EQ Bank Savings Plus Account
Interest rate of 1.5%
- Zero everyday banking fees
- Free transactions
- No minimum account balance
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A savings account lets your money earn interest and is insured up to $100,000 by the Canada Deposit Insurance Corporation (CDIC) – which means you’ll get your money back in the rare event your financial institution goes under. Savings accounts are more restrictive than chequing accounts. You typically don’t get a bank card or cheques, and you may have to pay every time you make a withdrawal. When choosing a savings account, the key factors to consider are the interest rate, account fee and how easily you can access your money.
For savings accounts, the interest rate is probably the most important factor in growing your money, and it’s usually expressed as a yearly rate called the annual percentage yield (APY). While many banks and credit unions pay an interest rate somewhere around 0.10%, there are several digital banking providers and other providers that pay around 2% or more. So on a $5,000 balance, for example:
It’s also important to keep in mind inflation. If the interest rate you earn is less than the rate of inflation, your savings are actually declining in purchasing power. Over the past decade, inflation has fluctuated from a low of 0.9% in 2013 to a high of 2.9% in 2011.1 The average inflation from 2010 to 2020 is around 1.6%.2
Your interest rate is determined by your bank, but interest rates generally fluctuate with the broader financial market and can be influenced by the rates set by the Bank of Canada. Interest rates vary by bank and the type of savings account you choose.
Savings accounts typically accrue daily or monthly compound interest. With daily compound interest, your bank calculates interest on your balance each day using a specified rate. In effect, you end up earning interest on the interest you’ve already earned. Your bank then pays out the compounded interest monthly as a credit to your account.
Interest you earn on your savings account is taxed at the same rate as any earned income – and you’ll have to report it to the CRA.
Your money doesn’t sit in a savings account untouched. When you open an account, you give your bank access to lend your money out to others.
Banks reward you for that access with interest, even if those rates are slightly lower than the rate they charge borrowers. It’s how they stay in business.
And if the bank loses money on that loan, it doesn’t affect your account balance. Furthermore, the vast majority of banks, financial institutions and credit unions are insured by the CDIC, so even if they go out of business, you’ll get up to $100,000 back.
The chief cost of a savings account is often the monthly fee – if the account has one. Many financial institutions now offer free savings accounts, while others are willing to waive the monthly fee if you maintain at least a minimum balance. Be mindful of any monthly fees because they can quickly and easily wipe out the benefits of interest earned. For example, even with 2% interest, you’d need to keep at least $3,000 in your account just to break even on a mere $5 monthly fee.
There are different types of savings accounts to meet different financial needs. Check out each variant below and compare some of the best options for that type.
Based on our reviewing and rating a variety of savings accounts, this is our list of the best overall picks.
When a great interest rate is at the top of your list, these are the accounts to pick from.
Without the cost burden of brick-and-mortar branches, online savings accounts can offer higher interest rates without the fees.
Avoid paying tax on your earned interest – up to a set amount – when you put your money into a TFSA.
Get a little help setting money aside with these innovative apps that automate saving.
Put your money in the hands of a financial institution whose owners are its customers.
Put your business on the path to meeting its financial goals with an account tailored to the business world.
Help your kids learn the habit of saving early in life with an account fit for them.
Graduate your student’s savings account to one that can handle high school and college or university.
How you’ll apply for a savings account depends on the bank or financial institutions you’re interested in. Generally, you’ll follow a standard series of steps like this:
The amount of money you accumulate in your savings account will vary depending on your goals. Here are a few popular reasons for saving money and how much you might want to keep in your savings account.
Beyond the variations of savings accounts available on the market, you have more complex options that can offer higher returns if you meet specified conditions.
Locked in for a specified amount of time, a GIC can help you earn more interest in a shorter period of time. But your money won’t be accessible until the GIC matures – unless you’re willing to pay a fee.
After you’ve narrowed down the savings account that’s right for your needs and budget, get the most out of it with our easy tips.
Savings accounts can be low fixed interest (such as the ones offered by popular banks) to high-interest accounts with no additional fees (like the ones offered by many digital banking providers). For each, the earlier you start saving, the more time your money has to grow.
Each type of savings account is designed to serve a different financial need. And with so many options at your disposal, weigh the benefits and drawbacks of each option to find the best fit for you. If you know what features you’re looking for, check out our guide to the best savings accounts.
1. Statistics Canada. Table 18-10-0005-01 Consumer Price Index, annual average, not seasonally adjusted
2. Bank of Canada. Inflation Calculator
Earn a high interest rate on your savings with no minimum deposit requirements and no monthly fees.
It’s impossible to predict the future, but you can build a rainy day fund and provide financial security for yourself and your family no matter what unexpected expenses arise.
In the spring lockdown of 2020, Canadian households are predicted to have saved an impressive 27.4% of their disposable income. With disposable income sitting at an average of $39,434, that left Canadians with savings of $5,816 in 2020.
Put money aside for your child’s education with this hassle-free RESP provider.
The CIBC US$ Personal Account is optimal for individuals who regularly manage US dollars or travel to the US often.
The CIBC Premium Growth Account is a simple savings account that can be used for a variety of purposes and by a broad range of people.
The eAdvantage Savings Account is optimal for existing CIBC clients who have access to a CIBC chequing account.
Enable this basic savings account in the RBC Mobile app to start saving money from your chequing account automatically.
Get a high return on interest and no monthly fees when you sign up for this savings account.
Earn interest when you deposit your savings in euros with this cross-border account.
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