How would you like to make money for free? Silly question, isn’t it? Of course you would, and you can easily with a high interest savings account. A high interest savings account (HISA) is something that every Canadian should have, yet there are still many that don’t. Chances are, that’s just because they don’t know enough about them. But, I’m going to change your mind. Here are 4 reasons why you need to have a high interest savings account as well as my thoughts on the best savings accounts in Canada.
High interest savings accounts are free
The term ‘free’ with banking doesn’t always go hand in hand, especially when it comes to having accounts that come with additional perks and benefits.
However, high interest savings accounts are free, which is a win in itself, but the fact that it’s free on top of having the added benefit of allowing you to make money (interest) on your savings really makes it a no-brainer.
Keep in mind, while having the account itself is free, there may be associated fees. Generally speaking, online HISA won’t have any monthly or transaction fees, but you may have a limit on e-transfers where you’ll have to pay for any transfers that exceed your limits. Regular banks also offer HISA accounts for free, but there might be a transaction limit so you really need to look at the terms of the accounts when you’re shopping around for a HISA.
You’ll earn more interest in a high interest savings account
Keeping all your money in a general chequing account with your bank may seem like the easiest thing do to, but if you want to earn that free money that I mentioned earlier, then your best bet is to move it into a high interest savings account.
In a high interest savings account, that money actually earns interest unlike chequing accounts. Sure, you won’t suddenly be making millions but even a few dollars a year is better than nothing. It really is free money. Interest rates vary depending on the bank, so take a look at the best high interest savings accounts before deciding who to open your account with. Some of my top picks include Motive Financial, Motive Financial, and Motive Financial
It’s the perfect place to park your money
You probably know (or, at least you should know) about how much money you spend each month on your regular expenses. Chances are you also have a little extra money as well in that chequing account. Maybe you are saving it for a rainy day or perhaps it is for something special. Either way, you really should put that extra money into a high interest savings account.
Keeping your extra money into a high interest savings account has several benefits. Firstly, as mentioned above, putting your money into a high interest savings account will actually help you make money- you can’t go wrong with that. Secondly, it’s a good way to separate your money, especially if you are looking to save for something specific like a vacation or maybe buying a car or even a down payment on a home.
It’s important to note, a HISA isn’t like a typical investment or a GIC. Your money isn’t trapped- you can get it at any time. It’s just a smart and easy way to park your money to help save for short term goals with the added bonus that you’ll earn interest on your money saved
It’s easy to access your money
As I mentioned in the previous point, putting your money into a high interest savings account isn’t locking it away. You can access that money whenever you want or need to.
Now, you can’t use your high interest savings account for day to day transactions. Depending on which financial institution you use, you will have transaction limits and there aren’t many HISAs that offer a debit card. However, when the time comes that you want to book your holidays or buy something special, or maybe you just had some unexpected costs and need to dip into those savings to tide you over for the rest of the month, you can easily access that money with no penalties.
HISAs allow you to transfer your money directly to another bank account but that usually takes up to two business days. If you need access to your money quicker, an e-transfer to yourself is usually the quickest way.
Have I convinced you that it’s time to open a high interest savings account? You’ll have no trouble opening one, after all, they are offered by every major financial institution in Canada. However, like with every other type of account, some HISAs have more to offer than others. Be sure to read my picks for the best high interest savings accounts in Canada to get you started.