By Alix Logan
If you were like me making close to 1.00% in a savings account at one of the big banks, it might be time for a change. Online banks are a really great option to make some extra interest because they don’t have the same overhead costs that the big banks do.
Most of them don’t have any branches you can visit in person, but if you feel comfortable with online customer service then online banks could be a great option to help your money make more money, safely. After finally switching to an online bank last year in search of a higher interest rate, I have never looked back.
High interest savings account will usually have interest rates higher than 1.05%. All of the savings accounts covered in this article are all above 2.00% interest. So, if you’re hoping to see one of the big banks on this list, you won’t. If you’re not even keeping up with inflation, there’s really no point…
You should be using your high interest savings for shorter term goals like annual travel, car insurance, property tax, or whatever you can think of that you might need money for in the next 3(ish) years.
Your savings account should also be where your emergency fund lives. This is your safety net of 3-6 months of expenses.
Not sure what 3-6 months of expenses looks like for you? Download my budget spreadsheet and try tracking your spending for just one month to see where you stand. This is the spreadsheet I use myself! Something that is extremely important to me is the Canadian Depositor’s Insurance Corporation (CDIC) protection. All banks on the list below are CDIC insured. You can tell if your bank is a CDIC member by going to the CDIC website or by seeing their purple logo on your bank’s website or app.
CDIC insurance means that if there were to be a bank failure, you would not lose a cent as eligible deposits would be protected up to $100,000 per account.
Here’s a list of the best high interest savings accounts in Canada right now. There are many other high interest savings accounts out there but I am only sharing the ones I would actually consider using myself.
motusbank High Interest Savings Account
-
No monthly fees
-
2.00% interest *NEW (decreased from 2.10% in March 2020)
-
No minimum balance
-
Unlimited transactions
-
Price drop feature, upload or email your receipts and they will search for lower prices so you can claim your money back
-
Interest calculated daily and paid monthly
-
Cannot receive or send interac® e-transfers
This savings account is entirely online but you can choose to receive a physical card for your unlimited debit purchases and withdrawals through access to the EXCHANGE Network ATMs. You will not be able to send or receive interac® e-transfers so sending money back and forth from your chequing account may take a few business days. They have both a website and useful mobile app that can help you find the nearest ATM.
Alterna Bank High Interest eSavings Account
-
No monthly fees
-
2.00% interest *NEW (decreased from 2.20% in March 2020)
-
No minimum balance
-
Unlimited transactions
-
Unlimited interac® e-transfers
-
Interest calculated daily and paid monthly
This savings account is entirely online and does not come with a physical card. However, you may request to be sent a bank card after signing up. Unfortunately, this service is not available to residents of Quebec. They have both a website and a mobile app for depositing cheques, paying bills, making transfers etc. and will also show you where the nearest ATM is located.
-
No monthly fees
-
2.00% interest *NEW (increased from 2.30% to 2.45% effective January 23, 2020 then decreased to 2.20% effective March 10, 2020)
-
No minimum balance
-
Unlimited transactions
-
Unlimited interac® e-transfers
-
Interest calculated daily and paid monthly
-
Maximum balance of $200,000
This savings account is entirely online and does not come with a physical card. You can create up to four accounts on top of your main account to compartmentalize your savings. It has a website and mobile app where you can link up your external chequing account to send unlimited transfers or e-transfers back and forth or pay bills directly. They have partnered with TransferWise to lower costs of transferring money internationally (up to eight times cheaper than the big banks!).
Motive Financial Savvy Savings Account
-
No monthly fees
-
2.20% interest up to $1,000,000 then 0.25% thereafter *NEW (decreased from 2.80% effective March 10, 2020)
-
No minimum balance
-
Only 2 free withdrawals then each withdrawal thereafter is $5.00
-
Interac® e-transfers $1.00 each
-
Interest calculated daily and paid monthly
This savings account is entirely online and does not come with a physical bank card. You can request to be sent a debit card but remember you only have two free monthly withdrawals with access to the EXCHANGE Network ATMs. They have a website and mobile app where you can set up bill payments directly from the account, though these will also be counted towards your two free withdrawals for the month.
Laurentian Bank of Canada Digital High Interest Savings Account
-
No monthly fees
-
2.25% interest up to $500,000 then 1.25% thereafter *NEW (decreased from 3.30% effective March 1, 2020 then decreased again from 2.80% effective March 14, 2020)
-
No minimum balance
-
Unlimited transactions
-
Interest calculated daily and paid monthly
-
Cannot receive or send interac® e-transfers
-
Cannot pay bills directly from the account
This savings account is entirely online and does not come with a physical card. You will need to physically transfer the money into another account to be able to use the money, which will usually take about 3 business days. They have a mobile app for depositing cheques, making transfers etc. Be careful when closing this account, fees may apply. For one of the highest rates in Canada, you can’t have it all!
What Bank Did I Choose?
I have personally been using EQ Bank since May of 2019 and have had a really great experience so far.
I really like that I can send myself an e-transfer with the money from my savings account into my chequing account in a matter of minutes. I can also just pay bills directly from my account.
EQ Bank has a really great website and app where you can have up to 4 different accounts under your one main account. I love being able to compartmentalize my savings into different accounts so I know exactly how much I have for what purposes rather than just one lump sum for everything.
As of right now, the $200,000 limit is a lifetime away. Hopefully this will be a future me problem!
EQ Bank sends me an email every month telling me how much money I made off of interest the previous month and the total for the year up to that point. This personalized element really helps me to stay motivated to continue to save.
I earned $110.47 in interest in 2019! I would have made less than half of that amount if I was still using the Scotiabank savings account.
Just for reference, Scotiabank’s competing interest rate is 2.00% and that’s only if you don’t touch the money for a full year… Making the switch was a no-brainer!
Remember, if you’re not already saving money, try to save just $1 this week. Next week, save $2 and so on. In a years time you might be able to save over $50 a week no problem. Start small and work your way up.
I recently joined Laurentian Bank as well just to try it out. So far, their website has been a bit tricky to maneuver.
I had to do some digging to find the sign up page and I had to do the application at least ten times before it actually worked. And then I couldn’t actually login online so I had to call their customer service to fix that… And after all of that, they decreased their interest rate from 3.30% to 2.80%. So if you can handle all of that, you really can’t beat that 2.80% interest rate!
All In All
What works for me may not work for you.
Please don’t just let your money sit in a chequing account or a crappy low interest savings account barely making any interest. You might as well just have a sack of cash hiding under your mattress. There are better options out there!
Before you sign up for any new bank, make sure to look at the fee schedule to make sure there are no other hidden fees that might bite you and do your own research too. For example, some banks charge a fee for closing your account within 90 days of opening so just be on the look out for things like that.
A high interest savings account is a crucial part of anyone’s personal finances so please consider checking your current rate and comparing it to the list provided here.
If you’re making under 2.00% interest in your current savings account, consider opening up an account with one of the banks on this list and watch your savings grow!
“You must gain control over your money or the lack of it will forever control you.”
Disclaimer: I am not a certified financial planner or investment advisor. The ideas posted on this website are my own opinions on how I manage my personal finances. The content is specifically for educational and informational purposes and is not considered professional financial advice. Everyone’s finances work differently and you will have to do your own due diligence before making any financial decisions.
Pin it for later!
Leave a Reply