Compare the Best Savings Accounts in Canada 2020

MoneySense’s savings account calculator can help you find the best savings account rates for non-registered high-interest savings accounts and youth savings accounts, as well as Tax-Free Savings Accounts (TFSAs) and Registered Retirement Savings Plans (RRSPs) available from major, independent and digital banks, as well as various credit unions.

This savings account calculator allows financially savvy Canadians to compare Canada’s best savings accounts and the rates that are currently available in Canada.

Traditional savings accounts tend to offer lower interest rates, so using a high-interest savings account, either as an unregistered account, or within a TFSA or an RRSP, might be more suitable for your short-term or long-term saving goals.

Advertisement

Shutterstock

Best Savings Account Finder

How to use the savings account calculator

You can simply scan the savings account comparison table above to view interest rates offered by financial institutions across Canada. You can also input your estimated account balance and compare the growth between high-interest savings accounts (HISA), Tax-Free Savings Accounts (TFSA), Registered Retirement Savings Plans (RRSP) and youth savings accounts.

This savings account calculator provides a first-year return based on the information you’ve keyed in and the interest rate available, which can help you find the best account for your financial needs.

The best high-interest, TFSA, and RRSP savings accounts in Canada

Below, you can find further details about each type of savings account, with various recommendations of the best accounts in each category.

The best high-interest savings accounts in Canada for 2020

While the rate offered may vary from account to account, you’ll also want to consider other factors in your choice. For example, if you prefer to bank online, you won’t miss the ability to make in-person transactions and can take advantage of the fact that banks without brick-and-mortar branches may offer higher rates. However, if having a live representative to help is important, then you’ll want to consider accounts offered by institutions with physical branches.

Here are a few MoneySense selections for the best high-interest savings accounts in Canada:

The best Tax-Free Savings Accounts (TFSAs) in Canada

A Tax-Free Savings Account (TFSA) is a savings and investment account that promotes the tax-free growth of wealth. Although the word “savings’ is in its name, a TFSA can hold a variety of savings and investments. 

There are various types of TFSAs, which can hold cash savings as well as various of investments, such as exchange-traded funds (ETFs), stocks, bonds, guaranteed investment certificates (GICs), mutual funds and more. Cash savings and investments can grow tax-free and can be withdrawn at any time without an income tax penalty.

Some of the best TFSAs in Canada include:

The best Registered Retirement Savings Plans (RRSPs) in Canada

A Registered Retirement Savings Plan (RRSP) is an account sponsored by the government, which is designed to encourage Canadians to save long-term for their retirement. An RRSP savings account does not permit tax-free withdrawals but allows savings and investments to grow free of tax.

Like a TFSA, an RRSP can hold cash savings and investments. Either cash or investments can grow tax-free inside an RRSP.

Some of the best RRSP saving and investing accounts include:

  • Best RRSP for risk-averse investors: MAXA Financial RRSP Savings
  • Best RRSP for risk-averse investors: Peoples Trust 1-year Registered GIC
  • Best RRSP for investors who want simplicity: Questwealth Portfolios*
  • Best RRSP for investors who want simplicity: Wealthsimple Invest*
  • Best RRSP for DIY investors: Questrade*

What is a savings account?

Traditional savings accounts provide interest on deposits, while investments held in registered savings accounts (TFSAs and RRSPs) provide returns.

While chequing accounts generally pay no interest, they make it easy for you to withdraw or pay bills from the account. On the other hand, savings accounts are designed to pay interest on your deposits, but offer little flexibility.

Depending on the type, savings accounts can be used towards short- or medium-term goals—such as a vacation or a new car—or, long-term goals—such as a property purchase or retirement.   


How to choose the right savings account

Generally speaking, Canadian savings accounts of all kinds come with terms, conditions and rules set by the Canadian government.

However, some attributes are set by the bank or credit union offering the account, such monthly or annual fees; note that most savings accounts do not charge fees, but some do, especially those held with major providers 

If possible, choose an account with an interest rate exceeding 2%. This allows your deposits to keep up with inflation, so your money has at least as much purchasing power when you take it out of the account as when you put it in.

It’s important to know the terms and conditions of transactions, and limitations of the account. A general rule of thumb is that the higher the interest rate, the more limitations come with the account.

Consider your savings goal, too. As outlined below, you’ll get the best results if you use an account designed for the time-frame of your savings goal: short-term, medium-term or long-term.


Which savings account should you use?

Savings accounts are bank accounts for the purpose of saving money. There are different types of savings accounts, and each type is best suited for different types of savings goals.

Since opening a savings account (in most cases) does not cost a banking customer anything, it’s often a good idea to hold some version of all three.

High-interest savings account (HISA)

  • A high-interest savings account is suitable for short-term or long-term investing if you’ve maxed your TFSA contribution limit for the year. You might consider saving in a HISA if you’ve maxed your RRSP contribution room for the year as well, and prefer not to risk your deposit principal. 
  • High-interest savings accounts do not come with a contribution limit. Therefore, using one for a short term savings goal is a suitable option for Canadians who would like to earn more interest in a shorter amount of time, want a low-risk way to save and prefer to be able to access their deposits whenever they wish.
  • Interest earned in a HISA is subject to taxation.

Tax-Free Savings Account (TFSA)

  • TFSAs are suitable savings accounts for all Canadian citizens of the age of majority, as anyone can reap the rewards of earning tax-free interest with no withdrawal restrictions.
  • TFSAs have a contribution limit that increases with each new year. Unused room carriers forward, and starts accumulating at the age of 18 or 19, depending on the age of majority in the province where you live.

Registered Retirement Savings Plan (RRSP)

  • Retirement savings should be kept in an RRSP, in most cases. Ideally, you contribute to an RRSP at a higher income life stage, so that you can defer paying taxes on that income. In other words, making an RRSP contribution can saves you money on your annual income taxes. When you withdraw the money in retirement, you will likely be in a lower income life stage, and will therefore have to pay less tax on it. 
  • RRSPs do not permit tax-free withdrawals, as high-interest savings accounts or TFSAs do, except through certain programs like the Home-Buyers’ Plan (HBP) and the Lifelong Learning Plan (LLP).

 

Advertisement