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Best TFSA High-Interest Savings Accounts in Canada

Updated July 17, 2019 

There are many things you can do with a TFSA (which you can read about on our mega-guide on TFSAs) but it is mainly an investment account. However, if you don’t want to risk your money because you might need it in the next few years, or you’re using your TFSA as your emergency fund (because you have lots of available contribution room) then you might consider keeping cash in your TFSA.

If that’s the case, then you definitely want the best interest rate. Unlike the best interest rate on savings accounts, TFSA rates are usually lower than non-registered accounts. Despite that, because you don’t pay taxes you can still come out ahead. That’s why we compiled this list of the best high-interest TFSA savings accounts in Canada – the results will probably surprise you.

It's important to remember that bank rates are subject to change at any time. Out of all the banks and credit unions on this list, the only one that hasn't changed their rate is motusbank, and that's only because they're a brand-new bank. They haven't had the time to lower their rate yet.

Sometimes, rates can change extremely quickly. Ideal Savings, one of the credit unions on our list, reduced their rate from 2.50% to 1.75% in under a month in 2016, but have kept their rate of 2.40% since April 2019. They are also the only institution to classify their rate as "variable," despite all rates having the ability to change at any time.

 

The Top 4 TFSA Savings Accounts in Canada

1.      motusbank TFSA Savings Account

2.      MAXA Financial TFSA Savings

3.      Implicity Financial, Outlook Financial, AcceleRate Financial, Ideal Savings

4.      Hubert Financial Happy Savings, Alterna Bank TFSA eSavings

 

#1. 2.50% - motusbank TFSA Savings Account

The newly launched motusbank boasts a current interest rate of 2.50% on their TFSA acount

However, opening an account with motusbank requires a hard credit check. That means your credit score will be affected in the same way it would after an application for a credit card. If you’re planning on purchasing a home in the next few months or applying for any type of loan, you should wait until after you get approved to apply at motusbank.

So far, the service at motusbank has been good, but the speed at which the money transfers is rather slow. It takes 3 business days to initiate a bank-to-bank transfer from your other accounts, and even longer to transfer directly into your TFSA. Sending money out is easy with Interac e-Transfers, but transferring large amounts (since Interac e-Transfers have transaction limits) can take noticeably longer than at other financial institutions.

 

#2. 2.45% – MAXA Financial Savings

MAXA Financial is also a Manitoba-based credit union that services all of Canada, Quebec included. 

To become a customer of a credit union, you have to become a member first. All credit unions are run by their members, and you have to pay to get a share to join. The share is refunded if you ever decide to leave, and usually costs just $5. 

Manitoba-based credit unions are insured by the Deposit Guarantee Corporation of Manitoba instead of CDIC, but that may actually be a benefit. The DGCM has no limit on the amount insured per category, unlike the CDIC's upper limit fo $100,000 per insurable account.

 

#3. 2.40% – Ideal Savings TFSA Account

Implicity Financial High-Interest Savings

Outlook Financial High-Interest Savings

AcceleRate Financial AcceleRate Savings

Until July 2, 2019, Achieva Financial was tied for 4th place at 2.40%. However, they lowered their TFSA rate to 2.30%, and were replaced by Ideal Savings. 

Here we have four more Manitoba credit unions. There is a well-recognized phenomenon of Manitoba credit unions beating the rates of big banks and other credit unions. You have probably never heard of any of these credit unions (or likely even your own local credit unions) but that doesn’t mean they’re unsafe or shady.

Manitoba credit unions are insured through the Deposit Guarantee Corporation of Manitoba rather than the CDIC, which might be a reason they’re so popular. One of the most enticing aspects of the DGCM is that there is unlimited coverage for deposits.

Each of these credit unions operates in all provinces. Like all credit unions, you’ll have to pay a refundable deposit to become a member, after which you’ll be able to vote in important credit union decisions such as board member elections.

 

#4. 2.35% – Hubert Financial Happy Savings and Alterna Bank TFSA eSavings Account

Alterna Bank is, perhaps unconventionally, a bank subsidiary of a credit union. The parent company, Alterna Savings, operates in Quebec and Ontario and membership is restricted to those provinces. Alterna Bank, however, has no restrictions on becoming a customer. As a bank, there are no special requirements for opening an account with them.

Hubert Financial is a Manitoba-based credit union but accepts all Canadian residents except Quebec (désolé!). As a credit union, you’ll have to become a member of the union to open an account. All that means is sending them a refundable deposit ($5 in this case) that is returned if you ever decide to leave. They used to have the best TFSA high interest savings account in Canada, but recently lowered their rates to be less competitive.

 

About the List

One of the things you might notice about this list is that none of the contenders are big banks. The Big 5 banks do not have the best TFSA savings account interest rates– period. That is also largely true for non-TFSA savings accounts. In order to get the best rate, you’ll have to go with a smaller or online-only bank or credit union. If that makes you uncomfortable, remember to look for the Canada Deposit Insurance Corporation (CDIC) logo on the bank’s website. The CDIC insures deposits up to $100,000 in multiple categories, like chequing accounts, savings accounts, GICs, and more. In the event the bank fails, your money (up to $100,000) will be safe.

 

Credit unions aren’t insured by CDIC but by a provincial equivalent which is just as good as or better than the CDIC. Here's a list of all the provincial credit union insurers:

Province

Deposit Insurance Provider

Deposit Coverage Terms

Alberta

Alberta Credit Union Deposit Guarantee Corporation

All deposits within Alberta

No maximum

British Columbia

Credit Union Deposit Insurance Corporation

All deposits within in B.C.

No maximum

Manitoba

Credit Union Deposit Guarantee Corporation2

All deposits within in Manitoba

No maximum

New Brunswick

New Brunswick Credit Union Deposit Insurance Corporation

Savings and GICs in Canadian Dollars (CAD) up to $250,000

Deposits in registered savings plans up to $250,000

Newfoundland and Labrador

Credit Union Deposit Guarantee Corporation

Savings and GICs in Canadian Dollars (CAD) up to $250,000

Deposits in registered savings plans up to $250,000

Nova Scotia

CUDIC

Savings and GICs in Canadian Dollars (CAD) up to $250,000

Deposits in registered savings plans up to $250,000

Ontario

Deposit Insurance Corporation of Ontario

Savings and GICs in Canadian Dollars (CAD) up to $100,000

All deposits in registered savings plans

P.E.I

Prince Edward Island Credit Union Deposit Insurance Corporation

Savings and GICs in Canadian Dollars up to $125,000

Deposits in registered retirement savings plans and other retirement accounts up to $125,000

Quebec

Autorité des marchés financiers

Savings and GICs in Canadian Dollars up to $100,000

Deposits in registered savings plans up to $100,000

Saskatchewan

Saskatchewan Credit Union Deposit Guarantee Corporation

All deposits within Saskatchewan

No maximum

The Bank of Canada & Interest Rates

You may have heard that the Bank of Canada kept its target for the overnight rate at 1.75%. The overnight rate is the rate that banks use to lend money to each other until the next morning.

Whenever this rate goes up or down, prime rate shortly follows. Prime rate is the best rate that a bank gives to its best lenders – currently at 3.95% at most Canadian banks. 

But did you know that your bank account’s interest will go up or down too? Rising interest rates are bad for borrowers but great for savers, as high-interest savings account rates also go up after a rate hike. Rates for savings accounts have been steadily rising since the beginning of 2018 – if you’re at the right bank.

We constantly update this list, so be sure to check back every once in a while!


Chris Chris 01/26/2019
Canadian personal finance buff and all-around writing enthusiast, Chris loves breaking down complicated money ideas to show that they're really not so complex. 
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