When you’re saving up for a goal, you don’t want to end up losing any money to fees. Most banks offer free savings accounts — but you have to know how to find them. Here’s what to look for when shopping around for and how to compare free savings account.
Both online banks and brick-and-mortar financial institutions offer savings accounts with no monthly account maintenance fees:
Online banks. Online banks — and online divisions of traditional banks — slash their overhead costs and pass these savings onto you in the form of high APYs and low fees. You’ll typically find the highest rates at online institutions, but you won’t be able to withdraw cash in-person and your account may not come with an ATM card.
Brick-and-mortar banks. Free savings accounts from physical banks usually have the lowest APYs. You won’t earn much on your money, but you may be able to withdraw cash at a local branch or using an ATM card.
How to compare free savings accounts
When weighing the benefits of a free savings account, look at such factors beyond the monthly fee:
Interest rates. If you want the highest APY, consider online banks. They have lower overhead than traditional banks, so they tend to offer the highest interest rates with little to no fees.
Signup bonuses. Some banks offer introductory bonus rates, extra features, free gifts or other rewards for opening a free savings account with them. Carefully read the conditions of the perk so that you don’t miss out.
Account access. Consider whether your bank offers a mobile app or an extensive network of ATMs and branches for easy access to your money.
Miscellaneous fees. Many savings accounts are considered “free” as long as they don’t have a monthly fee. But that doesn’t mean you won’t pay fees for excessive withdrawals, ATM usage, transfers or transactions. Read the account’s fine print to see what you could be on the hook for.
Compare free savings accounts
Compare free savings accounts by sorting the table by APY and minimum deposit. View your favorites side-by-side by clicking the “Compare” box next to each one.
What other fees do I need to look out for?
Savings accounts are designed to help you save money, but you won’t be able to avoid all fees. Depending on your bank, you could face:
Transfer fees. Your bank may charge you to transfer money to an account at another bank.
Overdraft fees. If a transaction drops your balance below $0, you could be charged a fee.
Paper statement fees. Unless you sign up for digital statements, your bank may charge a small fee to mail them.
Transaction penalties. To encourage customers to save, many banks only allow a certain number of free transactions. If you exceed that limit, you face fees that can really add up.
Potential fees with linked chequing
Your bank may require you to link your free savings account to a chequing account, which could have monthly fees. When comparing savings accounts, make sure you understand the fees that may come with the chequing account you link it to:
Monthly service fees. Fees usually range from $4/month up to $30/month, but some accounts waive the fee if you deposit a specific amount of money into your account each month. Make sure you can realistically meet any conditions before signing on.
Local ATM fees. If you make frequent withdraws, you’ll want to choose an account with a large ATM network. Usually, you aren’t charged for using ATMs within your bank’s network, but if you use an ATM from another bank or an independent ATM provider, you’ll be charged a fee.
Overseas ATM fees. If you travel a lot for business or pleasure, learn how much you might pay at international ATMs. Some banks, like HSBC and Scotiabank, have large global ATM networks that can help you save.
International transaction fees. Charges could be as high as 5% of each transaction you use your card for overseas. Look for a linked chequing account that charges low or no international transaction fees.
How fees can affect your savings
James has $10,000 set aside and wants to open a high-interest savings account to grow his money, but he’s stuck between 2 different accounts. After weighing his options, here’s what he finds:
$23 monthly fee + $2 paper statement fee = $25 per month
$0 monthly fee, enrolled in e-statements
Balance after 1 year
Total interest earned
If James chooses the second option, he’ll earn over $300 more given monthly service fees and paper statement charges.
But what about minimum balance requirements and the fees that come with failing to meet them? Let’s say account #1 requires a $10,000 monthly minimum balance or else James has to pay a $15 fee. Now take a look at how fees would impact James’ savings:
Interest rate (compounded monthly)
$23 monthly fee + $2 paper statement fee + $15 balance requirement fee = $40 per month
$0 monthly fee, enrolled in e-statements, balance requirement met
Balance after 1 year
In this case, James would earn nearly $500 more by choosing account #2, which would allow him to avoid monthly fees, statement fees and a minimum balance requirement.
How is interest taxed on a free savings account?
Interest earned from a savings account balance counts as part of your taxable income, which means you’ll need to declare this along with the rest of your income on your personal tax return. You won’t pay tax on the balance in your account — only on the interest you earned in that year. For example, if your income is taxed at 25% and you earn $200 in interest, you’ll pay $50 in taxes.
Free savings accounts are a solid option for growing your money. You’ll likely find the highest rates and lowest fees at online banks — but that doesn’t mean you should avoid brick-and-mortar institutions, which may provide better access to your money. Compare savings accounts until you find one that balances cost with the features you need to manage your money.
Frequently asked questions
Banks are businesses. When you deposit money into a free savings account, you’re effectively lending money to the bank. Your bank pools your money with other members’ and lends it out to borrowers, charging them interest. The interest they earn from lending out your money is likely a benefit they’re willing to waive fees for.
Yes, if you’re comfortable online and value high interest. Many high-yield savings accounts are offered by digital banks that don’t support a network of local branches. These banks pay less in overhead fees for branches and employees, passing the savings along to you in the form of high interest rates. Look for online banks that are CDIC insured, which provides protection of up to $100,000 on your account balance in the unlikely event the bank fails.
Usually, yes. But remember, that if you use an ATM outside your bank’s network, you’ll likely be charged a fee that could range from $1 to $5 per withdrawal.
As long as the financial institution offering the account is insured with the Canada Deposit Insurance Corporation (CDIC), then yes. Your balance is protected up to $100,000 per customer per bank. This applies to all your deposits at a given bank. So, if your savings is higher than $100,000, you might want to consider putting the excess amount in a different CDIC-insured bank to make sure it’s covered as well.
Not necessarily. If the high-yield account you’re interested in has a fee, read the fine print to see if there’s a way for you to avoid it. Many banks and credit unions waive fees if, say, you maintain a specific minimum balance each month. Even if the fees are unavoidable, you might find that the features or interest rate outweighs the extra cost.
As the assistant publisher of banking and investing at Finder, Ryan Brinks melds more than a decade of experience in business news and online content into creating comprehensive and helpful comparisons of the companies you trust your money with. He loves to innovate and put money to work while keeping a careful eye on managing risk. Beyond work, Ryan's also passionate about his family and serving his community.
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