Whether you’re looking for a personal loan, car loan, mortgage, savings account or investment option, understanding bank interest rates in Canada will impact what the best options are for your money.
In this guide, we’ll show you how to compare bank interest rates and high-interest savings accounts from other financial institutions to get the best bang for your buck.
The current Bank of Canada benchmark interest rate is 4.75%. That results in a current bank prime rate offered by banks across Canada of 6.95%. The next time we’ll hear about any potential rate changes from Canada’s central bank will be on July 24, 2024.
The Bank of Canada has just begun lowering rates as of June 5, 2024 with a rate decrease of 0.25% percentage points. According to econometric models, it’s predicted that Canada’s overnight interest rate will likely hover around 3.50% in 2024 and 3.00% by 2025.
The Bank of Canada increased its benchmark interest rate seven times in 2022 and three times in 2023 after holding it steady in 2021 following lower rates during the pandemic. That led us to see the highest Bank of Canada benchmark rate in over two decades. In the first part of 2024, rates were held steady, followed by the rates being lowered by 0.25% percentage points half through the year.
Banks in Canada describe interest rates differently depending on the financial product. Here’s a breakdown of the two types of interest rates you’ll come across in Canada:
Whether you’re earning or paying interest, the interest rate you’re offered will be one of these two options:
When financial institutions calculate the interest on your savings, investment or loan, they’ll use one of two methods based on the type of interest you’re offered:
Interest works differently depending on the type of product you have. A good rule of thumb is that savings accounts and GICs offer an APY, while personal loans, mortgages and credit cards charge APR.
Learn more about what interest rates look like for each product below:
The the interest rates on savings accounts earn you money rather than cost you money. If you have a high-interest savings account, the interest will be variable. That means the financial institution that provides the account can raise or lower your interest rate in line with their prime rate, so the amount of interest you earn could vary from month to month.
Savings account interest is typically calculated daily on your balance and paid into your account monthly. This is referred to as compound interest: the interest payments you earn then go on to earn their own interest.
If you invest in a guaranteed investment certificate (GIC) or term deposit, the interest rate will typically be fixed until the end of the term. This gives you the security of knowing you will get a guaranteed return on your investment. But some GICs come with variable interest rates if you want to benefit from any potential interest rate rises.
Special offers and high introductory interest rates can be a great way to boost your savings balance. Here are a few Canadian bank interest rate offers available now that have caught our attention:
Where can you find the best savings account interest rates in Canada? Here we’ve summarized details of savings accounts interest rates from the Big Banks as well as challenger banks, fintechs and credit unions.
| Bank account | Standard interest rates | Features |
|---|---|---|
| RBC High Interest eSavings Account |
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| RBC Leo’s Young Savers Account |
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| RBC GIC (1-year non-redeemable) |
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Rates last verified on July 2, 2024
| Bank account | Standard interest rates | Features |
|---|---|---|
| TD ePremium Savings Account |
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| TD Every Day Savings Account |
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| TD GIC (5-year stepper non-registered and registered GIC) |
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Rates last verified on July 2, 2024
| Bank account | Standard interest rates | Features |
|---|---|---|
| National Bank High Interest Savings Account |
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| Scotiabank MomentumPLUS Savings Account |
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| Scotiabank Money Master Savings Account |
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Rates last verified on July 2, 2024
| Bank account | Standard interest rates | Features |
|---|---|---|
| CIBC eAdvantage Savings Account |
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| BMO Savings Amplifier Account |
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| BMO Premium Rate Savings Account |
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Rates last verified on July 2, 2024
| Bank account | Standard interest rates | Features |
|---|---|---|
| EQ Bank Notice Savings Account |
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| Motusbank High Interest Savings Account TFSA |
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| Neo High Interest Savings Account |
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| Simplii High Interest Savings Account |
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| Tangerine Savings Account |
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| Wealthsimple Cash |
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Rates last verified on July 2, 2024
| Bank account | Standard interest rates | Features |
|---|---|---|
| Achieva Financial Daily Interest Savings Account |
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| Alterna Bank High Interest eSavings Account |
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| Coast Capital High-Interest Savings Account |
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| Vancity Jumpstart High Interest Savings Account |
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Rates last verified on July 2, 2024
The higher the interest rate, the harder the money in your savings account works for you. And while a small difference in interest rates might not look like much on paper, it can make a big difference to your bank balance over the course of several months or years.
Let’s say you’re saving for a deposit on a home. You have $5,000 already, and you’re going to deposit $100 of your paycheque into a HISA every week. As you can see in the table below, an interest rate of 5% instead of 4% will help you save an extra $429 over the course of 3 years.
| Savings account 1 | Savings account 2 | |
|---|---|---|
| Interest rate | 4% | 5% |
| Initial deposit | $5,000 | $5,000 |
| Weekly deposit | $100 | $100 |
| Balance after 1 year | $10,511 | $10,591 |
| Balance after 3 years | $22,218 | $22,647 |
| Difference | – | +$429 |
When you’re comparing bank interest rates on savings accounts, it’s important to be aware that different types of interest rates may apply. These include:
GIC rates in Canada for a 1-year GIC is 4.00%, for a 3-year GIC is 3.90% and for a 5-year GIC is 3.95% according to the Bank of Canada, which takes this data from the weekly posted rates from the six major chartered banks (as of June 26, 2024).
