With my travel budget now having lots of room because I’m not currently booking any travel, I’ve been reviewing at places to store money. For funds you want to keep liquid, a high interest savings account is the place to start. Major banks have low regular interest rates on savings accounts (often 0.2% or less) while having monthly fees. Instead, digital banking is probably your best bet. There are three main companies that offer the best deals. My own money are in these accounts, so I’m figuratively putting my money where my mouth is. These are the Tangerine Savings Account, the EQ Savings Plus Account, and the B2B Bank HISA, which currently offers up to a 2.8% interest savings rate.
An 2.8% interest rate is a huge increase on the typical return most consumers get on savings account. Storing $100,000 in an account yields $2800 in (taxable) interest. Instead, a 0.3% account only returns $300, a $2500 difference. With the typical international premium class award ticket requiring $100-250 in taxes and fees, that’s a lot of flights! The recent overnight rate target cuts by the Bank of Canada are unfortunate. These actions have decreased rates across the board. That being said, there are still opportunities to obtain outsized returns depending on the accounts you keep.
GIC’s are often mentioned as a way to store your money. I do not use these products. In nearly all cases, I get higher returns jumping between different bank account products. Further, my money stays completely liquid at all circumstances. For example, some GIC’s are offering ~2% with a one year term. That’s a long time for your funds to be locked in. Opening a new bank account can be very little work. Usually there is no hard inquiry. A hard inquiry affects your credit report negatively. Opening a new credit card will nearly always incur a hard pull. For more information, there are site articles about how your credit score is calculated, and what credit bureaus are pulled for a new credit card application.
Additional Reading: Free Credit Score Options for Canadians
Please be aware I’m not a financial advisor. The following are solely my personal opinions. Consult the appropriate people for any professional advice.
Tangerine High Interest Savings Accounts
- Promotional Interest Rate: Up to 2.80%
The Tangerine Savings Account currently provides the highest promotional rate offered by all financial institutions in Canada (barring private offers). I prefer right now. For new clients, they are offering 2.8% interest for five months when you open for new accounts and customers. Tangerine is owned by Scotiabank, and they are the only brand in this article that also offer USD savings account and a few physical locations.
Tangerine accounts are easy to open with a robust online interface. There are no hard inquiries when you a checking or savings product and decline overdraft. Checking accounts are a topic for another post, but Tangerine offers an additional $50 cash bonus for new clients that open a checking account using the promo code / Orange Key 44369391S1. To earn this bonus, the customer must deposit $250 in funds with the first sixty days of opening the account, as well as meet other requirements.
While Tangerine are not offering these promotions for existing customers, they are still one of the best high interest savings accounts because they offer fantastic targeted promotions where you can get similar rates. Currently, there a targeted offer for a 2.8% return which also apply to Tax Free Savings Accounts (!) and USD accounts. Depending on your marginal income tax rates, that could translate into big savings.
These promotion offer the rate for several months. The people who are targeted don’t have funds in their savings accounts, partly because they are offered on any marginal deposits during the promotion period. Tangerine takes a ‘snapshot’ of the current amount of funds in your savings account on a current date. An account balance falling below that amount no longer earns the bonus interest rate. I’ve found that I get targeted promotions fairly often if I empty my accounts and keep my savings at other institutions after the promotional period is over.
Application Link: Tangerine Savings Account
EQ Bank High Interest Savings Accounts
- Interest Rate: 2.00%
EQ Bank is another great institution that offers excellent rates on savings accounts. They are owned by Equitable Bank, which primarily handles commercial and residential real estate financing. The current rate for the EQ Bank Savings Account is 2.00% annually. This rate is paid monthly and calculated daily. This account has a deposit limit of $200,000. EQ Bank is the digital arm (direct-to-consumer) branch of the company. The brand launched in 2016. Offering a 3.00% interest rate right off the bat, there was great fanfare during that time. Rates have gone down a few times over the years but the current rate is still magnitudes larger than the BOC overnight targets.
Another unique benefit of this account is the ability to send funds abroad with one of the lowest rates in the market. EQ Bank partners with Transferwise, which is an online money transfer service. Here is a review of their standalone product, which offers your first transfer for potentially no fees at all. The reason for Transferwise’s savings is that they match transfers between parties to avoid buy/sell fees typically incurred by a currency conversion. The EQ Bank savings account is one of the best options if you need to send international remittances.
One of the most convenient features their ability to link multiple online accounts. By doing this, you can easily transfer your funds to/from any other bank account you own. EQ Bank is the only product where you can link five or more bank accounts to push and pull funds from, which is convenient for many purposes. There is no minimum balance required for this account. Interac e-Transfers are free, and there are no banking fees for most transactions made through the account.
Application Link: EQ Bank Savings Plus Account
B2B Bank High Interest Savings Accounts
- Interest Rate: 2.25%
B2B Bank is owned by Laurentian Bank, a medium sized institution with approximately 45 billion in assets. They are the digital arm of Laurentian Bank, and launched last year, This product was one of the best kept secrets out there as they began with a whopping 3.2% interest rate. Currently, the B2B High Interest Savings Account offers a 2.25% annual interest rate. This is valid on balances up to $500,000.
Recently, product eligibility was recently limited to consumers with a referral code from an advisor. However, consumers can alternatively open an account through LBC Digital Banking. LBC Digical offers the same features as B2B Bank but is targeted for personal use. I mean, even the name B2B I presume stood for business to business. As the name indicate, LBC Digital is another brand operated by Laurentian Bank.
I do not have an LBC account. I opened a B2B account when public signups were still available. My opinion of these accounts is that they are a satisfactory solution for a good interest rate on a savings account. The application process was complex and was a hassle if the identity verification by Equifax failed. The overall digital experience contained several bugs; these included online bank account links failing and few options to customize the accounts.
An important note is that this account does not offer links to financial and budget tracker services like Mint (by Intuit). Nonetheless, this product is a secondary backup to my Tangerine and EQ Bank accounts. The 3.2% initial rate was very enjoyable.
Application Link: LBC Digital Bank High Interst Savings Account
Savings Account Benefits
The best part about all of these accounts are that they are fee-light. There are no minimum amounts to open the accounts. The process is all online – these accounts are solely accessed through digital channels. There are no monthly minimum balances, no required amount activity to waive fees, and no fees for transferring funds between accounts.
There are no fees for Interac e-Transfers (to a certain monthly limit on some accounts). The biggest benefit for me is the ability to move money to and from traditional and other bank accounts. These accounts enable you to push/pull funds between your own accounts with ease. You can’t do that with traditional brick-and-mortar accounts from Scotiabank, BMO, and such. Even with credit unions, one of the ‘easiest’ ways to move funds between different accounts are with a check. On large amounts, holds are a hassle.
All products here receive the same CDIC deposit protections as any other Schedule I and II banks. The Canadian Deposit Insurance Corporation guarantees protection for bank balances of up to $100,000 per account. If you open multiple accounts, all your money is protected the same way.
If you do not currently think much about your saving accounts, I highly recommend checking out one of these banking options. Money at the Big 5 banks are not earning anything for the average person. Check out these options and decide for yourself what’s best.