7 Best High-Interest Savings Accounts in Canada 2020

Best High-Interest Savings Account (HISA) in Canada
Last updated Sep 7, 2020

After reviewing High-Interest Savings Accounts (HISA) in Canada, my top pick and what I personally use is EQ Bank, with a current savings rate of 1.70%*. You can get that rate here. (Not available to Quebec residents)

HISA’s are a great place to stash your money if you need to make a purchase in the short-term. You can earn interest that will roughly keep pace with inflation and maintain full control of when you can withdraw it.

On the other hand, Canadians parking their capital in traditional savings accounts (usually at a Big Five Bank) have not been able to enjoy significant returns on their money for most of the last decade. 

Traditional savings accounts are not the best place to park your funds if you want significant returns on your capital. Other income-producing assets can entail risk to your capital. High-Interest Savings Accounts (HISAs) can offer you decent interest so your savings can keep up with the pace of inflation. 

There is a variety of HISAs that can help you earn more substantial returns with low-risk to your money. I’ve created a guide to help you understand HISAs and a list of the top HISA rates from non-credit union banks.

If you’re looking for an ideal financial vehicle to park your funds, perhaps one of these might fit the bill.

High-Interest Savings Accounts vs. Normal Savings Accounts

When you think of a high-interest savings account, you might think about what difference it has from a regular savings account. There are several differences between these two types of accounts.

1. Higher Interest Rates (Obviously!)

The first (and the most obvious) difference is that HISAs offer a higher interest rate for your savings. For instance, regular savings account at one of the Big banks can be 0.50%, while the same bank can offer you a 0.90% for its HISA.

Bank of Canada’s (BoC) benchmark rate remaining at historic low levels along with inflation has led to practically insignificant returns on traditional savings accounts.

BoC recently introduced higher interest rates, but they have done little to have a significant impact on savings rates that the most prominent financial institutions in the country offer. 

These low-interest rates are turning what could be tangible savings into negative real returns once you consider inflation.

2. May be Some Withdrawal Restrictions or Limits

HISAs can also differ from regular savings accounts in terms of how many withdrawals you can make from them. Banks earn income by letting borrowers lend money from them. Banks lend deposits from their customers to borrowers, and they can turn a profit from the interest they charge lenders. The longer your deposits sit in the bank, the more profit banks can earn from them.

HISAs can often also have higher transaction fees compared to checking accounts for the same reason. If you are taking your deposits in and out of the account, your money might not generate as much for the bank, and they cannot justify paying you higher interest rates.

However, most online-only banks offer fantastic HISA rates without more substantial transaction fees or limit to the number of withdrawals you make from your account each month. Banks offering you HISAs might also require you to retain a certain minimum balance in the account. Most online-only banks do not charge these fees.

HISAs are designed for long-term storage of your capital. They are not suitable for day-to-day transactions.

Pros of Using High-Interest Savings Accounts

You stand to gain several advantages by using HISAs, including:

  • Higher Returns: A HISA offers you better returns on your savings as opposed to traditional savings accounts.
  • Flexibility: HISAs offer you more flexibility in comparison to other financial vehicles. For instance, if you invest in a Guaranteed Investment Certificate (GIC), your funds are locked in for six months to 5 years (or longer). Most HISAs, on the other hand, allow you to make withdrawals from your account without penalties if you need money. It makes HISAs a better option for holding emergency funds.
  • Safety and Guarantee: The money you store in your HISA is generally safe. If the financial institution is a member of the Canada Deposit Insurance Corporation (CDIC), it can insure amounts up to $100,000 per client if the bank goes bankrupt for any reason. Deposits at credit unions have provincial insurance and can typically cover the entire deposit of the clients (even those who have balances over $100,000).
  • Bonuses: Some banks that offer you HISA also provide you with attractive bonuses and promotional rates for signing up and offers that last for a limited period.

Cons of Using High-Interest Savings Accounts

High-interest savings accounts or regular savings accounts of any kind cannot double your capital, but that might not be a bad thing. They pose less of a risk compared to most income-generating assets. The return you get from the account reflects the risk to your capital.

