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The best high-interest, TFSA and RRSP savings accounts in Canada

When it comes to choosing a savings product, the type of account is just as important as its features. And what you go with can depend on your money goals—investing or growing an emergency fund . Below, we break down the three main types of savings accounts and list our 2022 selections for the best savings accounts in Canada for each category.

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While the rates offered can vary from account to account, you’ll want to consider other factors, too. For example, if you prefer to bank online or on your phone, you likely won’t miss the ability to make in-person transactions and can take advantage of the fact that banks without brick-and-mortar branches may offer higher rates. However, if having a live representative to help is important, then you’ll want to consider accounts offered by institutions with physical branches.
Here are a few MoneySense selections for the best high-interest savings accounts in Canada:

• Best high-interest savings account rate: Saven Financial High Interest Savings Account (Also consider: Motive Savvy Savings Account )
• Best for interest rates and no service fees: EQ Bank Savings Plus Account *
• Best regular interest rate at a credit union: Maxa Financial High-Interest Savings Account
• Best e-savings account: Neo Money Account
• Best regular interest rate in a hybrid account: Wealthsimple Cash
• Best promotional rate: Tangerine Savings Account (Honourable mention: Simplii Financial High Interest Savings Account) *

Best tiered interest product : Scotiabank MomentumPlus Savings Account

The best Tax-Free Savings Accounts (TFSAs) in Canada

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

There are various types of TFSAs , which can hold cash savings as well as various of investments, such as exchange-traded funds ( ETFs ), stocks, bonds, guaranteed investment certificates ( GICs ), mutual funds and more. Cash savings and investments can grow tax-free and can be withdrawn at any time without an income tax penalty.

Some of the best TFSAs in Canada include:

• Best TFSA account: EQ Bank TFSA Savings Account * (1.25%)
• Best robo advisors : Questwealth Portfolios* ; Wealthsimple Invest*
• Best for trading stocks and ETFs: Questrade* ; Wealthsimple Trade*
• Best for mutual funds: Qtrade *

Best for interest rates: CIBC *

The best Registered Retirement Savings Plans (RRSPs) in Canada

RRSPs is registered with the government and it is designed to encourage Canadians to save long-term for their retirement. An RRSP does not permit tax-free withdrawals but allows savings and investments to grow free of tax.

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

Some of the best RRSP saving and investing accounts include:

• Best RRSP savings account: EQ Bank RSP Savings Account * (1.25%)
• Best robo-advisors: Questwealth Portfolio and Wealthsimple Invest*
• Best brokerage account for passive investing: Wealthsimple Trade *
• Best brokerage account for active traders: Questrade *
• Best brokerage account for mutual funds: Qtrade*

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Traditional savings accounts provide interest on deposits, while investments held in registered savings accounts (TFSAs and RRSPs) provide returns.

While chequing accounts generally pay no interest, they make it easy for you to withdraw or pay bills from the account. 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 towards short- or medium-term goals—such as a vacation or a new car—or, long-term goals—such as a property purchase or retirement.

How to choose the right savings account

Generally speaking, Canadian savings accounts of all kinds come with terms, conditions and rules set by the Canadian government. However, some attributes are set by the bank or credit union offering the account, such monthly or annual fees. Note that most savings accounts do not charge fees, but some do, especially those held with major providers. If possible, choose an account with an interest rate exceeding 2%. This allows your deposits to keep up with inflation , so your money has at least as much purchasing power when you take it out of the account as when you put it in.

It’s important to know the terms and conditions of transactions, and limitations of the account. A general rule of thumb is that the higher the interest rate, the more limitations come with the account.

Consider your savings goal, too. As outlined below, you’ll get the best results if you use an account designed for the time-frame of your savings goal: short-term, medium-term or long-term.

Which savings account should you use?

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

S ince opening a savings account (in most cases) does not cost a banking customer anything, it’s often a good idea to hold some version of all three.

High-interest savings account (HISA)

• HISAs are suitable for short-term or long-term investing if you’ve maxed your TFSA contribution limit for the year. You might consider saving in a HISA if you’ve maxed your RRSP contribution room for the year as well, and prefer not to risk your deposit principal. And HISAs do not come with a contribution limit. Therefore, using one for a short term savings goal is a suitable option for Canadians who would like to earn more interest in a shorter amount of time, want a low-risk way to save and prefer to be able to access their deposits whenever they wish. Interest earned in a HISA is subject to taxation.

Tax-free savings account (TFSA)

• TFSAs are suitable savings accounts for all Canadian citizens of the age of majority, as anyone can reap the rewards of earning tax-free interest with no withdrawal restrictions.
• TFSAs have a contribution limit that increases with each new year. Unused room carriers forward, and starts accumulating at the age of 18 or 19, depending on the age of majority in the province where you live.

Registered retirement savings plan (RRSP)

• Retirement savings should be kept in an RRSP, in most cases. Ideally, you contribute to an RRSP at a higher income life stage, so that you can defer paying taxes on that income. In other words, making an RRSP contribution can saves you money on your annual income taxes. W hen you withdraw the money in retirement, you will likely be in a lower income life stage, and will therefore have to pay less tax on it. RRSPs do not permit tax-free withdrawals, as high-interest savings accounts or TFSAs do, except through certain programs like the Home-Buyers’ Plan (HBP) and the Lifelong Learning Plan (LLP).

Read more about investing :

• A guide to the best robo-advisors in Canada
• How does a spousal RRSP withdrawal work ?
• What we learned about investing during a pandemic