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Advantages and Disadvantages of Savings Accounts in Canada

A savings account is a good place to park money you don’t need immediately. It can hold funds you need in the near future, whether you are planning to make a down payment on a home or saving towards a vacation or wedding.

While savings accounts have many advantages, there are also disadvantages to consider.

Below, I cover the pros, cons, and features of savings accounts in Canada.

Advantages of a Savings Account

Grow your money: While you can just as easily keep your money at home for easy access, it has no chance of growing in value under your pillow.

The best savings accounts in Canada pay interest which means you earn some income over time.

Low risk: Savings accounts are safe because your money is insured by Canada Deposit Insurance Corporation (CDIC) up to $100,000 per depositor and insured category.

Unlike stocks and bonds, savings accounts are very low risk. Your balance won’t fluctuate up and down like the stock market.

No monthly fees: Canadian chequing accounts can be pricy at up to $30 per month. Most savings accounts do not charge a monthly fee.

Easy to access: Besides being free, savings accounts can easily be opened online. You can also transfer money from your savings to external banks you have linked to your account.

No lock-in periods: Unlike GICs (term deposits) that may be non-cashable or non-redeemable for a specific period of time, you can deposit or withdraw funds from a savings account at any time.

Low barrier to entry: Don’t have much money to save? Most savings accounts do not have a minimum balance requirement which means you can start saving with as little as $1.

Disadvantages of a Savings Account

Low interest rates: The interest rates offered by banks on savings accounts are abysmally low. And your best bet for a rate worth your time is with an online bank like the EQ Bank Savings Plus Account.

Variable rates: Banks can change the interest paid on savings at any time without prior warning. Fluctuating rates make it harder to budget as you can’t be certain how much income to expect.

Limited transactions: Check that your bank allows unlimited withdrawals from savings accounts. Sometimes, you can only make so many transfers before transaction fees apply.

Insurance coverage limit: CDIC protection is limited to $100,000 per insured category.

Minimum balance: Some big banks have a minimum balance you must maintain to earn interest in your savings account.

In-person support: As already noted, the best savings account rates are often from digital banks that don’t have physical branches. While you can conduct all transactions using online banking, some people prefer in-person banking.

Compare the Best Savings Accounts in Canada

FeaturesEQ BankNeo FinancialKOHO
Interest rateCompetitiveCompetitiveCompetitive
Free transactionsUnlimitedUnlimitedUnlimited
Minimum balance$0$0$0
Monthly fee$0$0$0
Other featuresMobile cheque deposits, RSP, TFSA, and GICsNeo Mastercard0.25% to 5% cash back; budgeting app, free early payroll, and credit building service
Learn moreVisitVisitVisit

High Interest Savings Accounts in Canada

Learn about some of the top high-interest savings account rates in Canada offered by digital banks.

1. EQ Bank Savings Plus Account

EQ Bank is the online banking subsidiary of Equitable Bank. It has over $7 billion in deposits, and customers enjoy CDIC guarantee protection.

The EQ Bank Savings Plus Account pays up to 250x more than other banks with its standard high-interest rate.

In addition, this no-fee hybrid account offers the best features of savings and chequing accounts, including:

  • Unlimited free debits and bill payments
  • Unlimited free Interac e-Transfers
  • Free mobile cheque deposits
  • No minimum balance requirement

EQ Bank Savings Plus Account

Monthly fee: $0

Free transactions: Unlimited debits, Interac e-Transfers, and bank-to-bank transfers.

Sign-up bonus: N/A

Interest earned on deposit: 2.50%


On EQ Bank’s website

  • Combined chequing and savings account that earns you 2.50% interest.
  • Zero monthly or yearly fees.
  • Free Interac e-Transfers, EQ to EQ transfers, electronic funds transfers, and bill payments.
  • No minimum balance is required.
  • Link other bank accounts to the EQ Savings Plus Account.
  • With your Account, categorize your spending, savings, and track your goals.
  • Mobile Cheque Deposit on the EQ Bank app.
  • No debit card or access to ATMs. To withdraw cash or access your funds, you must send money to your linked accounts.
  • Get a $20 bonus for each friend you refer, up to $500 total.
  • To open an EQ bank account, you must be 18 years of age or older, be the age of majority in your province, and have a SIN.
  • Note that EQ Bank is not available in Quebec.

Earn 2.50% interest on every dollar

No fees

Mobile app available

No debit card or ATM access

Not available in Quebec

The EQ Bank Savings Plus Account is a combined chequing and savings account that earns you 2.50% interest on every dollar, higher than any other online bank in Canada. Although it does not offer a debit card or access to ATMs, it is easy to send money to your linked accounts and withdraw cash. You get free transfers and bill payments with no minimum account balance.

2. KOHO Earn Interest

KOHO combines many features you’d like to see in savings, chequing, and credit card accounts.

