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High Interest Savings Accounts 2018

Way back in 2007 when this blog was in its first year of existence, I wrote about high-interest savings accounts.  In the early days, I had a large portion of my savings sitting in cash and the interest rates were decent.

After the financial crisis in 2008, interest rates dropped to stimulate the economy, which meant that interest rates for savings accounts followed the downward spiral.  It’s only now that interest rates seem to have bottomed out and rates are reaching the 2% range.

There are definitely better gains out there by building a long-term portfolio, but what if you have cash that you may need in the near future (within 5 years) and you want your savings to at least meet inflation.  Cue high-interest savings accounts!

The only downside is that the interest gained from these accounts are taxable at your marginal tax rate.  For example, if your marginal tax rate is 35%, you’ll pay $35 in tax for every $100 of interest that you gain.

I know what your thinking, why not open a TFSA high-interest savings account so that the interest can grow tax-free.  A sound idea, but I prefer the strategy of using the TFSA as part of your overall long-term portfolio instead.

Having said that, making a few dollars from your savings is better than nothing at all.  Also, financial institutions that offer savings account often offer “promo” periods with a higher interest rate for a set period of time.  There is some financial benefit of “churning” savings accounts – similar to churning credit cards with high sign up bonuses.

Here are some of the more popular choices for high-interest savings accounts in Canada (sorted by interest rate).

  1. EQ Bank (EQ Bank is a trade name of Equitable Bank which is CDIC insured – full product features here)- 2.30%*
  2. Outlook Financial (DGCM insured)- 2.15%
  3. Alterna Bank (CDIC insured)- 2.05%
  4. Zagg Bank (CDIC insured) – 1.65%
  5. Oaken Financial (CDIC insured) – 1.50%
  6. BMO Savings Builder -(CDIC insured) 1.45% (requires $200/month deposit)
  7. Tangerine (CDIC insured)- 1.25% (3.00% for the first 6 months)
  8. Simplii (CDIC insured) – 1.25% (formerly PC Financial)
  9. Other Big Banks ~ 0.90%

As you can see, the top 3 listings above are all over the 2% mark, which is very competitive in today’s low-interest-rate environment.  If you are willing to move your money around, you could take Tangerine up on their bonus offer for 6 months,  then move your money to a higher interest paying institution like EQ Bank.

Let me know what your favourite high-interest savings account and/or if I’m missing any major contenders in the market.

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FT About the author: FT is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.

{ 30 comments… add one }
  • Leo Ly @ isaved5K.com May 14, 2018, 10:07 am

    I use the Tangerine high interest savings accounts. From time to time, they have extra bonus interest on top of the regular interest that they pay you. If you give them a call and ask for the promotion, you’ll her more interest. Try it. I got 1.6% when the offer rate was just 0.8%

    • FT FT May 15, 2018, 8:52 am

      Thanks for the tip Leo!

  • Paul N May 14, 2018, 2:09 pm

    I have to ask… Is it even worth to write an article about a return of 2% or less? Real inflation is higher than this. If you have this in a non registered account, then your even taxed on this pathetic return. To me it will never be worth the effort to find the greatest yield in this form, unless we go back to years gone by.. But I don’t see it if we don’t want to create a mortgage and housing crisis for people already stretched to their limits even at our low interest borrowing rates of today.

    • Chrissy May 14, 2018, 10:01 pm

      True, 2% doesn’t move the needle, but it’s something! I personally appreciate that Frugal Trader did the research and wrote this article. Helps me to reconfirm my choice to go with EQ Bank.

      • FT FT May 15, 2018, 8:54 am

        Thanks for the support Chrissy!

    • FT FT May 15, 2018, 8:51 am

      Thanks for the feedback Paul. While 2% isn’t much, it’s better than the close to 0% that chequing accounts are offering. But I’m with you in that there are much more efficient ways to use the cash (pay off debt, invest etc).

  • Denise Johnson May 14, 2018, 3:58 pm

    Achieva Financial is also good.

  • dividendgeek May 14, 2018, 9:21 pm

    2% is really good. With a 1-Year CD I get 2.10%. Money market gives me 1.60%

  • Chrissy May 14, 2018, 9:59 pm

    I’ve been with EQ for about a year and have been happy with them. Cannot beat their rate, and I’ve received excellent customer service.

    I don’t love their app, and can never seem to get the mobile cheque deposit to work lately… both otherwise very happy and would recommend them to others!

