Canadian High Interest Savings Account Comparison

I’ve been researching different high interest savings account options after emptying the majority of our savings account to use as a downpayment on our new house.  I need to build my savings account back up again.

Do We Still Call It A High Interest Savings Account?

Even though the interest rates are pretty low all across Canada, there is still a significant spread between different banks and financial institutions when comparing high interest savings accounts .  I wasn’t thrilled with the paltry interest rate I was getting from the savings account at my bank so I checked out some different options to see what else was available here in Canada.

An additional 1% interest rate on $5,000 means an extra $50 in your pocket each year (before tax).  I don’t mind spending a little bit of time in order to save money.  I’ve already compared the best chequing account options in Canada.

Here’s what I discovered for the best high interest savings account in Canada (updated February 19th, 2013):

High Interest Savings Account Comparison

Bank / Account Name Rate % Min. Balance Transaction Fees
Manulife Advantage Account 1.55 None $1.25 per debit
Canadian Tire High Interest Savings 1.5 None none
CIBC eAdvantage Savings 1.5* $5,000 $5 per debit
Tangerine Investment Savings 1.35 None None
PC Financial Interest Plus 1.35 $1,000 None
RBC High Interest eSavings 1.2 None One free debit
BMO Smart Saver 1.2 None One free debit
Scotia Power Savings 1.2 $5,000 $5 per debit
TD High Interest Savings 1.1 $5,000 $5 per debit

*promotional offer ends March 28th, 2013

Best of the Big Banks

The big banks leave something to be desired when it comes to high interest savings accounts, which explains the rise of online high interest savings account options like PC Financial and Tangerine.

On the surface, the RBC High Interest eSavings Account appears to be a really competitive option with no minimum balance and no monthly fees, but when I dug a bit deeper there are still plenty of fees and restrictions on this account.

Although you can still pay bills online, there is a $5 fee for every assisted transaction, and a $5 fee for any money transfers outside of your RBC accounts.  You are allowed one cash withdrawal per billing cycle.

Several smaller banks and credit unions also offer competitive rates on high interest savings accounts. AcceleRate and Achieva lead the way, paying 2% each.  Steinbach Credit Union and Outlook Financial each pay 1.95% interest, while Canadian Direct and Peoples Trust both pay 1.9% interest.

The Best High Interest Savings Account option

At a quick glance it appears that the Manulife Advantage Account is the best option for earning the highest interest rate in the country.  But even though you’re earning a guaranteed return, at 1.55% you’re barely keeping up with inflation.

Ally Financial used to pay 1.8% interest on its savings account.  However, Ally was purchased by RBC, who then immediately shut down Ally’s high interest savings account option as of February 15th, 2013.  Existing Ally accounts will be closed on April 30th, 2013, and clients will presumably be offered to move to the RBC High Interest eSavings account.

I decided to go with the Tangerine Investment Savings Account. Tangerine has a competitive interest rate of 1.35%, and they pay you a bonus of $25 just for opening an account with them and making an initial $100 deposit.

With Tangerine, a $1,000 balance would grow to $1,067 over 3 years when you include the $25 deposit.  Not only do you get a bonus for signing up with Tangerine, you can also earn $25 for every new account your friends or family open.  Simply pass along your orange key code to your friends and family for the chance to earn up to $2,000.

If you’d like to sign up for the Tangerine Savings Account and receive a $25 bonus, please use my orange key code: 35965713S1 – and sign up here.

Are you happy with the interest rate on your current savings account?  Would you consider switching to a high interest savings account?

13 Responses to Canadian High Interest Savings Account Comparison

  1. Do not miss out on the best rate to date.
    Peoples Trust in B.C.
    They have 100% guaranteed daily high interest of 2.1%
    I have my accounted linked and transfer in and out in a flash(next day) with zero fees.
    Free monthly statement mailed also.

  2. As MLarose pointed out, Achieva Financial offers a 2% rate. So does Outlook Financial, the Internet only branch of Assiniboine Credit Union, another Manitoba offering. You do not need to live in Manitoba to access it, although there probably will be withdrawal fees for using ATMs outside Manitoba.

  3. Scotiabank no longer promotes money master as a high interest savings account. It’s been replaced by Scotia power savings account, but still a lot lower than ally or ING

  4. I like ING too :) It’s something about that bright orange marketing that appeals to me.

    To me, I find the small differences in rate trivial because I don’t have that much capital to park my money with anyway. I would rather use a company I believe in and like than pick one over a 0.5% difference.

  5. Outlook Financial and Achieva, both Credit Unions with Internet presence offer 2% savings accounts. Both pretty much usually offer the same rates as Ally, usually the best available.

    I have accounts at Outlook Financial and find them pretty easy to deal with.

    Depending on your time frame, you may also be interested in Cashable GICs at Outlook Financial. They pay 2.25 for a 1 year cashable – should you need the cash in less than a year the penalty is that you only get the “withdrawal rate” – currently 1%.

  6. /quote
    BMO’s Premium Rate Savings Account offers a pitiful 0.25% and requires a minimum of $1,000 deposit or else you are charged $4/month. Now I’m no math expert, but if you only held $999 in this account you would earn just about $25 in interest over a full year while paying a whopping $48 in bank fees. No thank you.

    That would be $2.50 in interest not $25

  7. Hi, I’m a student and just starting to save. I’ve noticed TFSA are just like HISA but they have better rates. So why don’t people just use TFSA? 3.00% at Canadian Direct Financial.

    • @Cough: With a TFSA you have to be at least 18 years old and there is a $5000 a year limit. Otherwise there’s no reason why you couldn’t use it instead of a HISA if you like – and it’s tax sheltered.

    • Another reason why people might not want to open a TFSA over a HISA is because this will limit the investment potential of a TFSA .TFSA can also include brokerage accounts, so people saving for the long term might want to invest in dividend paying shares which yield much more than any rate offered by a savings account.

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