Learn about the best TFSA savings account rates offered by banks and credit unions in Canada and the benefits of holding your money in a TFSA rather than a regular savings account.
The tax-free savings account (TFSA) is not strictly a savings account in the traditional sense. Your TFSA account can hold various investment assets, including cash (savings), GICs, stocks, bonds, ETFs, mutual funds, etc.
There are many reasons you may choose to keep your TFSA funds in a savings account, for example, if you are saving for a vacation or a down payment on a home.
In these two scenarios, you want to avoid the ups and downs of the stock markets and protect your balance since you will need access to funds within a few months to years.
To get the most out of your TFSA when using a savings account, it’s in your best interest to park your funds in a ‘high-interest rate account’ that offers returns that are at the very least up to (or close to) the inflation rate.
One of the best high-interest TFSA savings accounts rates available in Canada right now is (for overall value):
- EQ Bank: 3.00%*
You can also check out the best general high-interest savings accounts in Canada.
Best High-Interest Rate TFSA Accounts in Canada
A comparison of TFSA savings accounts interest rates shows that the best rates are currently being offered by online-only banks and credit unions. The difference in rates between online banks vs. Big banks can be significant.
For example, as of May 2023, I can see TFSA savings rates as high as 3.45%* (offered by online banks) compared to as low as 0.05% (offered by a Big 5 bank).
In addition to great rates, other perks to look for in a great TFSA savings account include:
- Zero monthly fees
- No minimum balance
- No restrictions on transactions, including transfers and withdrawals
|Bank/Credit Union||TFSA Rate||Website|
1. EQ Bank TFSA Savings Account
EQ Bank is the direct banking arm of Equitable Bank. It offers a hybrid (savings+chequing) account known as the EQ Bank Savings Plus Account and options to invest your money using a TFSA or RRSP.
EQ Bank’s TFSA has one of the best rates in Canada at 3.00%*. It’s not promotional, so you won’t have to keep moving your money around. Also, this account has no fees and no minimum balance, and it’s quite easy to sign up.
Customers can also utilize the high-interest GICs offered on the platform, as well as joint savings accounts. Your account is eligible for CDIC insurance up to $100,000.
If you are looking for a consistently great savings rate for your money, the EQ Bank TFSA is worth checking out.
You can read our EQ Bank TFSA review or open an account using the link below.
Sign up for an EQ Bank TFSA Savings Account.
2. Motive Financial Tax-Free Savings Account
Motive Financial is a division of the Canadian Western Bank, which is a member of CDIC.
The Motive Financial TFSA Savings Account offers a rate of 4.10% on your savings plus no minimum balance, and free and unlimited transactions.
Read my Motive Financial Review for more details.
3. Motusbank TFSA Savings Account
motusbank is the online-only banking arm of Meridian Credit Union, one of the largest credit unions in Canada. Their TFSA savings account offers a high tax-free interest rate of 2.50%.
There is no monthly fee, no minimum balance requirement, unlimited transactions, no-fee access to over 3,700 ATMs across Canada, and your deposits are insured by the Canada Deposit Insurance Corporation (CDIC) up to $100,000.
Check out our detailed motusbank review for more information about its offerings.
4. Canadian Tire Tax-Free Savings Account
Canadian Tire Bank offers a TFSA savings rate of 3.50%.
This account has no monthly fees, no minimum balance, and no lock-in periods. Your deposits in this bank are eligible for CDIC insurance.
Learn about Canadian Tire Bank.
5. AcceleRate Financial TFSA
AcceleRate Financial is the online banking arm of Access Credit Union, a Manitoba-based credit union. It was established in 2010 and is available to customers across Canada.
This TFSA account pays 3.65%, has no monthly fees, and you get one free cheque, POS, or electronic funds withdrawal every month. It also supports mobile cheque deposits and free personal cheques.
Your deposits are guaranteed by the Deposit Guarantee Corporation of Manitoba.
Learn more about AcceleRate Financial.
6. Hubert Financial TFSA
Hubert Financial is an online bank owned by Sunova Credit Union. Its TFSA Savings Account offers a 3.65% interest rate that is 100% guaranteed by the Deposit Guarantee Corporation of Manitoba.
The account has no monthly service fees and no minimum balance. Interest earned on your fund is calculated daily and paid out monthly.
Learn more about Hubert Financial.
7. Alterna Bank TFSA
Alterna Bank is a digital bank owned by Alterna Savings and Credit Union. Their TFSA eSavings Account offers a 2.25% rate.
There are no minimum balance requirements, no fees and unlimited transactions, and your deposits are insured by CDIC.
Read my Alterna Review.
8. Tangerine TFSA Savings Account
Tangerine is one of the most popular online-only banks in Canada. Its TFSA savings account earns a standard rate of 1.00%.
