Would you be interested in earning money effortlessly? It’s a no-brainer, right? Naturally, everyone would want to, and with a high interest savings account, this is entirely possible. Despite their benefits, many Canadians still lack a high interest savings account (HISA). This often stems from a lack of understanding, but I’m here to clarify why having one is essential. Below are four compelling reasons to consider a high interest savings account, along with my recommendations for the best options available in Canada.
High interest savings accounts come with no fees
The notion of ‘free’ often doesn’t align with banking, particularly when it involves accounts with extra perks.
However, high interest savings accounts are indeed free, which is already a great advantage, and when you add the potential to earn interest on your savings, it becomes a no-brainer.
Although having the account is typically free, keep in mind that there may be some associated costs. Generally, online HISAs do not impose monthly or transaction fees but might limit e-transfers, resulting in fees for exceeding those limits. Traditional banks may offer free HISAs too, but they might impose transaction limits, so it’s crucial to review the account terms when choosing a HISA.
Boost your earnings with higher interest rates
While keeping your funds in a standard chequing account may seem convenient, if you’re aiming to earn that ‘free money’ I mentioned earlier, transferring your funds into a high interest savings account is your best option.
In a high interest savings account, your funds actually generate interest, unlike in a regular chequing account. While you may not become a millionaire overnight, even incremental interest earnings over a year are better than receiving nothing. It truly is free money. Since interest rates differ across banks, it’s advisable to compare the best high interest savings account options before deciding where to open your account. Some of my top recommendations are Motive Financial, EQ Bank, and Simplii Financial.
The ideal place to hold extra funds
You likely have a good grasp of your monthly expenses. You probably also find yourself with a bit of extra cash in your chequing account—whether saved for emergencies or future purchases. Regardless of its purpose, it’s wise to deposit that extra cash into a high interest savings account.
Utilizing a high interest savings account for this extra cash brings multiple advantages. Firstly, as previously stated, placing your money in a HISA essentially guarantees earnings—hard to argue against that. Secondly, it provides a practical approach to organizing your finances, especially if you’re saving for a specific goal such as a vacation, a vehicle, or a down payment on a house.
It’s also crucial to understand that a HISA is distinct from standard investments or GICs. Your cash isn’t locked away; it’s readily accessible at any time, making it a smart, hassle-free option to save for short-term aspirations while earning interest on your savings.
Accessing your funds is simple
As noted earlier, depositing your cash in a high interest savings account doesn’t mean it’s inaccessible. You can retrieve your money whenever necessary.
Bear in mind that HIAs aren’t designed for daily transactions. Depending on your chosen financial institution, there may be transaction limitations and debit card options are rare. However, should you need to book a vacation, make a special purchase, or cover unexpected expenses, accessing your savings incurs no penalties.
Most HISAs allow direct money transfers to another bank account, which usually takes a couple of business days. For quicker access, an e-transfer to yourself is typically the fastest option.
Final thoughts
Have I persuaded you to consider opening a high interest savings account? You’ll find that securing one is straightforward, as virtually every major financial institution in Canada offers them. However, as with any financial product, some HISAs come with better features than others. Be sure to check out my recommendations for the best high interest savings accounts in Canada to get started.