However, HISAs are not perfect. The most problematic aspect of HISAs and other fixed-income generating assets is taxation. The Canada Revenue Agency (CRA) taxes you on the income you earn through interest at your marginal tax rate. If you are in a high tax bracket, you can end up paying a substantial chunk of your profits in taxes.

The tax on interest income is not as favorable compared to capital gains or dividend income. If you’re looking to avoid paying taxes on your HISA returns, you can use a Tax-Free Savings Account (TFSA).

Despite this, I actually don’t hold a HISA in a TFSA account, instead having it in a regular taxable account. This is because I believe a TFSA should actually be used for investing, and not saving, and it’s important to build that mental distinction for me.

That’s why I don’t mind that EQ Bank here doesn’t have a TFSA account, and why it’s my top pick for a HISA.

The Best High-Interest Savings Accounts in Canada

And now, we are going to take a look at the top high-interest savings accounts available in the country today. 

There are a few things you should consider before you choose a financial institution you work with. Take a closer look at the fine print so you can find out details like:

  • Whether they charge fees on transfers and/or withdrawals.
  • Is the rate promotional or introductory? Is it the regular rate they offer for the HISA?
  • Whether they have any restrictions on the number of monthly transactions and lock-in periods.

Taking all this into account and based on my personal experience with the customer service, EQ Bank is my top pick for Canadians for a HISA. You can open an account here.

Here are the best high-interest savings accounts in Canada and their rates right now. While we have mentioned them in terms of their HISA rates from the highest to the lowest, it is a good idea to check out more details about the financial institutions to get a better idea about their high-interest savings accounts. Having a more comprehensive idea before you decide on which one you want to work with can help you make a better decision based on your financial goals.

1.EQ Bank: EQ Bank Savings Plus Account (My Top Pick)

Interest Rate on HISA/Savings: 1.70%*
Fees:
Free
How to Open an Account: Link Here
Awesome Features:

  • High non-promotional savings rate
  • Zero monthly fee
  • Free transactions
  • Free electronic transfers
  • Zero minimum balance
  • Free mobile check deposits
  • Free bill payments
  • Free Interac e-Transfers®
  • Extremely easy sign up
  • Fantastic design and easy to use

EQ Bank is a banking arm of the Equitable Bank that operates in an online-only environment. Equitable Bank is the 9th largest Schedule I bank in Canada. EQ Bank began in 2016. In four years, EQ Bank has grown to more than 60,000 clients, with over $3 billion in deposits. Its interest is calculated daily and paid out to customers monthly.

I consider it among the best online-only banks. It charges no monthly banking fees. It offers high non-promotional HISA rates. The maximum balance you can hold in your account is $200,000.

I hold any money I need for the short-term, for example for taxes or trip purchases, inside an EQ Bank HISA. It’s not available for Quebec residents or TFSAs, but I like to save my TFSA for investments anyways.

Open an EQ Bank Savings Plus Account: Click Here

2.Motive Financial: Motive Savvy Savings Account

Interest Rate on HISA/Savings: 1.75%
Fees:
free
Awesome Features: 

  • Free deposits and unlimited transfers between accounts
  • Zero monthly fees
  • Zero minimum balance

Motive Financial is an online-only banking division of the Canadian Western Bank. It serves its customers through the website and mobile app. It offers an exceptional HISA with a tiered interest rate on the account.

The app for this online bank is slow, it takes over a month for your application to be approved, and it offers two free withdrawals each month. After that, it can cost $5 per transaction. Also, it is not available to the citizens of Quebec.

3.Tangerine: Tangerine Savings Account

Interest Rate on HISA/Savings: 2.50% (promo rate) and 0.20% (after 5 months)
Fees:
Free
Awesome Features: 

  • No lock-in periods
  • Zero monthly fees
  • Zero minimum balance
  • Offers TFSA and RRSP
  • Automatic savings plan

Tangerine Bank has been a subsidiary of the Bank of Nova Scotia since 2012. It has become one of the best online-only banks in the country. Formerly known as ING Direct, Tangerine charges no fees for its high-quality products, and it offers competitive interest rates. 

It is not the best non-promo interest rate out there, but the bank also offers other savings plans like TFSAs and Registered Retirement Savings Plans (RRSPs). It also provides GICs with higher rates.

