The past 10 years have been a lost decade for savers as interest rates plummeted and stayed at historic lows. A so-called high interest savings account at one of Canada’s big banks pay next to nothing for interest. Meanwhile those looking for higher rates on their deposits have to chase short-term promotional offers at online banks and out-of-province credit unions just to stay ahead of inflation.
Luckily the tide is starting to turn thanks to the Bank of Canada raising its key interest rate on five occasions in the past 15 months. While debtors bemoan the 1.25 percent increase over that time, savers are cheering for higher rates on their deposits.
High Interest Savings Account Comparison
It had been some time since I surveyed the market to compare high interest savings accounts rates. What I found was much of the same from Canada’s big banks, whose best rates range from a paltry 0.5 percent to 1.2 percent on a high interest savings account.
RBC’s eSavings account is easily the best of the bunch for everyday deposits, paying a decent 1.2 percent on every dollar with no monthly fees or minimum deposits required. The account also includes one free ATM cash withdrawal per month.
|Bank||Account||Interest rate %|
|RBC||High Interest eSavings Account||1.20|
|Scotiabank||Momentum Plus Savings Account||1.05|
|CIBC||eAdvantage Savings Account||1.05*|
|TD||High Interest Savings Account||0.50*|
* $5,000 minimum balance required
In the middle of the rate pack you’ll find online banking pioneers Tangerine and Simplii Financial (formerly PC Financial), plus other household names such as Manulife and Canadian Tire Bank.
At the top of the online competitors we have EQ Bank, which pays a healthy 2.30%* everyday interest rate on its savings deposits. The EQ Bank Savings Plus Account comes with no monthly fees, no minimum balance, and acts as a chequing account with unlimited transactions, including free bill payments and five free Interac e-Transfers® per month.
|Bank||Account||Interest rate %|
|EQ Bank||EQ Bank Savings Plus Account||2.30*|
|Alterna Bank||High Interest eSavings Account||2.25|
|Canadian Tire||High Interest Savings Account||1.50|
|Manulife Bank||Advantage Account||1.40|
|Simplii Financial||High Interest Savings Account||1.25|
Finally, I’d be remiss not to include a section on credit unions, which for years have offered some of the highest interest rates on savings accounts in the country. The trouble is that savers often need to look beyond their provincial borders to take advantage of these higher rates.
Indeed, some of the best interest rates today are offered by little known Manitoba credit unions. Topping the list (and the country) is Manitoba’s largest credit union, Steinbach, which pays an incredible 2.65 percent on its regular savings account. Not too far behind is Winnipeg’s AcceleRate Financial, which pays 2.35 percent on its high interest savings account.
The Deposit Guarantee Corporation of Manitoba guarantees all deposits. Canadian residents outside of Manitoba can open an account with a Manitoba credit union by becoming a member and providing additional supporting documentation with their application.
|Manitoba Credit Union||Account||Interest rate %|
|AcceleRate||High Interest Savings||2.35|
|Achieva||Daily Interest Savings||2.15|
|Outlook||High Interest Savings Account||2.15|
|Implicity||High Interest Savings Account||2.15|
Ontario also has its share of credit unions that offer competitive rates on savings accounts among other products. Pacing the field is Alterna Bank, an online offshoot of Alterna Savings, which has 33 locations across Ontario. Alterna offers a high interest eSavings account at 2.25 percent.
|Ontario Credit Union||Account||Interest rate %|
|Alterna||High Interest eSavings||2.25|
|Meridian||High Interest Savings||1.50|
|IC Savings||Investment Savings||1.25|
Many of the above listed banks, online banks, and credit unions typically offer promotional interest rates upwards of 3 percent or more for short periods of time. A savvy customer with the time and inclination could stay ahead of the curve by moving their savings around every few months.
A less complicated solution is to park your money with a bank that consistently offers an everyday high interest rate at or near the top of the market with no hassles. For my money today, that’s the EQ Bank Savings Plus Account at 2.30% interest*.
*Interest is calculated daily on the total closing balance and paid monthly. Rates are per annum and subject to change without notice.