Accounting

A Guide to High-Interest Saving Account:

High-interest saving accounts are an excellent means of making your money work for you.

May 14, 2022

Why not put your money to work for you at a greater return when you deposit it into a savings account? The solution is to open a high-interest savings account. A high-interest savings account can save you thousands of dollars.

According to the Canadian Bankers Association, Canadians can select from over 100 different types of bank accounts. If you're looking for a way to increase your savings, it might be time to look into high-interest savings accounts or HISAs.

While the best high-interest savings accounts have attractive interest rates, that isn't the only factor to consider when evaluating them. Some HISAs also have cheap transaction costs, low service fees, and cash-back options.

What Is A High-Interest Saving Account?

A HISA is a type of savings account that pays a higher interest rate than regular savings accounts. A wide range of banks, credit unions, and other financial institutions offer HISAs. This type of account allows you to put money aside safe and secure while earning a modest return without losing access to it at any moment.

There is no minimum deposit requirement for high-interest savings accounts in Canada, and they pay ranging from 1.05 percent at major banks to close to 2.00 percent at internet banks and some credit unions.

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"Money looks better in the bank account than on your feet." — Sophia Amoruso

How Does HISA Work?

A HISA functions in the same way as any other savings account. When you deposit funds into a bank or other financial institution, those funds may be given to other customers. You can retrieve your money at any time, and the bank pays you a specific amount of interest for keeping your money in the account.

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"It is never too early to encourage long-term savings." — Ron Lewis

Is A High-Interest Saving Account Tax-Free?

Even though you are unlikely to earn much interest in a high-interest savings account, you should be aware that any interest you do earn will be completely taxed by the Canada Revenue Agency. To put it another way, you will be taxed at your marginal tax rate (as opposed to say, eligible dividends or capital gains, which are more tax-friendly). Savings maintained in a tax-free savings account are the only exemption.

What Kind Of Transactions Is Possible With High-Interest Savings Accounts?

You can do the following with a high-interest savings account:

  • Investing (cash and cheques)
  • Payments for goods and services only once
  • Paying bills only once
  • Pre-authorized transactions (insurance, mortgage, rent, utilities, etc.)
  • Transitions (between two users of the same lending institution)
  • Money transfers via email (both send and receive)

Pros And Cons Of High-Interest Saving Accounts:

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How To Choose The Best High-Interest Saving Account?

  1. You must know what initial deposit you have to submit before opening your account.
  2. Make sure you choose a reputable bank or check the reviews of the bank before opening an account.
  3. You must have your financial goals like why do you want to open an account.
  4. Make sure the bank offers good interest rates. Because some banks give you a good interest-only for a few months and after some time the interest rates drop.

How to Open High-Interest Saving Accounts?

  1. Give your full name, your email address, and date of birth in the personal information required.
  2. Mention your identity and SIN
  3. Write your email id if you want to open an account online.

The Bottom Line!

Regardless of whether you select an online or traditional savings account, having one is essential. Working on your savings early and often will help you manage unexpected bills and potential financial emergencies. A savings account will not only help you keep your money safe, but it will also help you increase your money and fulfill your financial goals in the future. But you don't have to worry about your financial security. We at Yogi & Associates offer an easy application for a high-interest savings account. Our expert advice and guidance will ensure that you get the kind of interest rate that can make a difference in your life, so don't delay, contact Yogi & Associates!

Rafia Khalil

Executive Journalist

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