easier to transfer funds. I have my day-to-day chequing account linked to my EQ Bank HISA and with a few finger taps in the EQ Bank app my money is transferred; either into our out of my EQ Bank account.
Canadian HISA Rates
Okay, now let’s get to the comparison of the possibilities. In Canada we have plenty of no-fee, no minimum balance, high interest saving account options. Let me break them down for you.
When LBC first announced its high-interest savings account they were offering a 3.3% interest rate. This was a rate that nobody could match. And it attracted a lot of people to open new accounts.
Well as it turns out, LBC couldn’t maintain that rate for long. After yo-yoing rates LBC has now settled on an interest rate on its high yield savings account in Canada of 13% on the first $500,000.
I have also not heard one good thing about the onboarding process to create an account with Laurentian Bank of Canada. Because of this and the volatility of their interest rate, LBC is not the best HISA rate in Canada.
Motiv’s HISA is called the Motiv Savvy Savings Account. Its current rate is 3% – one of the better rates in Canada.
Unique to the Motiv Savvy Savings Account is the restrictions on withdrawals. The first two withdrawals are free every month. After that, each withdrawal will cost you $5. A bill payment, debit, or Interac etransfer would be considered a withdrawal.
This can be a good motivator preventing you from withdrawing from your savings. But if you do need to access that fund repeatedly in a month then Motiv Financial may not be your best option.
The EQ Bank Savings Plus account is the BEST high yield savings account in Canada. Previously EQ Bank had a slightly lower interest rate. Not anymore, EQ Bank now offers a 2.5% interest rate up to a maximum of $200,000 deposited.
And there is no charge for withdrawals.
EQ Bank’s HISA acts like a chequing account while providing you the benefit of a higher interest rate than your day-to-day chequing account.
Other added benefits of EQ Bank’s Savings Plus account are low international money transfer fees, free bill payments, and free Interac etransfers.
And EQ Bank has now increased their account offerings and now offers a joint high-interest savings account. One of the advantages of this is accessibility should something happen to one of the account holders.
For example, if you and your partner have a joint high yield savings account and one of you were to pass away, the other could still access the funds. If this were not a joint account those funds would be much more difficult to access.
If you are like me and want your money in the best high yield savings account in Canada, then click here to earn $20 on your first $100 deposit. That’s an instant 20% return on your first $100.
One of the newest features of the EQ Bank Savings Plus account is that it is now available in Quebec.
Tangerine used to be the big player in the high-interest savings account game in Canada. Now there are many other options out there that offer higher interest rates.
The current interest rate at Tangerine is a dismal 1%. But they do offer rolling promotional rates all the time.
After that the rate drops back down to 1%.
If you are over-eager you could create an account, deposit your money and let it sit there for the promo period. And then after the promotional period move your money to one of the better high yield savings accounts in Canada. Personally, the extra few dollars are not worth the effort.
I used to have my savings account at Tangerine but have since switched it to EQ Bank and could not be happier.
Tangerine has many other great features as an overall bank, but a high yield savings account is not one of them.
Motus Bank currently offers 2.5% interest on its HISA. They are not a big player in this space but a viable option as they offer unlimited debit purchases and withdrawals and a joint account option. One advantage that Motus Bank has is that their interest rate has stayed the most consistent over time.
Motus Bank is 100% digital so they do not have the overhead of brick and mortar banks. Meridian Credit Union of Ontario is the parent company for Motus Bank.
Alterna Bank is another hybrid savings account option in Canada. It offers 2.5% interest on their high-interest esavings account. This account has unlimited bill payments, money transfers, debits, and Interac etransfers.
Oaken Financial offers a 3.4% interest rate on their high yield savings account. This is currently the best HISA rate in Canada.
Like the other HISA options in Canada, Oaken Financial offers unlimited transactions and no minimum balance. Oaken Financial also offers their HISA for commercial purposes and they make it super easy to convert your money into a GIC (if that’s your thing).
Like Tangerine, Simplii Financial used to be a big player in this field. Now they offer a low 0.40% interest on their high-interest savings account. Yes, they offer unlimited transactions and all the other bells and whistles offered by other high yield savings accounts.
But with all the other options available to you, Simplii Financial is not a good choice for your high-interest savings account.
Canadian Tire Bank
Canadian Tire Bank is the new kid on the block in the high interest savings account space. At the time of this writing Canadian Tire Bank didn’t have their interest rates listed online.
And although I love my Canadian Tire World Elite Mastercard, personally I’m going to stick with the tried and true EQ Bank for my HISA. Their account offerings and customer service has earned my loyalty.
Wyth Financial is the trade name of Concentra Bank. In early 2022 Concentra was acquired by EQ Bank. So if you’re looking to open a HISA with Wyth Financial – look no further than EQ Bank.
If you want a free $20 open your high-interest savings account with EQ Bank using this referral link and deposit $100 within the first 30 days.
How much interest will you make on $1000?
|Bank||Interest Rate||Annual Return on $1000|
|Laurentian Bank of Canada (LBC)||3%||$30.00|
|Canadian Tire Bank||TBD||TBD|
|Wyth Financial||see EQ Bank||see EQ Bank|
All of the information is current as of the time of writing. Rates are subject to change without notice. All interest rates (unless otherwise stated) are annual, calculated daily and paid monthly.
Best High-Interest Savings Account Canada
As you can see from the table above the interest earned on $1000 varies from $4.00 to $34.00. Although EQ Bank does not offer the best HISA rates in Canada, overall its account option is the best.
Why EQ Bank is the Best HISA Canada
- Competitive 2.5% interest rate
- Unlimited free transactions
- No account minimum
- No monthly fee
- Low international money transfer fees
- Free bill payments
- Free Interac etransfers
- Joint account capability
When it comes to high yields savings accounts in Canada, you have a lot of options. But only one account stands out when compared to the rest and that is EQ Bank’s Savings Plus account.
There is no minimum required and no monthly fee so what is holding you back from opening an account?
Remember when you open your EQ Bank account with this referral link you will earn $20 on the first $100 you deposit. Once your account is open set up regular transfers and watch your money grow.
So if you’re looking for the best high-interest savings account Canada, EQ Bank is the #1 choice.