Compare savings accounts to find one that fits your unique savings style.
Put your money to work – a savings account with a high interest rate and low fees will help you earn more over time.
What's in this guide?
How do I open a savings account?
- Find a savings account that meets your needs.
- Submit your application. You’ll need to provide identification documents with proof of your residential address, such as your passport and/or drivers license.
- Transfer the minimum initial deposit into your new account if applicable.
- Set up automatic transfer of the minimum monthly deposit required to achieve the high bonus interest rate if applicable.
- Start earning interest and putting your savings to work!
Why do banks offer high interest and bonus rates?
- They are rewarding you with bonus interest for letting them borrow your money to loan to others while it sits in the bank. You may be limited in how often you can transfer funds from one savings account to another to take advantage of the highest interest rate available.
- The introductory bonus rate offered by some providers is an incentive to open an account with them instead of another bank. This is for new customers only, which means you can’t apply for the same account again and again and expect to get the maximum rate.
Let’s get started building your wealth
Do you want to be able to afford a house, a new car or your children’s education not just ‘someday’ but in the next few years?
If you want to reach your savings goals, you need to start putting money away in a savings account. There are a lot of factors to consider when choosing the right savings account. You’ll be empowered with the information you need to make a decision that will help provide a successful financial future for you and your family. Read on to learn more.
What is a savings account?
A savings account is a secure bank account that earns you interest over time. These have higher interest rates than chequings accounts, enabling you to save for big ticket items like a car or the deposit on a house, or save money for a rainy day.
You may need to deposit a set amount of money into the account each month to earn the high interest rate.
Benefits
- Savings accounts are a safe investment. The CDIC protect deposits up to $100,000 per insured category, depending on the financial institution.
- They’re a great tool to help you save and budget.
- Savings accounts are liquid. It’s harder to withdraw your money from a GIC or mutual funds account.
- You earn a higher interest rate than your everyday transaction (chequings) account.
- You can use them to save up for a deposit on a house.
Drawbacks
- You are usually required to deposit a set amount each month and make zero or minimal withdrawals in order to receive the high bonus interest rate.
- Savings accounts sometimes do not come with a debit card, so you may be unable to access your cash as easily as you can with a chequings account.
Interest rates on your savings account
To encourage account holders to save (and in exchange for using your money to give out loans), banks will allow you to collect interest. Here are some important things to consider:
- The interest rate on your savings account is usually variable, meaning it can change according to the market. If the interest rates on all savings accounts are low, it usually means the market rate is low.
- In some cases, the interest on your account is calculated daily and paid monthly. This means you’ll get compound interest so you earn interest on your interest. You have to read the fine print to see if your account pays interest monthly to be sure you will get compound interest. Interest that is paid annually isn’t compounded as often and thus won’t be as lucrative for you.
- It is important to pay attention to the requirements set in order to achieve the high bonus interest rate – this usually requires you to deposit a certain amount of money in the account each month and limits the number of withdrawals you can make.
- Some savings accounts offer a high introductory variable interest rate which is higher than the standard variable rate for a set period (usually a few months). This is a reward for selecting their savings account. However, it’s important to be aware of how long the introductory bonus rate will apply for and what the rate will convert to after this period.
- From the Canada Revenue Agency’s perspective, the interest you earn on your savings account is taxable (unless you have a tax free savings account).
How do I withdraw money from the account?
Savings accounts sometimes don’t come with a debit card like chequings accounts, however this will depend on the financial institution and the account you choose. If your account doesn’t come with a debit card, you will need to transfer your money from your savings account to your everyday account in order to access your funds.
Depending on the savings account you choose, there may be stipulations as to how often you can withdraw from the account. Savings accounts offering higher interest rates may not allow you to touch your money for extended periods of time, or may penalize you for doing so.
If you know you want to lock away your funds for a longer period, you may want to consider an investment like a GIC instead of a savings account.
How to compare savings accounts
There are certain features to keep in mind when comparing savings accounts, including fees, interest rates and your personal savings goals. Identifying your needs can help you choose the right savings account.
How do I get the bonus interest rate on my savings account?
- For an introductory bonus offer, the bonus interest rate is typically awarded for a few months only and you need to be a new customer.
- For a bonus savings account, the bonus interest is usually awarded when you’re able to deposit a certain amount per month and make no withdrawals. It usually doesn’t matter if you’re a new customer or not, but there may be restrictions around deposit amounts.
You will also need to be within the balance your bonus rate applies to. If you have over a certain amount of savings, you may incur the standard rate.
How do I find a savings account for my situation?
| Are you… | Description | Typical features |
|---|---|---|
| Youth and student | Whether you’re studying, doing an internship or under 18, there are still a range of accounts available for you. Every dollar counts at this stage, so check if you’re eligible for a low-cost student account. |
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| Saving for a goal | Setting a goal and developing a savings plan is easier than you think. There are a few ideas that can help, including taking advantage of investment products like GIC’s. Also, take note of the interest rate and understand the features you can use. |
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| Retired and seniors | Whether you love the convenience of Internet and phone banking, or prefer face-to-face banking in a branch – financial institutions offer a range of options. |
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| Accounts for children | Most parents want to help their kids manage their money responsibly and learning to save is an important skill for the future. Help your child’s savings grow by choosing the right account. |
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| Moving to Canada | Whether you’ve moved to Canada for work or study, Canadian banks have a wide range of options for you. You’ll need an everyday bank account for your day to day banking and most likely a savings account to store any surplus cash. |
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| Looking for an online account with no fees | Fee-free banking means every dollar you deposit gets you closer to your savings goal. Plus, online accounts typically offer higher interest rates. |
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How to apply for a savings account online
While it can vary between providers, you will usually need to do the following to apply for a savings account online:
- Fill out an online application, where you will need to verify your identity if you’re a new customer.
- Deposit funds into the account to get your savings plan started.
You’ll likely need the following documents to apply online:
- Your personal details. This includes your full name, address, phone number and email address.
- Identification. A driver’s licence, passport or birth certificate. If you’ve recently arrived in Canada, you will likely need to supply a copy of your temporary residence card or your permanent resident card.
