Best high-yield savings accounts
Whether you have short-term or long-term goals, financial planning is essential to help you achieve them. A high-yield savings account, also called a high-interest savings account, is great for building your short-term savings fund. Unlike traditional savings accounts, you earn at a higher interest rate, which grows your money quicker. The higher the annual percentage yield (APY) in your savings account, the more return you get on your deposits.
High-interest savings accounts have many perks and features that make them an attractive part of several financial portfolios. You can easily access your funds and earn a return with minimal risk and effort.
Before you open a high-interest savings account, you should understand its benefits and the factors influencing interest rates to maximize your savings.
Exploring the benefits of high-yield savings accounts
Here are some main benefits of a high-yield savings account, which make it a powerful tool for your financial portfolio.
Higher interest rates
The goal of a high-interest savings account is to provide account holders with a higher interest rate than a standard savings account. With compounding interest, the rate at which you earn interest increases after every compounding period.
Many people put their emergency savings into a high-interest savings account because of its higher and faster growth. Your emergency fund helps with any unexpected events that weren’t part of your budget. Since your money grows faster with a higher annual percentage yield, you can build resilience for emergencies and financial downturns while earning interest when you don’t need to use your funds.
Flexibility
Flexibility is essential if you have shorter timelines. You don’t want to lock in your funds or pay penalties for early withdrawals. High-interest savings accounts provide a lot of flexibility to access your funds whenever you want. Unlike other products like guaranteed investment certificates and registered retirement savings accounts, there are no restrictions for withdrawing your funds. You can instantly withdraw your funds with no questions asked.
Security
You don’t want to lose your hard-earned money. The Canadian Deposit Insurance Company (CDIC) provides insurance for up to $100,000 on eligible deposits of member institutions in case the financial provider fails. Visit the CDIC website to learn more about deposit insurance and eligible deposits.
Low-risk savings
A high-interest savings account is a great alternative to investing because you get low-risk savings. Unless your financial provider fails, you’re guaranteed to see your account balance increase through your principal amount and any interest you make on your deposits
If you have a shorter horizon, limiting your risks is a good idea to ensure you have enough funds to meet your goals. There’s always a risk associated with investment products like stocks and bonds because the financial markets are volatile. Many factors influence market prices, and it can be hard to generate any return on your investment in the short term.
Factors that determine the best high-yield savings accounts
In addition to understanding the benefits of a high-yield savings account, it’s also important for you to explore the factors determining the best account to open. High-interest savings accounts have become increasingly popular, and many providers offer similar savings accounts.
Here are some tips to determine the best high-yield savings account for you.
Monthly fees and balances
Some financial providers have no monthly fees or minimum balances for high-interest savings accounts. You keep every dollar in your account and can deposit as much or as little as you want.
These perks are great for people who are just starting to save or may not have a lot of funds. It gives you more flexibility to use the account in a way that best suits your situation. Note that these benefits may not apply to all institutions.
Interest payment frequency
Higher interest payment frequencies equal higher interest earnings. For example, monthly compounding grows your money faster than annual compounding. Different providers may offer varying frequencies of interest payments. If you want to maximize the interest you earn, look for accounts that pay interest more frequently throughout the year.
For example, the Neo High-Interest Savings account pays interest each month. We calculate the interest you earn based on your daily account balance and pay your account at the start of each month.
Introductory vs. ongoing rates
Have you ever wondered why you’re suddenly earning interest at a slower pace if you previously had a higher interest rate?
Many financial providers offer introductory rates to attract new customers. These rates are typically higher than the base rates and expire after the promotional period ends. If you were earning at a 4% interest rate and are only earning 0.4% now, that means the previous rate was an introductory rate.
It's common to see introductory interest rates with standard savings accounts at traditional financial providers, and these rates can be beneficial in some cases. However, if you’re looking for the best bang for your buck in a savings account, you’re more likely to find that with an ongoing high-interest rate that doesn’t expire.
Customer service
The customer service a financial provider offers is just as important as the APY and benefits you get from their high-interest savings account. Professional customer service makes your experience smoother and more pleasant. The last thing you want is to be stressed whenever you have questions or concerns about your account.
Look at online reviews and talk to friends and family about their experiences. Are they a reputable financial provider that’s transparent, responsive, and helpful? Or will you want to pull your hair out when you contact customer service?
Additional perks and features
Some savings accounts offer additional perks and features to support your savings journey, such as free money transfers, unlimited withdrawals, financial advice, and smart tools. You may not need all these features, but they can help make your savings journey smoother and more optimized. Every institution provides perks and features according to their policies, so it’s important to understand what your account offers.
