Find the best* savings account rates by APY in January 2020

Are you earning a competitive interest rate?

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The interest rate on your savings account is crucial to calculating how much your balance will grow. It’s important that you earn the maximum rate of interest to build on your savings as quickly as possible, but sometimes the rate quoted doesn’t match the interest returns you receive.

*Disclaimer: How we chose the best savings account by APY

Some accounts may offer more convenient or advantageous features than others. We’ve highlighted the accounts below based on factors like commercial partnerships, interest rates, fees, application requirements, account features and other variables that might affect your ability to save.

No single account will be right for everyone, so we encourage you to compare your options to find the one that’s best for your situation.

EQ Bank Savings Plus Account

  • Account fee: $0
  • Min. deposit amount to open account: $0
  • Max. balance amount: $200,000
  • Account type: Savings
  • No monthly fees
  • Unlimited transactions
  • No minimum account balance

EQ Bank Savings Plus Account

Enjoy free and unlimited daily transactions, no fees and no minimum balance with an EQ Bank Savings Plus Account.

  • Account fee: $0
  • Min. deposit amount to open account: $0
  • Max. balance amount: $200,000
  • Account type: Savings
Promoted

Compare the savings account interest rates below

Name Product Annual Interest Rate Promotional Interest Rate Minimum Balance Fees
Tangerine TFSA
1.05%
2.75%
$0
None
Earn 2.75% interest in your first Savings Account for 5 months (up to a maximum of $1,000,000) as a new Tangerine client. Offer expires April 30, 2020.
Tangerine RSP
1.05%
2.75%
$0
None
As a new Tangerine client, earn 2.75% interest in your first Savings Account (including RSP) for 5 months up to a maximum of $100,000. Offer expires April 30, 2020.
Tangerine Savings Account
1.05%
2.75%
$0
None
Earn 2.75% interest for 5 months when you open your first Tangerine Savings Account by April 3, 2020. (up to a maximum of $1,000,000).
EQ Bank Savings Plus Account
2.30%
N/A
$0
None
Enjoy free and unlimited daily transactions, no fees and no minimum balance with an EQ Bank Savings Plus Account.

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How do interest rates work for savings accounts?

If you open a high-interest savings account, the money you deposit will earn interest at a particular rate. However, in some cases you may find that the interest earned on your account doesn’t match the maximum rate quoted. There are a few reasons why this can occur:

Check out some of the current high interest rates of some leading savings accounts from Canadian banks here.

Introductory interest rates

There’s the introductory rate that a bank uses to get you in the door, and then there’s the long-term rate applied to your account. Some banks — particularly smaller ones — will temporarily raise their interest rates above the usual level. Then, in a few months, they drop back down.

When opening an account, look at the historical interest rates the bank has offered — major swings can be a red flag.

Karen opens a savings account with a small bank that offers an introductory rate of 3%, but after six months the rate drops down to 1.5%. Bethany looks into the historical rates of her bank before opening an account to make sure her interest rate won’t vary too wildly, and her rate of 3% stays the same over the course of the year.

BethanyKaren
Initial balance$10,000$10,000
Monthly deposit$1,000$1,000
Interest rate3%3% for the first six 6 months, 1.5% for the second 6 months
Total balance$21,470.54$20,321.62

As the table shows, even though Karen and Bethany deposited the same amount of money, Karen earned $1,148.92 less in one year because her interest rate changed.

The type of interest rate you have

Another important factor that affects the interest you can earn on your savings balance is whether your account pays simple interest or compound interest. Simple interest is only paid on the money you deposit into your account, but compound interest allows you to earn interest on the initial deposit and the interest payments you received up until that point — in other words, you can earn interest on your interest.

How often interest is compounded

The interest on your account could be compounded daily, monthly, quarterly, biannually or annually, and the frequency with which it occurs can make a difference to your balance. The more interest is compounded, the more chances you have to earn interest on your interest.

Adam is in his early 20s and wants to start saving for a house. He has an initial investment of $5,000.00 and plans to deposit $500.00 each month for the next five years. Assuming an interest rate of 2.00%, let’s look at how Adam’s balance differs based on whether interest is compounded daily, monthly or annually.

Account AAccount BAccount C
Interest compoundedDailyMonthlyAnnually
Initial deposit$5,000.00$5,000.00$5,000.00
Ongoing monthly deposit$500.00$500.00$500.00
Investment term5 years5 years5 years
Interest rate2.00%2.00%2.00%
Total balance$37,103.35$37,101.68$37,081.87

Adam will earn $21.48 more in interest by choosing an account that compounds interest daily. The longer Adam saves, the more interest he can earn on his interest.

Check our compound interest calculator

Tiered interest rates

Some banks have different interest rates depending on how much money is in your account. For example, balances below $10,000 could have a rate of 0.5% while balances that exceed $10,000 have a 1.5% interest rate. With multiple rates potentially applying to your account, the maximum rate available will fluctuate with your bank balance.

Interest rate changes

One other risk to be aware of is that your bank may have changed the interest rate that applies without you knowing. You should check the terms and conditions of your account to see if your bank is required to notify you of changes to your interest rate.

Otherwise, you can track changes to your interest rate by monitoring your account statements. Depending on how often you receive statements and how closely you read them, it could be some time before you realize that the maximum rate on your account has changed.

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How to earn the best interest rate

Taking the above examples into account, there are a few simple steps you can take to ensure that you always earn the highest interest rate:

  • Shop around. Before choosing an account, compare savings accounts to find one that offers a high rate. Remember to investigate account fees, features and accessibility before you make your decision.
  • Check the market. The savings account sector is a competitive area of the banking industry, with new accounts and better interest rates becoming available all the time. With this in mind, it pays to review your savings account once a year to see if you could get a better deal elsewhere.
  • Check your statements. Are you worried that your bank may have adjusted the interest rate on your account without you realizing? Check your most recent statement to make sure you’re earning a competitive rate.
  • Choose compound over simple interest. Simple interest accounts only allow you to earn interest on your initial deposit, while compound interest accounts allow you to earn interest on your interest.
  • Check how often interest is compounded. The more often interest is compounded, the more your balance will grow. An account that compounds interest daily or monthly will earn more than an account that compounds annually.

Bottom line

Opening a savings account with a high interest rate can help you earn a big return on your balance. However, two accounts that advertise the same interest rate can pay very different returns by the time you need your money back.

To get the most out of your account, shop around for the terms and conditions that will save you the most.

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