4.WealthONE Bank of Canada: High-Interest Savings Account

Interest Rate on HISA/Savings: 1.60%
Fees:
Free
Awesome Features:

  • Zero monthly fees
  • Zero minimum balance
  • Automatic savings plan
  • Unlimited transactions
  • Ten free bill payment transactions per month

WealthONE Bank of Canada is a Schedule I bank that offers online banking services to Canadians as well as face-to-face banking through their brick-and-mortar branches in British Columbia and Ontario. The bank offers a variety of accounts, including its HISA, residential mortgages, and GICs, among more.

WealthONE Bank of Canada offers one of the best non-promotional interest rates for its HISA.

5.Alterna Bank: High-Interest eSavings

Interest Rate on HISA/Savings: 1.40%
Fees:
Free
Awesome Features:

  • Zero minimum balance
  • Unlimited free bill payments
  • Free unlimited Interact eTransfers per month
  • Available in Quebec

Alterna Bank is the digital banking arm of Alterna Savings and Credit Union. Alterna Savings is a 110-year old credit union based in Ontario. Alterna Bank and Alterna Savings are together referred to as Alterna Financial Group. Alterna Bank is primarily an online bank, but it also offers face-to-face interaction to customers through its Alterna Savings branches in Ontario and Quebec.

6.Motusbank: motusbank High-Interest Savings Account

Interest Rate on HISA/Savings: 1.40%
Fees:
Free
Awesome Features: 

  • Zero monthly fees
  • Zero minimum balance
  • Deposit insurance up to $100,000 per client
  • Automated savings feature

Motusbank is among the latest online-only bank that is a subsidiary of the Meridian Credit Union. Meridian Credit Union is the most popular credit union in Ontario and the third most significant in Canada. Launched in April 2019, motusbank is a federally chartered bank in Canada, and it is a member of the Canada Deposit Insurance Corporation.

It offers investment accounts, HISA, a no-fee checking account, and competitive rates on mortgages. The bank is available everywhere in Canada except for the residents of Quebec.

7.Wealthsimple: Wealthsimple Cash

Interest Rate on HISA/Savings: 0.90%
Fees:
Free
Awesome Features: 

  • Zero monthly fees
  • Zero minimum balance
  • Unlimited free transactions
  • No foreign exchange transaction fees (coming soon)

Wealthsimple is a well-known robo-advisor that helps its customers manage their investment portfolios. It is the most significant online wealth manager that was founded in 2014. It has over $5 billion in assets under management, with more than 175,000 clients.

The robo-advisor also offers a HISA called Wealthsimple Cash, and it offers a decent interest rate. Wealthsimple Cash is an excellent financial account that also reimburses any ATM withdrawal fees.

Considering the transfer, withdrawal, and payment capabilities it offers, Wealthsimple Cash is a hybrid between a savings and checking account.

Best Credit Union HISA and Savings Rates

Click the links below for up to date interest rates for these credit unions. Note that many are only available in your province of residence:

  1. ATB Financial HISA rate
  2. Ideal Savings HISA rate
  3. Maxa Financial HISA rate
  4. AcceleRate Financial HISA rate
  5. Achieva Financial HISA rate
  6. Implicity Financial HISA rate
  7. Outlook Financial HISA rate
  8. Hubert Financial HISA rate

Conclusion

As you can see, high-interest savings accounts can help you earn significant interest through your funds without losing pace with inflation.

After I did this review, my top pick is EQ Bank, and you can open an account here.

Each of the HISA products can vary drastically in terms of rates and additional features.

If you plan on opening a HISA for the interest income it can offer, I hope this article helps you make a more well-informed decision.

If you want more details, check out this Wealth Awesome guide on How to Start investing in Canada.

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

Best High Interest Savings Accounts

If you liked this article…

<a href="https://wealthawesome.com/author/christopher-liew/" target="_self">Christopher Liew, CFA</a>

Christopher Liew, CFA

Creator of Wealth Awesome

A Canadian CFA Charterholder with 11 years of finance experience and the creator of Wealthawesome.com. Read about how he quit his 6-figure salary career to travel the world here.

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