Types of savings accounts in Canada
Quick summary
Savings accounts differ in how they pay interest and how they are taxed. Check the rate, whether it is temporary, the fees and whether you pay tax on the interest. Next step: compare chequing and savings accounts.
Checked November 8, 2026. Main source: Financial Consumer Agency of Canada, Savings accounts (modified October 29, 2026). Checked November 8, 2026.. See all 2 sources.
What is a savings account?
A savings account holds money you set aside to use later. You can usually take it out when you need it, and it may pay interest on what you deposit.
A chequing account is for everyday spending. A savings account is mainly for keeping money and earning interest. Using a savings account often can mean higher transaction fees. Many people use both together.
Source: Financial Consumer Agency of Canada, Savings accounts (modified October 29, 2026). Checked November 8, 2026.
How interest works
- Banks usually work out interest every day and pay it into your account every month.
- Rates are usually shown as a yearly rate. Interest may compound monthly or daily, and daily can earn more.
- Some accounts pay different rates on different parts of the balance, such as 1% on the first $1,000 and 2% above that. That is the official example.
- Introductory rates are high but temporary. Check the rate after the promotion ends.
Source: Financial Consumer Agency of Canada, Savings accounts (modified October 29, 2026). Checked November 8, 2026.
Kinds of savings accounts
These are common ways accounts differ. Banks use their own names, such as high interest savings, so read the rate terms for each.
- Regular savings account: holds your savings and pays interest.
- Tiered rate account: the rate changes with your balance.
- Promotional rate account: a high rate for a short time, then a lower one.
- TFSA savings account: a savings account held inside a Tax-Free Savings Account (TFSA).
Tax on the interest
Interest in a regular savings account is usually taxable income. Your bank reports it on a T5 slip.
In a TFSA, interest is generally tax free. A TFSA at a bank or credit union works like a savings account or a guaranteed investment certificate (a GIC, where your money is locked in for a set time), but contributions are not tax deductible.
Sources: Financial Consumer Agency of Canada, Savings accounts (modified October 29, 2026); Canada Revenue Agency, What is a TFSA. Checked November 8, 2026.
What to compare
- The minimum deposit, and any balance you need to earn interest. Some accounts need at least $1,000.
- The interest rate, and whether it is temporary.
- Service fees. Monthly fees are usually not charged, but transactions may cost money and may be limited.
- Fees for a payment that bounces because there is not enough money (called NSF, or non-sufficient funds).
- Deposit insurance, in case your institution fails.
Questions people ask
What is a savings account?
A savings account holds money you set aside to use later. You can usually withdraw it when you need it, and it may pay interest. A chequing account is for everyday spending.
What is the difference between a chequing and a savings account?
A chequing account is for everyday spending. A savings account is mainly for keeping money and earning interest. The FCAC says using a savings account often can bring higher transaction fees, and you can use both together.
What is a high interest savings account?
The FCAC page we read does not define it. Banks use the name for savings accounts that pay more than their basic account, but the rate can be temporary or depend on your balance. Read the rate terms before you decide.
What is a good interest rate for a savings account?
Rates change often, so compare them on the day you open the account. On the big six banks' own pages that we read on November 3, 2026, standard rates ran from 0.00% to 0.75%. Boosted and promotional rates were higher, but some lasted only a few months or came with conditions. See the table on our savings rates page.
Can I have more than one savings account?
We found no Canadian rule that limits it. The FCAC page we read does not address it, so ask your bank about its rules and fees. See our guide on having multiple bank accounts.
What are the types of savings accounts in Canada?
Regular, tiered rate, promotional rate and TFSA savings accounts are common. Banks use their own names, so read the rate terms.
Is savings account interest taxed?
Interest in a regular savings account is usually taxable income and is reported on a T5 slip. Interest in a TFSA is generally tax free.
Why did my savings rate drop?
Introductory rates are high but temporary. Check the rate after the promotion ends.
How is savings interest paid?
Banks usually work it out daily and pay it into your account monthly.