I started the year having much interest with personal finance especially now that I have a customized financial spreadsheet; tracking expenses and investment is less tedious. It’s time to develop the habit of updating (and don’t forget: backing up the files).
And I will do so with appealing numbers—high interest rates of TFSA (Tax-Free Savings Account) of Canadian banks. I wasn’t aware of this great news till I received the email from ING. If you are a client already, you can max out your TFSA with high interest rate for a limited time.
So What is TFSA?
It allows you to contribute up to the dollar limit per year and withdraw without being taxed. For detailed information Canada Revenue Agency can show you how to wield this amazing saving and investment tool.
From spreadsheet to inbox, I was thrilled and wondered what the other banks have come up with. I searched and confined my curiosity with the Big Five banks (first five in the list) and other domestic banks.
The following are the list of Canadian banks with corresponding TFSA interest rates:
| BONUS INTEREST RATE | CURRENT INTEREST RATE | |
|---|---|---|
| Bank of Montreal | 2.00% | 0.75% |
| Bank of Nova Scotia (Scotiabank) | 0.40% | 0.40% |
| Canadian Imperial Bank of Canada (CIBC) | 1.75% | 1.00% |
| Royal Bank of Canada (RBC) | 1.00% | 0.50% |
| Toronto-Dominion Bank (TD) | 0.75% | 0.75% |
| Tangerine | 2.40% | 0.80% |
| Simplii Financial (formerly President's Choice Bank | 1.00% | 1.00% |
Is your bank in the list?
Here are the details to help you max out your TFSA with high interest rate:
- 2020 TFSA dollar limit is $6,000.00.
- All the accounts in the list are eligible for deposit insurance from Canada Deposit Insurance Corporation (CDIC).
- From January 1 to March 31, all the deposits made into a TFSA will have the bonus interest rate.
- Your deposit can earn the bonus interest rate. Referring to the list, Tangerine
and President’s Choice Bankhas the highest rate even after the promo period.
- More of Tangerine good news: become a new Tangerine client and open a TFSA account (you can use my orange key 40154181S1; we’ll both get free money) and get $75.00 if you deposit $100.00 or more. Let’s sum it up: new account = max out your TFSA with high rate + free money.
- With 2.00% bonus interest rate, BMO is always in the third place.
If you found any incorrect data, please do let me know.
One thing I learned in writing this blog post is how challenging it is to find Canadian bank rates.
Most of the links are found either on top or bottom. But I love the landing page flaunting the word “rates” beside the call to action of opening an account. (Can you guess which bank?)
Final Thoughts
As clients we have to know the rates and fees.
I know it’s more fun to search and compare rates. But once you found the bank to match your financial goal, you must diligently determine the fees (written or display often in small text).
Tip: With that in mind before you transfer any amount to max out your TFSA with high rate from one bank to another, check the transfer fee and contribution room.
It’s a great time of the year to attract new clients for banks; however, as clients it is an opportunity to save more whether in the Big Five banks or not.
What’s your TFSA strategy? Are you going to take advantage of this limited offer? If you found better opportunity, share your tips by commenting.
Hey, forgot to point out that the bonus rate (used to lure you in) is only for new balances and that a time limit usually applies (something like 2 weeks which is laughable) then it’s back to the base rate. Which by the way, is different for accounts eligible for TFSA than for regular high interest accounts. Why is that? Hmmmm, could it be that what you’re saving in taxes on interest income that would normally go to the government, you’re losing to the bank instead, by getting a lower interest rate. I mean really, why would the interest rate for a TFSA eligible account be lower than for a non TFSA eligible account when they are both supposedly “high interest” . What exactly is the benefit here?
Thanks Corinna for pointing it out (bonus rate is only for new balances).
When it comes to interest rates, it is best to compare different Canadian bank rates. I’ve written “The Long (And Tricky) Search Of Canadian Bank Rates” as a result of writing the post about TFSA. While the interest rate in TFSA is quite low, a person can use it to invest while not paying tax with investment gain.
I appreciate your time and ideas. I’ll look forward to more of your tips in the future. Thanks for dropping by.