    • FT FT May 15, 2018, 8:49 am

      Thanks for the feedback Chrissy!

  • Chris May 14, 2018, 10:05 pm

    Wealthsimple pays 1.7%, which makes it competitive with the rates above, particularly for anyone who already uses Wealthsimple for passive investing.

  • Danny May 15, 2018, 2:36 pm

    Wealth Simple has a pretty good savings account option as well. It’s 1.7% which is respectable, but it’s main features are that the balance of your account counts toward the wealthsimple black promotion, which could help lower fees by 0.1% on your investment account, as well as help qualify for the airport passes, and they automatically using a different deposit institution for each grouping of $100,000 to ensure that ever dollar you have in savings account has CDIC coverage.

    So for existing wealth simple users, this could be a pretty good, easy and low maintenance choice.

  • Bert May 16, 2018, 10:55 am

    You missed Canadian Tire Bank. (currently 1.5%) Any reason?

    • FT FT May 16, 2018, 1:22 pm

      Hi Bert, thanks for the suggestion. Oversight on my part! How has your experience been with them?

      • Bert May 16, 2018, 11:08 pm

        My spouse and I each have high interest savings acct. Service is good, quick and reliable. Also nice to have CDIC protection. Bert

  • bfjcs May 16, 2018, 1:02 pm

    I don’t see Hubert Financial in your list, any concern about them??

    • FT FT May 16, 2018, 1:23 pm

      I haven’t heard of them, but I will look them up!

      • bfjcs May 17, 2018, 12:03 pm

        Just another one of the Manitoba Credit Unions. Currently 2.10%. Used to have my HISA with Outlook Financial but Hubert Financial now has higher rates. Outlook has great customer service, very professional and courteous. Hubert as well, may be just a little more laid back. :)

  • GYM May 19, 2018, 3:02 am

    I have some of my cash in Tangerine and have been happy with them. I have been tempted to try EQ bank but have never pulled the trigger, just because I don’t’ want to open yet another bank account- but will definitely look at it again.
    Thanks for sharing FT!

  • elizabeth reeves May 19, 2018, 10:44 pm

    We sold our house in November and are now waiting on the sidelines (renting) to see where this housing market is going. We were transferred from Atlantic Canada to Toronto and we sold low and the housing market in GTA area despite the drop in price is still crazy especially when you are used to the Atlantic Province’s market. So that led to the question “What do we do with our cash from the sale short term?” I bank at RBC and they wouldn’t give me more than the going rate despite my long term relationship. So I went to TD when they had the special (2.45%) up until March. Then in April I went with Scotia Momentum savings as they were offering a tiered rate up to 2.65%. I hate the moving around but when you are dealing with a large sum of money the hassle is worth it.

  • Greg May 22, 2018, 2:17 pm

    There is a whole web site devoted to this with comparison charts and discussion forums:

    https://www.highinterestsavings.ca/chart/

    • moneyhelp June 28, 2018, 7:28 pm

      Thank you! I was about to add it myself, so I’m glad someone else is aware of the website.

      Personally, I use Tangerine and play the Tangerine game to get the higher rates (ie. 2.5% or >) which you can learn about at that website.

      I also have accounts with Achieva and Hubert, both are MB credit unions, but their respective regular rates always beat the main banks and is not time limited. If Tangerine doesn’t offer a better rate (Tangerine game) then with one click I’ll send my $ over to either of the credit unions, pending who’s rates are better.

  • Sandra B. July 17, 2018, 10:08 am

    What about Manulife?

  • Elena Fordham July 27, 2018, 11:23 am

    I’m really happy with EQ so far. Received great customer service and can’t beat the rates. Saving something is better than saving nothing. Keep these posts coming. Really helpful!

  • maxb September 25, 2018, 12:42 am

    Interest rates have moved up since the last post….
    Tangerine is paying 2.5% to lots of people till November.
    Just got 3.25 on a 1 year term deposit at Meridian…

  • RetireSoonMaybe September 30, 2018, 1:28 am

    Meridian has an offer for the new money … 3.75% for 6 months.

    • maxb September 30, 2018, 11:22 pm

      Not sure on that 3.75… Web site shows 3.15.. Please confirm if you had to talk to someone to get that rate…..

  • james robert wood October 4, 2018, 5:34 pm

    Try Hubert Financial.

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