It’s tough to find a good interest rate on your savings. The big banks pay next-to-nothing on basic savings accounts, so unless you carry a big balance you’re better off moving to an online bank or credit union. Even then, you’re not keeping up with inflation.
Ally and ING Direct, two of the more competitive banks for savings rate, were recently swallowed up by RBC and Bank of Nova Scotia, respectively.
While Scotia remains committed to running ING Direct separately, RBC has decided to shut down Ally, effective April 30. Until then, RBC has reduced the interest rate on Ally’s existing savings account from 1.8 per cent to 1.2 per cent.
So what’s a saver to do?
This chart looks at the best savings account rates offered at the big five Canadian banks and several online banks:
|Bank / Account Name||Rate %||Min. Balance||Transaction fees|
|Canadian Tire High Interest Savings||1.7||$0||None|
|Manulife Advantage Account||1.65||$0||$1.25 per debit|
|CIBC eAdvantage Savings*||1.5||$5,000||$5 per debit|
|ING Direct Investment Savings||1.35||$0||None|
|PC Financial Interest Plus||1.35||$1,000||None**|
|RBC High Interest eSavings||1.2||$0||One free debit|
|BMO Smart Saver||1.2||$0||One free debit|
|Scotia Power Savings||1.2||$5,000||$5 per debit|
|TD High Interest Savings||1.1||$5,000||$5 per debit|
*CIBC has a limited time offer ending July 31st, 2012.
**PC Financial Interest Plus is not eligible for Interac payments or bank machine withdrawals.
Several smaller banks and credit unions also offer competitive rates on high interest savings accounts. AcceleRate and Achieva lead the way, paying 2 per cent each. Steinbach Credit Union and Outlook Financial each pay 1.95 per cent interest, while Canadian Direct and Peoples Trust both pay 1.9 per cent interest.
Canadian Tire’s 1.7 per cent rate is currently the best of the online banks. This account has no monthly fees, no minimum balance and you can transfer funds easily online or by phone.
Of the big banks, CIBC’s current promotion offers the best interest rate at 1.5 per cent. The RBC account also stands out because their eSavings account pays interest on every dollar, rather than requiring a $5,000 minimum balance.
There is plenty of competition out there between the big banks, credit unions and online banks. Most financial institutions make it pretty simple to open an account, set-up automatic deposits and access your money when you need it.
If you’re looking to get a better rate on your savings account, it pays to shop around. Don’t feel obligated to keep all your accounts with just one bank.