KOHO users get access to a free budgeting app and prepaid card (no credit check or impact) that pays up to 5% cash back on all purchases. In addition, they earn interest on all balances after setting up at least one regular direct deposit to the account.

Interac e-Transfers, bill payments, and POS transactions are free. Also, you get a $20 bonus when you sign up here (use our referral code CASHBACK) and make your first purchase using the KOHO Visa Card.

KOHO Account

Best Prepaid Card in Canada

Monthly fee: $0

Free transactions: Unlimited debits and Interac e-Transfers.

Sign-up bonus: Earn $20 in cash back when you make a purchase within 30 days of registering.

Interest earned on deposit: Up to 2.00% interest rate.

KOHO logo

On KOHO’s website

  • No minimum account balance, fees, or promotional rates.
  • Send and receive unlimited free Interac e-Transfers.
  • Earn up to 5% cash back on purchases at KOHO partners.
  • Earn 0.50% to 2.00% interest on your balance, depending on your account tier.
  • With the KOHO account, choose a Standard, Essential or Premium KOHO Mastercard with different benefits.
  • Standard (Easy): earn 1% cash back on groceries and transportation and up to 5% cash back with KOHO partners with no monthly fees; 0.50% interest is paid on your balance.
  • KOHO Essential: earn 1% cash back on groceries and transportation; earn 0.25% cash back on all other purchases and up to 5% cash back with KOHO partners; earn 1.50% interest on your balance; $4 monthly fee.
  • Premium: earn 2% cash back on groceries, dining out, and transportation, 0.5% cash back on all other purchases, no FX fees, get 1 free international ATM withdrawal per month, price matching feature, earn 2% interest on your balance; $9/month or $84/year.
  • Build your credit history for an optional $7 or $10 per month.

Earn a high interest rate on your balance

Choose a KOHO card that suits your needs

Earn 0.25% to 5% cash back on purchases

Need credit building add-on to grow credit score

Fee for some account tiers

KOHO is a full-service spending and savings account with a prepaid Mastercard that earns you cash back on all purchases. You choose your level of cash back with the Easy, Essential or Premium KOHO card. You pay no monthly account fees, get unlimited transactions, and you can earn interest on your balance.

3. Neo Financial

Neo Financial is one of the nearest online banks in Canada.

Its Neo Money account offers competitive interest and no monthly fees. Clients also enjoy:

  • Free bill payments and Interac e-Transfers
  • No minimum balance
  • Unlimited free transactions

Neo Money account deposits are held at Concentra Bank, a CDIC-member institution.

Neo Money Account

Monthly fee: $0

Free transactions: Unlimited debits, Interac e-Transfers, bill payments, and deposits.

Sign-up bonus: $5 welcome bonus.

Interest earned on deposit: 2.25%.


On Neo Financial’s website

  • Earn 2.25% interest on your balance.
  • Interest is calculated daily and paid monthly.
  • Transactions, including purchases, bill payments, transfers, and direct deposits, are free and unlimited.
  • No minimum deposit or balance is required.
  • Easily set up automatic bill payments.
  • Fund your account in 3 ways: Interac e-Transfer, link your existing accounts, or set up direct deposit.
  • Neo Money does not come with a debit card; you must apply for a Neo Financial credit card if you want to earn cash back.
  • Note that Neo Money is only available in Alberta, Ontario, Saskatchewan, British Columbia, New Brunswick, Nova Scotia, and Newfoundland and Labrador.

Earn 2.25% interest on your balance

Easily fund your account in one of 3 ways

No minimum deposit or balance required

No debit card included

No free ATM withdrawals

Not available in all provinces and territories

A hybrid spending and savings account, Neo Money pays 2.25% interest on your balance with no monthly fees or balance requirements. It includes unlimited, free transactions, bill payments, payroll deposits, transfers, and more. Although it does not come with a free debit card, you can sign up for the Neo Money card to earn cash back.


Have questions about savings accounts in Canada? Leave them in the comments.

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Gravatar for Enoch Omololu, MSc (Econ)
Enoch Omololu, MSc (Econ)

Enoch Omololu is a personal finance expert and a veterinarian. He has a master’s degree in Finance and Investment Management from the University of Aberdeen Business School (Scotland) and has completed several courses and certificates in finance, including the Canadian Securities Course. He also has an MSc. in Agricultural Economics from the University of Manitoba and a Doctor of Veterinary Medicine degree from the University of Ibadan. Enoch is passionate about helping others win with their finances and has been writing about money matters for over a decade. He has been featured or quoted in Forbes, The Globe and Mail, Winnipeg Free Press, Wealthsimple, CBC News, Financial Post, Toronto Star, CTV News, Canadian Securities Exchange, Credit Canada, National Post, and many other personal finance publications. You can learn more about him on the About Page.

His top investment tools include Wealthsimple and Questrade. He earns cash back on purchases using KOHO, monitors his credit score for free using Borrowell, and earns interest on savings through EQ Bank.

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