In Canada, GIC rates are offered as fixed, laddered fixed-rate, variable or market-linked. Your return and the rate you’re offered are dependent both on the type of interest rate structure and term length of the GIC you choose. While GIC rates are often higher than what you could get with a savings account from a standard bank, they won’t offer the same rate of return as you can typically get from investing in stocks and ETFs.
According to Statistics Canada via the Bank of Canada, the average interest rate for personal loans in Canada is currently 9.09%.
Personal loan interest rates can be fixed or variable annual interest rates. The bank loan interest rate you qualify for will depend on factors such as your credit score and credit history, your income and any existing debts you may have. The lender will also take into account the size of the loan and the loan term when setting your interest rate.
The current average interest rate for a mortgage in Canada is 5.95% for uninsured mortgages and 5.75% for insured mortgages.
The weekly posted conventional mortgage rates from the six major chartered banks in Canada are 7.84% for a 1-year mortgage, 6.99% for a 3-year mortgage and 6.84% for a 5-year mortgage, according to the Bank of Canada (as of June 26, 2024).
Mortgage interest rates can be fixed or variable. Fixed interest rates are guaranteed not to change, whereas variable rates may fluctuate. The interest you’re charged will generally be calculated daily.
Mortgage payments can either be principal and interest — meaning you’re repaying both the interest you’re being charged and the original amount you borrowed — or interest-only. With the latter, you’re only repaying the interest accruing on your debt for a set period, such as five years, before the loan reverts to a principal and interest mortgage.
When interest rates rise, you pay more on your monthly mortgage repayments. On the flipside, you’ll end up paying less each month if rates fall.
The key interest rate you need to monitor is the Bank of Canada’s policy rate, which is adjusted eight times per year. This is the benchmark rate lenders use when setting interest rates for their mortgages and other loans, so changes to the policy rate are usually soon reflected in home loan rates.
To give you an idea of the impact of interest rate changes in the real world, let’s look at an example. If you have a $500,000 mortgage with a 30-year term and an interest rate of 6%, your monthly payment will be $2,998. But if your interest rate increases by 0.25%, your monthly payment will rise to $3,079 — that’s an extra $81 per month.
The average auto loan interest rate in Canada is currently 7.79%.
Car loan interest rates can be either fixed or variable. The bank car loan interest rate you’re approved for will depend on whether the car is used or new, your credit score and other personal financial factors. To qualify for the lowest auto loan rates – including any 0% financing offers – you’ll have to have an excellent credit score and meet specific criteria.
Credit cards rates vary depending on what features the card offers, but the average card falls somewhere between 15% and 22% APR with most cards charging 19.99%. While it’s possible to find credit cards with variable APRs, the majority of credit cards offered by banks in Canada have a fixed interest rate.
There are two types of interest rates on a credit card: purchase rate and cash advance rate. The purchase rate is what you’re charged when you make purchases on the card, and the cash advance rate is what you’re charged when you withdraw cash at an ATM using the credit card. Credit cards can also offer special interest rates such as introductory 0% rates or balance transfer rates.
Bank interest rates determine how long it takes you to pay off debt and build up savings.
When bank interest rates increase, the interest charged on new loans and mortgages is higher and it may take longer to pay off your current debts. That means people generally spend less money and the economy slows down. A perk, however, is that you may get higher savings rates and return on certain investments.
Alternatively, when bank interest rates decrease, banks offer lower rates on loans and mortgages, which means you’ll pay off certain types of debt faster. When that happens, people typically spend more money and the economy grows. The downside of lower interest rates is that you may receive lower rates of return on your savings.
Keep the following in mind when searching for the best interest rates in Canada:
There are also several factors that can affect the rate you get when you take out a loan or credit product. These include:
While comparing interest rates across products is a good idea, make sure the products you’re comparing are similar. For example, if you compare a rewards credit card to a low-rate credit card with no added perks or features, their interest rates will be quite different.
One financial policy idea that emerged from the Global Financial Crisis, and again made waves at the height of the pandemic, is implementing negative interest rates. A negative interest rate is an interest rate of less than zero, and the idea behind negative rates is to stimulate a stagnant economy.
Negative interest rates are incentives for banks, encouraging them to lend out their reserves rather than deposit them with central banks and be charged interest. The theory is that this will in turn encourage consumers to borrow more money.
Switzerland was one of the first countries to implement NIRP in the 1970s in an attempt to deter a flood of foreign investment. Following the 2008 recession, Sweden was the first country to begin implementing a negative interest rate, while the European Central Bank (ECB) adopted such a policy in 2014.
A negative interest rate could be a way to stimulate the economy, but so far it isn’t something we’ve tried out in Canada. Economists are divided over whether or not it would be a good idea — it would encourage spending and inject cash into the market, but it would also make it more difficult for people to save.
Looking for more information about interest rates? Check out these helpful articles below:
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