How a high interest savings account works, how it compares to a TFSA or GIC, and how to choose one — a clear guide for Canadians. Plus financing when you need to borrow.
A high interest savings account (HISA) pays a much higher interest rate than a regular chequing or savings account, while keeping your money safe and easy to access. It's the simplest way for Canadians to earn more on cash they don't need right away — an emergency fund, a down-payment pot, or short-term savings. This guide explains how a high interest savings account works and how to choose one.
A high interest savings account is a deposit account built to grow your balance rather than handle daily spending. It pays a notably higher rate than everyday accounts, your money stays liquid (you can withdraw any time), and eligible deposits are protected by CDIC at member institutions. The trade-off is that it's meant for saving, not transacting, so it may limit certain transactions or charge for them.
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Online banks and credit unions typically offer the best HISA rates because they have lower overhead than big branch networks. Many Canadians pair a no-fee chequing account for spending with a high interest savings account for everything they're setting aside.
Interest on a HISA is usually calculated daily and paid monthly, so your savings compound over time — you earn interest on your interest. The posted rate is annual, so a balance of $10,000 at a 3% rate earns roughly $300 over a year if the rate holds, paid in monthly instalments.
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HISA rates are variable — they move with the wider rate environment, so the rate you open with can change. Watch for promotional rates that drop after a few months, and check whether interest is paid on every dollar or only above a threshold.
These three are often confused, but they solve different problems:
Flexible, liquid savings at a variable rate. Best for an emergency fund or money you may need soon. Interest is taxable unless the account is held inside a registered plan.
A Tax-Free Savings Account is a registered account type, not a product — you can hold a HISA, investments or a GIC inside it, and the growth is tax-free. Many people hold a high interest savings account inside a TFSA to avoid tax on the interest.
A Guaranteed Investment Certificate locks your money for a set term in exchange for a guaranteed rate. It usually pays more than a HISA but you give up access until it matures. Good for money you definitely won't need for a while.
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When you compare options, look beyond the headline rate:
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The Financial Consumer Agency of Canada offers a free tool to compare savings account features side by side.
Interest earned in a regular high interest savings account is taxable — it counts as income, and your institution issues a tax slip if you earn more than a small amount in a year. To avoid that tax, hold your HISA inside a TFSA, where the interest grows tax-free, or a registered plan like an RRSP or FHSA depending on your goal.
For an emergency fund or short-term savings you may dip into, a TFSA-held HISA is often the sweet spot: high interest, easy access, and no tax on the growth. For more on registered accounts, the Canada Revenue Agency explains the rules and contribution limits.
The questions Canadians ask most.
A high interest savings account (HISA) is a deposit account that pays a higher interest rate than a chequing or regular savings account, while keeping your money safe and accessible. It's ideal for an emergency fund or short-term savings.
Interest is usually calculated daily and paid monthly, so your savings compound. The posted rate is annual and variable, meaning it can change with the wider rate environment.
No. A TFSA is a registered account type that can hold a HISA, investments or a GIC, with tax-free growth. You can hold a high interest savings account inside a TFSA to avoid tax on the interest.
Yes. Eligible deposits at CDIC member institutions are insured up to $100,000 per category per institution, and credit unions have similar provincial coverage.
Interest in a regular HISA is taxable as income. Holding the account inside a TFSA lets the interest grow tax-free, which is why many Canadians do exactly that.
A HISA keeps your money flexible at a variable rate; a GIC locks it for a term at a guaranteed, often higher rate. Choose a HISA for money you may need soon and a GIC for money you can set aside.
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