Comparing options: Top picks for high-yield savings
The Bank of Canada’s policy interest rate influences savings account rates, and economic conditions affect the policy rate. When the policy rate goes up, financial providers may follow suit with their interest rates.
The policy interest rate has risen several times since the start of last year, which may not be ideal for those who have variable mortgage rates, but is great news for anyone with a savings account. However, the annual percentage yield is only one part to consider. Financial providers have individual policies, so high-yield savings accounts may differ from one another.
One of the best ways to find the best account available is to compare savings accounts. You can easily understand the pros and cons of different providers and find a high-interest savings account matching your needs.
When you compare your options, it’s important to look at more than just the annual percentage yield you get. High-interest savings accounts offer many perks and features that can support your savings journey and help your funds grow quickly. Considering all factors can help you choose the best high-yield savings account with a reputable financial provider.
What is the highest high-yield savings account right now?
You may have seen savings accounts with interest rates as high as 6% or more1. Some of these are introductory rates, and you’ll likely earn at a lower rate once the promotion ends. Most traditional savings accounts have much lower base rates that don’t give you as much interest on your deposits. If you want to consistently receive higher interest payments and allow your money to grow at an accelerating rate, consider savings accounts with high ongoing rates, like a Neo High-Interest Savings account.
Some people like to take advantage of the high introductory rates to earn more interest during the promotional period. It can help you earn higher interest payments temporarily if you’re looking for a small boost. However, the lower base rate may not be a great long-term place for your savings.
Which financial provider has the highest rate of interest on savings accounts?
You’ll likely find higher APYs at financial technology companies and online providers since they have lower operating costs and can pass on the savings to customers with higher interest rates. Many fintech companies focus on delivering intuitive mobile apps and websites with built-in smart tools to make saving simple and automatic. These tools help optimize your funds to receive maximum interest payments.
The Neo High-Interest Savings account has one of the highest interest rates in Canada¹. You can earn 4% interest² on every dollar you deposit into the account. With monthly compounding, you get interest payments each month and earn interest based on the total balance of your account.
The 4% interest rate² is a stable rate that never expires. There are no monthly fees or minimum balance requirements, which means anyone who meets the eligibility criteria can open an account and start working towards their savings goals. Whether you’re a new or existing customer, and regardless of how much cash you have, you can use the Neo High-Interest Savings account to hold your funds until you need them.
Start saving with a Neo High-Interest Savings account today
Saving money is an important part of creating a strong financial future. We make saving a simple and stress-free process for everyone because it should never be challenging for Canadians to save money. Whether you’re starting your savings journey or want to transfer your funds into a Neo High-Interest Savings account, it only takes a few minutes to open an account.
You can open multiple Neo High-Interest Savings accounts tailored to multiple savings goals. Set targets and automate savings so you never forget to make a deposit. Our built-in smart tools track your savings habits and determine whether you’re progressing toward your goals. You can personalize the icons and names of each account to help you stay organized.
With no monthly fees or minimum balance requirements, the Neo High-Interest Savings account is suitable for all eligible Canadians as young as 13 years old³.
Deposits in a Neo High-Interest Savings account are eligible for deposit insurance with CDIC⁴. You can easily access your funds whenever you want and make transfers between your Neo and external accounts. It gives you the ultimate flexibility to arrange your funds in a way that makes the most sense for your financial situation, even when it changes.
Ready to kickstart your savings journey and make your money work for you? Learn more about the Neo High-Interest Savings account and get started today.
¹ Based on research of high-interest savings accounts, comparing and limited to: BMO, CIBC, Scotiabank, TD Bank, RBC, Simplii Financial, and Tangerine. Research conducted by Neo Financial and based on data taken from public websites on December 14, 2023. Research excludes welcome offers.
² Interest is calculated daily on the total closing balance and paid monthly. Rates are per annum and subject to change without notice.
³ Account only available to Canadian residents. You must be at least 13 years of age if you reside outside of Quebec; if you reside in Quebec you must be at least 14 years of age.
⁴ The Neo High-Interest Savings account is provided by Peoples Bank of Canada, a CDIC member institution, and is eligible for CDIC deposit protection. Deposits held in Neo High-Interest Savings accounts are combined with eligible deposits held at Peoples Bank of Canada, for up to $100,000 of deposit protection, per category, per depositor. For more information about CDIC deposit insurance, please consult the CDIC’s website, cdic.ca.
