High-Interest Savings Accounts That You Should Have
Throughout the years, I’ve met many people who refuse to invest their money because of the risk. However, many of them don’t know that there is a way to make your money work for you with little to no risk. This is through a high-interest savings account. Many people have thousands of dollars sitting in their chequing account and don’t know what to do with it. Therefore, we are going to help those in need!
We present to you 5 amazing high-interest savings account that everyone should have if they’re planning to save. However, let’s start off by discussing what a high-interest savings account is.
What Is A High-Interest Savings Account?
A high-interest savings account is one of the most useful investments that anyone can have. The best part about it is that it’s usually free. It’s crazy how many people overlook this form of investment. Every month, I meet at least one person who hasn’t even heard of a high-interest savings account. A lot of these people aren’t into investing. However, they have thousands of dollars just sitting in their chequing. They have no idea about the amount of money they’re missing. Therefore, we’re going to give a brief explanation and our list of a few amazing savings accounts!
To put it simply, this account pays you for having funds within it! There are many banks out there that offer a variety of options.
HISAs (high-interest savings account) has an annual interest rate that varies depending on the bank you choose. However, some banks have better rates than others. My advice would be to go with any bank that gives you an interest rate above 2% annually. The higher, the better.
Before you give banks like Tangerine and TD a call, you should know how the interest works. Knowing this will help you project just how much money you’re going to be accumulating and how you’ll get paid.
Interest Breakdown
The most critical and confusing aspect of anything finance-related is interest calculation. As I said, you should be going for an account that pays you over 2% interest. This may sound easy. However, many banks offer a high-interest rate for a limited time before reducing it dramatically.
The interest is an annual rate, calculated daily and paid out monthly (in most cases). Therefore, if you have $10,000 dollars sitting in your 2.5% HISA for 12 months, you’ll get paid out $252.88 annually. If you’re wondering why it is not an even $250, once you get paid out your total balance increases. Therefore, you’re gaining interest on the $10,000 + monthly interest payouts.
Here is a quick rundown of the calculation. $10,000 x 0.025 (2.5%) = $250 (annual earnings). $250/365 = $0.68493151 (daily interest on $10,000 for the first month). $0.6893151 x 30.4166667 (365 days divided by 12 months) = $20.83 payout on the first 30 days of interest accumulation. All other months are calculated the same way except the initial balance is increased. For example, month two’s initial balance will be $10,020.83 because of the interest payment.
If this is still difficult to understand, here is a graph provided by Tangerine’s savings calculator. (If you decide to use the calculator, you can check the monthly interest payments by clicking the 4 buttons above the graph.)
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1. Motive Financial: Savvy Savings
We won’t be listing high-interest accounts in any particular order. This is due to the fact that many have their own respective strengths and weaknesses. Furthermore, many people have their own particular needs that need to be satisfied. The best savings, account, in our opinion, may not work for you.
Motive Financial is a great bank that offers a very high-interest rate, 2.80%. This is great for those who are looking to just throw every single cent into their account and watch it grow. The best part, this isn’t a promo rate. This is their regular interest rate for the account as a whole! However, there are some caveats that you need to be aware of before you go ahead and sign up!
First, although you’ll have access to your money whenever you want, you’re only permitted 2 withdrawals per month. However, each withdrawal after two will incur a $5 charge! Lastly, the 2.80% interest rate is available for balances under $1,000,000 (which isn’t a problem for most)
If you’re into saving long-term and have no intention of accessing our money, this account is for you!
2. Tangerine High-Interest Savings Account
This is probably one of the more popular selections on our list. Tangerine, for those who don’t know, used to be ING Direct. However, the rates and benefits they offer rival and sometimes beat their competition! This is especially true when it comes to their high-interest savings account!
Right now, they’re having a promo for any new clients who were thinking of switching over to their bank!
As you can see, Tangerine is offering a special promo rate that rivals Motive Financial. However, it is a promo rate which means it’ll disappear after 6 months (182 days). Once it’s gone, your interest rate will plummet to 1.15%. This is very low compared to the other banks on our list. However, there is a trade-off.
Tangerine has no service fees or minimums. Therefore, you’ll have absolute access to your money at any time, without penalties. Withdrawing your money is no problem when it comes to this bank. Therefore, those who’re looking for short-medium term growth and require frequent access to their accounts should look into this bank!
3. Eq Bank’s Savings Plus Account
Next is EQ Bank’s Savings Plus Account. This option is probably the best choice for those who are looking for long-term growth with liquidity. The account boasts a rather large interest rate of 2.30%. Not the highest we’ve seen on this list. However, there are a few things that make this account very special.
This account has the least amount of restrictions. That means no monthly fee and minimum balance. Furthermore, you get unlimited transactions without any service fees. This means your funds will be absolutely liquid and you won’t have to worry about any penalties. The fact that the interest rate does not change is a huge benefit, especially since it’s above 2%.
Compound interest is incredibly important and I cannot stress enough how important it is to utilize this feature. Therefore, a bank like EQ, which has a high-interest rate any given time is great for those who are looking for medium-long term growth.
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4. Implicity
Implicity Financial is very similar to EQ Bank in many aspects. First, the interest rate actually beats EQ bank. Implicity offers a great interest rate of 2.40%! Implicity also offers no minimum balance, no monthly fee, and unlimited transactions!
Although they have many free features, it is important to note that not all of them are free. For example, if you were to transfer out of your TFSA at any time, you’ll have to pay $75. Furthermore, you’ll incur a $15 if you were to close your account 6 months after opening. Here are other little charges that you may run into.
Even though there are smaller charges. The bank is a great rival to EQ. Some would say that the extra 0.1% is a fair trade-off for the smaller fees!
5. Motusbank Savings
The last on our list is Motusbank Savings! This is another digital bank with a high interest rate. However, with this bank, you have a choice between two options. If you’re looking to have a general savings account, you can acquire an interest rate of 2.25%. However, if you’re looking to get a savings account within a TFSA, the interest rate increases to 2.50%.
Like many other online banks, Motus offers unlimited withdrawals, a card to make debit purchases with and zero account fees. However, one of the more notable features is that they ensure eligible deposits up to $100,000! Therefore, if you have a lot of money stored, this can be extremely advantageous.
Last Words
Well, that was 5 high-interest savings accounts that everyone should have. If you’re new to the investment sphere and want your money to grow passively without any risk, this should be your first step. There are many different banks. Therefore, take a look at all of them and choose the one that works for you!
Have a great day/night!
Shameed is just a man on a mission to help those around him gain financial success. Obsessed with writing about all things finance, this GTA native is constantly learning and sharing his experiences with others.
