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Looking to learn how to save for a vacation? Everyone needs a break from time to time. But since even short vacations can get expensive, it’s essential to have a vacation fund savings plan in place. Here are some of the best vacation savings accounts to help you take your next trip sooner.
To determine the best vacation savings accounts in Canada, we consider a few critical factors such as interest rate earned, access to funds and ease of use. To determine our list by examining information found in the marketplace and through assessments of details provided by partner providers. This means the the best vacation savings accounts listed in this guide are not representative of the entire market. No single vacation savings account is the best choice for everyone, so compare all your options before selecting and opening a savings account.
If you need a little help staying motivated to save, then Scotiabank MomentumPLUS Savings Account might be just what you need. Earn a regular interest rate of 1.4% right away, and enjoy a bonus of up to 1.1% if you consistently contribute to your account over a certain amount of time without withdrawing from it. You can also opt in now for a promotional interest rate of 5.4% until 3 months
$0 monthly fee
$0 minimum balance requirement
In-person service available at Scotiabank branches (note that there may be fees for certain types of teller-assisted services)
It takes some time to earn a higher interest rate
You may be a charged a fee for Interac e-Transfers.
EQ Bank offers an easy, streamlined, no-hidden-fees alternative to big banks. With the EQ Bank Savings Plus Account, you can enjoy a very competitive interest rate and low costs. EQ Bank is entirely online, so you can manage your money conveniently from home. While you can't perform cash transactions, you can easily send money to and from linked accounts at outside institutions for free. This high interest savings account is great if you're just starting to save or are trying to build up an existing, modest-sized fund.
Great interest rate
$0 monthly fee
Hidden fees: $0
Can move money easily between accounts
Interac e-Transfers are $0
Some standard banking features not available such as overdraft protection, use of ATMs and the option to have paper statements
Tangerine is one of Canada's most established, fully online banks and is known for its straightforward, fee-free banking solutions. The Tangerine Savings Account comes with a promotional interest rate offer of 6% for the first 5 months, after which the rate goes down to 1%. You can manage your money conveniently through Tangerine's easy-to-use online personal banking portal.
Great introductory interest rate
$0 monthly fee
All everyday transactions are $0
Supports an Automatic Savings Program for making recurring deposits into your account
24/7 customer service phone line.
Regular interest rate may not be as competitive as other savings account rates on this list
No physical branches for in-person service.
Min. Age
16
Account Fee
$0
Transaction Fee
$0
Interac e-Transfer Fee
N/A
How to compare vacation fund savings accounts
While searching for the best savings account for your vacation, consider a few factors that can help you compare your options:
A higher APY or annual percentage yield (also commonly referred to as the interest rate) can help you reach your savings goals sooner. Aim for the highest you can find.
Monthly fees and other charges can eat into your balance, so try to find accounts with low or easily avoidable fees.
Look for signup bonuses and rewards programs as they can give you a head start on saving.
Find a savings account that fits your lifestyle, comparing features like automatic savings plans, mobile banking and budgeting tools.
Make sure you can meet any conditions or eligibility requirements to earn the advertised bonus or APY.
Depending on your needs, pick an account that gives you access when you need it, or limits your access so you’re not tempted to dip into your savings too often.
Compare more savings accounts for a vacation fund
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While not all Canadians are in a position to save — with almost 3 out of 4 Canadians (73%) reporting that they spend more than they save each month — those that can save want to find a safe place to park and grow their money. For almost 1 in 4 Canadians (23.12%), the preference is either in a savings account or a high-interest savings account (HISA), according to survey data from the Finder: Consumer Sentiment Tracker Q2.
How to save for a vacation
To save for your vacation, consider things like how long you’ll be saving, the length of your trip and whether you’ll need access to your money. Once you’ve homed in on the details of your trip, here are some of the best ways to save:
Compare savings products to hold and grow your vacation fund
If you plan ahead and have a long time to save, you might want to open a GIC. You’ll get a higher interest rate in exchange for locking up your money for a period of time.
Consider investing apps
Round up and investing apps like Mint and Moka can help you reach your goals sooner by investing your spare change or working with your partner.
Set up recurring deposits
Consistency is key, so consider setting up automatic deposits into your savings account.
Budgeting
Break down your monthly income to find out how much you can put toward your vacation each month.
Organize your savings
Set up a separate savings account for your vacation fund. Or set up multiple accounts for different aspects of your trip.
Little contributions add up
Even spare change from everyday purchases or small decisions like packing a lunch can snowball, helping you fund your trip sooner.
Track your progress
Visit a branch, log in online or use mobile banking to track your progress and motivate yourself to keep going.
Look for incentives
Look for an account that offers a rewards program, travel points or a signup bonus.
What about vacation savings clubs?
Savings clubs work just like savings accounts, but they’re structured to help you save toward individual goals. Instead of a general savings account that you pay into occasionally, you’ll make routine contributions into an account with a specific purpose, like a vacation. There are usually set dates when you can open and withdraw from the account and you’ll be penalized if you withdraw early. Plus, some vacation savings clubs offer higher interest rates as an incentive for you to save.
Bottom line
Vacations are always something to get excited and plan for but they’re not worth going into debt. Plan ahead to figure out how much your trip is going to cost and how you’re going to pay for it. Then, compare savings accounts to find an option that works for your financial strategy.
Best vacation fund savings accounts FAQs
Plan ahead to find the best dates and destinations for your trip, then book in advance if possible. Watch for deals and seat sales.
Yes. You can usually open more than one savings account at the same institution, but may be able to set up multiple savings goals in the same account instead. Either method can help you organize your savings to reach your vacation fund savings goals sooner.
While travel insurance isn’t mandatory, it can be a lifesaver if you need medical attention in a foreign country. Make sure you compare multiple travel insurance plans to find one that suits your needs.
Simply put, compound interest helps you save faster. Unlike simple interest, compound interest is calculated on your growing balance, allowing you to earn money on interest added to your account.
Peter Carleton is a writer that covers banking and investing, breaking down what you need to know about where you put your money. When Peter's not thinking about cutting-edge banking apps and robo-advisors, he runs a creative agency and spends his spare time cooking or reading.
Compare examples of interest rates charged by some of Canada’s top banks and credit unions for popular products like credit cards, personal loans, savings accounts and GICs.
Just like any other source of income, interest earned on a savings account is taxable. Find out how interest is taxed and how to save on taxes using tax-savings and tax-deferred savings accounts.
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