Money & Career

Secrets to choosing the best savings account

Secrets to choosing the best savings account

Author: Canadian Living

Money & Career

Secrets to choosing the best savings account

You can’t keep all your cash in Mr. Piggy forever. But hoping for any real gains in interest with a chequing or day-to-day operating account from the major banks is almost laughable. Half a point? Whoopee!

If you want something a little more substantial for storing your cash on hand, we suggest looking for a so-called high-interest savings account, either from your primary bank or an alternative. When choosing, make sure to watch for unappealing details such as a minimum balance, fees for use, limitations on interest payment and maximum number of transactions allowed.

ING ( offers a few choices for savings accounts -- at time of writing, their basic savings account offered a 1.5 per cent interest rate while the RSP and TFSA savings offered two per cent.

The President’s Choice Interest Plus savings account ( offers a decent interest rate -- currently two percent -- but does require a minimum balance of $1,000 to get that rate. And there’s more: anniversary bonuses and no fees.

BMO ( offers a savings account -- their Smart Saver Account -- boasting a 1.25 per cent interest rate at time of publishing, but they require a balance of $5,000 for that. Other incentives: Air Miles and access to: BMO MoneyLogic, an online financial management tool.

TD ( offers a High Interest Savings Account but they ding you five bucks if you use the debit machine -- unless there’s $25,000 sitting in there. Plus, interest is only paid on the balance above $5,000. Good reasons to always read the fine print.

These accounts tend to be very basic, without chequing or other bells and whistles, and are truly meant to sit there and grow. But, unlike many other kinds of investments, your money is accessible -- without penalties -- should you need to dip into it.

We asked bookkeeper and income tax specialist Susan Feldman of Tax Maam to deposit some savings tips into the old knowledge bank. Here’s her two cents:

Page 1 of 2 - Read page 2 to see what Susan Feldman has to say about savings

 It makes sense to just leave a minimal balance in a chequing account with most of your money sitting in a savings account with a better interest rate to earn whatever you can. This means that you may have to transfer money between a savings account and a chequing account to ensure that there is enough to cover cheques and payments but not so much that the money is sitting there and not earning any interest at all. Online banking is helpful for this, as you can monitor your balance and do transfers whenever necessary. 

Bank account fees are often directly related to the number of transactions, so you should review your banking plan to ensure that it will cover the number of transactions you think you will need every month. 

Online banks such as ING and PC (which is actually operated by CIBC) definitely give the best interest rate on savings, have much lower bank fees and are the preferred savings account for most people. Remember that you do have to pay income tax on interest earned in a savings account. Your bank should give you a form come tax time. 

TFSAs (tax-free savings accounts) are useful as a way of not paying tax on investment and interest income. But there are very strict rules limiting withdrawals and deposits that if not followed can result in a penalty from the CRA. Also, you can put all kinds of investments in a TFSA, not just a basic savings accounts, so it often makes more sense to use it for higher-earning investments rather than straight savings. 

Bottom line? Whether you're saving for something specific, maintaining an emergency fund or keeping a buffer balance in your account, make sure that money's working for you as hard as it can. A little research and effort now can bring in decent returns over the long term.

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Money & Career

Secrets to choosing the best savings account