Which Bank Gives The Highest Interest Rate?

Interest rates have been on the rise in Canada for much of 2022 and 2023. This year, rates remain high but are expected to begin dropping. For now, savings account interest rates can offer anywhere from 5% to 6% APY on your money.

Finding a bank offering a high savings interest rate can help you grow your money faster. But make sure you read the fine print. Many savings accounts in Canada right now are advertising high rates but have certain criteria you have to meet to earn these rates. And some banks only offer high rates for a short period of time.

If you’re looking to build your savings faster this year, here’s what you need to know about high interest rates and the banks that are offering the best savings rates right now.

What is a high interest savings account?

A high interest savings account is a bank account offering a competitive interest rate to help grow your money faster. While many traditional banks offer savings interest rates near zero percent, a high interest savings account generally offers ten times as much interest as the national average savings account rate.

Currently in Canada the best savings account rates offer over 5% APY. You may be able to find higher rates at local credit unions or online financial institutions. However, since savings rates are expected to drop this year, finding a bank with a solid history of offering competitive interest may be a better move than opting for a bank with a high temporary rate that will decline in a few months.

How do high interest savings accounts work?

Just like a regular savings account you might open at a big bank in Canada, a high yield savings account functions as a place to store and grow your money. The main difference? You’ll earn a higher interest rate on your funds, helping you to grow your money more quickly.

Like all savings accounts, high interest savings plans offer variable interest rates, which means the bank may change the rate at any time. Interest rates tend to rise and fall along with the Bank of Canada’s central rate range. But banks may also adjust savings rates to attract new customers.

You can typically connect high interest savings accounts to chequing accounts for easy access. Some high-interest savings accounts offer debit card access, while others don’t. Many of the best high interest accounts are at online banks that don’t charge monthly fees, but every account is different, so do your research before comparing options.

Additionally, some high interest savings accounts offer promotional APYs. Make sure you know what your APY will drop down to before opening an account.

Lastly, know how your interest is calculated. Financial institutions compound their interest at different times. Banks that compound interest more often — daily or monthly — offer slightly more interest than those with similar rates that compound quarterly or annually.

Best High Interest Savings Accounts in Canada

Simplii Financial - Offering 6% APY

Simplii Financial is a Canadian bank offering a high-interest rate on your savings. You can earn 6% right now through April 30, 2024. You can earn this high rate for five months, after which you’ll drop down to the bank’s current savings interest rate. Right now the standard interest rate runs between 0.40% APY and 5.50% APY, based on your account balance.

You won’t have to pay monthly fees or transaction fees for this high-interest savings account, and there is no minimum balance requirement. It’s a member of the Canadian Deposit Insurance Corporation (CDIC), which protects your money for up to $100,000 per account.

Simplii Financial is owned by CIBC and is a full service bank, offering chequing accounts, loans, credit cards, mortgages, and more. It also offers a variety of promotions, like a cash-back offer for new Visa customers and a new chequing account bonus.

Tangerine - Offering 6% APY

Tangerine is an online bank with a competitive savings account. Right now, it’s offering new customers 6% APY on their savings until March. This rate is promotional, meaning you’ll only earn this interest rate for a set period, after which it will drop down to the bank’s current savings rate (0.70% APY).

Like many online savings accounts, Tangerine has no monthly fee. It’s also fully insured by CDIC.

This online bank offers other products like guaranteed rate certificates, tax-free savings accounts, retirement savings plans, retirement income fund accounts, and even US dollar savings accounts.

CIBC - Offering up to 5.60%

Another traditional bank, CIBC offers up to 5.60% APY on your savings, when you meet certain conditions. You’ll start off with a lower rate — up to 1.90% APY — and then can work your way up to 5.60% by saving at least $200 per month in your account. You can earn 5.60% APY on balances up to $1,000,000.

There are no monthly account fees for this savings plan, but you will be charged $5 for debit purchases and other transactions. This account is also CDIC insured. You have a large assortment of ATMs across the country, but it will cost you to withdraw your money. CDIC also alerts you if your balance is low to prevent NSF fees.

CIBC offers other banking products like chequing accounts, as well as mortgages, credit cards, loans, and more.

Scotiabank - Offering 5.60% APY

Scotiabank is another Canadian bank account offering high-interest APYs right now. This traditional, brick-and-mortar bank lets you earn 5.60% on your savings for three months. After that, your rate drops down to under 2% (your exact rate hinges on your account balance).

This account has no monthly fees (a rare find for a big bank), no minimum balance requirements, and no limit on self-service transfers. It’s also CDIC-insured.

This full-suite bank also offers other banking products, credit cards, loans, mortgages, and more, making it a good fit for many finance needs.

Royal Bank of Canada - Offering 5.50% APY

The high interest eSavings account at RBC is an online account that offers up to 5.50% APY. You’ll earn this high rate for three months, after which your rate will slip to 3.80% APY. You’ll only earn this elevated rate on balances under $1,000,000.

There are no monthly fees for this savings account, and it also comes with free transfers to RBC accounts and one free ATM withdrawal from an RBC ATM each month. Excessive debit charges will cost you $5. This savings account is also CDIC-insured.

RBC has various savings tools and digital features to make managing your money easier.

KOHO - Offering 5% APY

KOHO offers an alternative to online savings accounts that may only offer high interest for a period of time. Instead of worrying about when your APY offer will run out, a KOHO savings account can help you earn up to 5% APY when you opt-in.

You’ll get a combined spending and savings account to keep all of your money in one place, hassle-free. There’s no minimum balance requirement, overdraft protection, no non-sufficient funds fees, and it’s CDIC insured.

KOHO also has an offer to earn up to 5% back on certain purchases and offers virtual credit card access. Unlike other banks, KOHO also offers a great way to build your credit profile, and you can access your credit score for free.

Monthly fees range between $0 and $19, but you can try KOHO without any cost for 30 days.

How to choose the right high interest savings account

Just because an account offers the highest interest rate doesn’t mean it’s the best fit for your money. Be sure to look at the account’s other features, limitations, the bank’s reputation, and other services.

Here are some factors to consider before opening a high interest savings account:

Your interest rate.

While you don’t need to lock in the highest rate, make sure you find a bank with a competitive savings rate that fits your needs. Make sure you know the terms to earn the interest rate and whether or not it’s a promotion;

Monthly fees

You may be charged a monthly account fee for your savings account. Sometimes, account fees can be waived if you meet certain requirements. But this fee may also cut into your interest, so weigh your options carefully.

Other fees and requirements.

Banks can charge various fees, so make sure you read the fine print. Transaction fees, excessive transaction fees, debit fees, non-sufficient funds fees and overdraft fees are just a few to look out for.

You should also watch out for minimum balance requirements you may need to hit to avoid fees or earn the highest level of interest.

Credit building features

If growing your credit score is important to you, look for a savings option with credit-building tools like KOHO. KOHO can help you grow your credit score over time without taking on risky debt. It also lets you earn up to 5% APY and 5% cash back on certain purchases.