Compare the Best Savings Accounts in Canada 2022

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The Best High Yield, TFSA, and RRSP Savings Accounts in Canada

When choosing a savings product, the type of account is just as important as its features. And what you choose may depend on your money goals – invest or build an emergency fund. Below we break down the three main types of savings accounts and list our 2022 picks for the best savings accounts in Canada for each category.

The Best High Yield Savings Accounts in Canada for 2022

While the rates offered may vary from account to account, you should consider other factors as well. For example, if you prefer to bank online or on your phone, you probably won’t miss the ability to conduct face-to-face transactions and can take advantage of the fact that banks without brick-and-mortar branches may offer higher interest rates. However, if having a live representative is important, consider accounts offered by institutions with physical branches.
Here are some MoneySense picks for the best high yield savings accounts in Canada:

Best Tiered Rate Product: Scotiabank MomentumPlus Savings Account

The Best Tax-Exempt Savings Accounts (TFSAs) in Canada

TFSAs can be used for savings and investments while providing tax-free growth. Although the word “Savings” is the S in TFSA, it can include a variety of financial products.

There are different types of TFSAs that can hold cash on deposit as well as various investments such as: B. exchange-traded funds (ETFs), stocks, bonds, guaranteed investment certificates (GICs), mutual funds and more. Cash savings and investments can be accumulated tax-free and withdrawn at any time with no income tax penalty.

Top TFSAs in Canada include:

Best for interest: CIBC*

The Best Registered Retirement Saving Plans (RRSPs) in Canada

RRSPs are registered with the government and are designed to encourage Canadians to save for their retirement over the long term. An RRSP does not allow tax-free withdrawals, but allows savings and investments to grow tax-free.

Like a TFSA, an RRSP can hold cash savings and investments, and both can grow tax-free within an RRSP.

Some of the best RRSP savings and investment accounts include:

What is a savings account?

Traditional savings accounts offer interest on deposits, while investments held in Registered Savings Accounts (TFSAs and RRSPs) yield returns.

Checking accounts don’t typically pay interest, but they make it easy for you to withdraw or pay bills. On the other hand, savings accounts are designed to pay interest on your deposits but offer little flexibility.

Depending on the type, savings accounts can be used for short- or medium-term goals—like a vacation or a new car—or for long-term goals—like buying a property or retirement.

How to choose the right savings account

In general, all types of Canadian savings accounts are subject to terms and rules set by the Canadian government. However, some attributes are set by the bank or credit union offering the account, such as: B. Monthly or annual fees. Note that most savings accounts do not charge fees, but some do, particularly those held with major providers. If possible, choose an account with an interest rate above 2%. This allows your deposits to keep up with inflation, so when you withdraw your money from your account it has at least as much purchasing power as when you deposited it.

It is important to know the terms and conditions of the transactions and the limitations of the account. As a rule of thumb, the higher the interest rate, the more restrictions the account has.

Also think about your savings goal. As detailed below, you will achieve the best results when you use an account designed for the time frame of your savings goal: short, medium or long term.

Which savings account should you use?

Savings accounts are bank accounts for saving money. There are different types of savings accounts, and each type is best suited to different types of savings goals.

SSince opening a savings account (in most cases) costs a bank customer nothing, it’s often a good idea to keep a version of all three.

High Interest Savings Account (HISA)

• HISAs are suitable for short-term or long-term investments once you have exhausted your TFSA contribution limit for the year. You might consider saving in a HISA if you have also exhausted your RRSP contribution space for the year and prefer not to risk your deposit capital. And HISA’s do not come with a contribution limit. Therefore, using a short-term savings goal is a suitable option for Canadians who want to earn more interest in less time, want a low-risk way to save, and prefer having access to their deposits at all times. Interest income from a HISA is subject to taxation.

Tax-Exempt Savings Account (TFSA)

• TFSAs are appropriate savings accounts for all Canadian citizens of legal age as anyone can benefit from tax-free interest with no withdrawal restrictions.
• TFSAs have a contribution limit that increases with each new year. Unused room porters are passed on and begin at age 18 or 19, depending on the age of majority in the province you live in.

Registered Retirement Plan (RRSP)

• Retirement assets should in most cases be held in an RRSP. Ideally, you’ll contribute to an RRSP during a higher-income phase of life so you can defer paying taxes on that income. In other words, making an RRSP contribution can save you money on your annual income taxes. WIf you get the money in retirement, you’re likely to be in a lower-income phase of life, so you’ll have less tax to pay on it. RRSPs don’t allow tax-free withdrawals like high-yield savings accounts or TFSAs do, except through certain programs like the Home-Buyers’ Plan (HBP) and the Lifelong Learning Plan (LLP).

This story was originally published on March 19, 2020. It was last updated on February 16, 2022.