Tangerine deposit accounts do not have a monthly fee, and you get free access to an automatic savings plan, no minimum balances, and CDIC insurance up to $100,000. It also offers a chequing account that gives you free access to 3,500 ATMs in Canada and 44,000 worldwide.
You can read our detailed Tangerine Bank Review.
Other TFSA savings accounts you may want to look at are:
9. Questrade Tax-Free Savings Account
10. Peoples Trust Tax-Free Savings Account
11. WealthOne Bank of Canada TFSA
12. Outlook Financial Tax-Free Savings Account
What is a TFSA?
The tax-free savings account was introduced by the Federal Government in 2009 and can be used to save and invest for various purposes, including retirement.
The TFSA is popular because it allows Canadians to invest and grow their wealth without paying taxes on earned returns.
Each year, Canadians get an additional TFSA contribution limit that adds to their existing contribution room. For 2022, the contribution limit is $6,000, and it increases to $6,500 in 2023.
If you have been eligible to contribute to a TFSA since its inception, your total contribution room as of 2022 is $81,500. It increases to $88,000 in 2023.
TFSA Contribution Room
You can confirm how much room you have left by checking your CRA MyAccount or using one of the many TFSA calculators available online.
Benefits of the Best TFSA Savings Accounts in Canada
Contrary to what the name suggests, a TFSA account can hold various investments (similar to RRSPs), of which savings is just one.
Some of the benefits offered by a TFSA savings account include the following:
- You can withdraw funds and re-contribute them later without losing the contribution room.
- The interest income earned on your account is not taxable.
- Income generated from a TFSA does not affect income-tested benefits such as the Old Age Security pension and GIS. So, if your TFSA income puts you in a higher tax bracket when you are retired, your pensions are not clawed back.
- Your unused TFSA contribution room carries over from year to year, so you can easily contribute whenever you have the funds.
- There is no age limit for contributing to a TFSA.
While a savings account generally offers lower returns, you may choose to put your funds inside TFSA savings account if you are saving towards a short-term goal, for your emergency funds, or if you need to protect your money against stock market/investment risks.
In addition to savings and GIC deposits, you can hold several investment assets in your TFSA. Some of the popular TFSA investments include:
- Exchange-Traded Funds (ETFs)
- Mutual Funds
TFSA vs RRSP
TFSAs and RRSPs share some similarities and are also very different in some respect.
|Tax-Free Savings Account (TFSA)||Registered Retirement Savings Plan (RRSP)|
|Purpose||To provide tax-free growth and withdrawals for short-term and long-term savings goals, including retirement.||To provide tax deductions for contributions and tax-deferred growth for retirement savings.|
|Tax Treatment||Contributions are made with after-tax dollars; any income earned within the account is tax-free.||Contributions are tax-deductible, but withdrawals are taxed as income at the time of withdrawal.|
|Annual Contribution Limit (2023)||$6,500||18% of the previous year’s earned income, up to a maximum of $30,780.|
|Lifetime Contribution Limit (2023)||$88,000||Varies depending on your income over the years|
|Contribution Room||Unused contribution room can be carried forward and added to the following year’s limit. Withdrawals do not affect contribution room.||Unused contribution room can be carried forward and added to the following year’s limit. Withdrawals cannot be re-contributed without losing contribution room.|
|Investment Options||A range of investment options, including stocks, bonds, mutual funds, ETFs, GICs, and savings accounts.||A range of investment options, including stocks, bonds, mutual funds, ETFs, and GICs.|
|Withdrawal Rules||Withdrawals are tax-free and can be made at any time without penalty.||Withdrawals before retirement age result in significant tax implications, including withholding tax of up to 30%.|
|Impact on Government Benefits||Withdrawals do not impact eligibility for government benefits, such as OAS and GIS.||Withdrawals can impact eligibility for government benefits, such as OAS and GIS, as they are considered taxable income.|
|Eligibility||Available to all Canadian residents who are 18 years of age or older, regardless of their income.||Contribution limits are based on previous year’s earned income.|
TFSA Savings Account FAQs
The best TFSA savings rate I could find in Canada as of this writing includes the one offered by EQ Bank (matched by a few online banks). Given the economic climate, TFSA rates have been changing quickly. That said, you will find that online banks, in general, offer a better rate than big banks.
All investments have risks, and you can lose money. If your investment timeframe is short or you are risk-averse, there are investments that carry a lower risk of loss. These include savings accounts, GICs, Treasury Bills, and other money market instruments. On the flip side, these low-risk investments offer a lower return in exchange for relative safety.
You can open as many TFSA accounts as you want as long as you don’t exceed your TFSA contribution room. The TFSA annual limit for 2023 is $6,500. You can carry forward unused TFSA contribution room to future years.
A TFSA account allows you to invest and save money without paying interest on your account earnings. Your money grows tax-free for life.
If you are looking for the best regular (non-TFSA) savings rate in Canada, our pick is the EQ Bank Savings Plus Account.