The best TFSA savings account rates in Canada for 2024
Updated: January 26, 2024
Tax-free savings accounts are a fantastic way for Canadians to save, especially since it's tax-sheltered and a TFSA interest rate is often higher than regular savings accounts.
There are few words Canadians love more than “tax-free,” which is why the popularity of the Tax-Free Savings Account (TFSA) has been growing steadily since it was introduced in 2009.
In case you missed the memo, a TFSA is a registered Canadian account with tax-exempt status.
Any money you earn from interest is tax-free. TFSA interest rates are often higher than regular savings accounts.
But don’t let the word “savings” fool you: your TFSA can also be an investment account that holds stocks, GICs, mutual funds, ETFs and more (meaning you can earn much more than the posted rates).
For those looking to stash their cash in a savings account, we’ve rounded up the best TFSA savings accounts in Canada to help you get started.
Comparison of the best TFSA rates in Canada
| Bank | Rate | Get started |
|---|---|---|
| Tangerine |
0.70%
GIC rate: Up to 5.30% Promotional rate: 6.00% for 5 months |
Open a TFSA |
| EQ Bank |
3.00%
GIC rate: up to 5.10% Promotional rate: |
Open a TFSA |
EQ Bank
EQ Bank is a Canadian online-only bank known for its hard-to-beat interest rates and no everyday banking fees. EQ Bank added a TFSA version of its popular high-interest savings accounts and GICs. The EQ Bank TFSA Personal account currently offers 4.00%* interest, tax-free, with no minimum account balances and no service fees (you just have to set up direct deposit with them). You can even pair your TFSA seamlessly with your regular EQ Personal Account or external bank account for easy one-time or recurring deposits.
* Interest is calculated daily on the total closing balance and paid monthly. Rates are per annum and subject to change without notice.
Tangerine Bank's Tax-Free Savings Account (TFSA) in Canada is a popular choice for those looking to save money while benefiting from tax-free interest earnings. This account combines the features of Tangerine's personal account with the added advantage of being tax-free. One of the key attractions is that the interest earned in the TFSA and any withdrawals made from it are not subject to taxation, provided the account stays within the annual contribution limits. As of 2024, the annual TFSA contribution limit is $7,000.
Tangerine's TFSA offers significant flexibility, allowing customers to move their funds at any time without minimum balance requirements or lock-in periods. In line with Tangerine's policy of fairness, the TFSA comes with no service charges or fees for saving. Additionally, the bank provides tools for setting personal savings goals and an Automatic Savings Program (ASP) to help customers achieve their financial objectives more systematically.
The TFSA account at Tangerine is also known for its competitive interest rates. Initially, they offer an attractive 6% interest rate for the first five months, followed by a standard rate of 0.70% after the introductory period. This account requires no minimum balance and imposes no annual fees. Features like automatic contributions and goal tracking enhance the appeal of Tangerine's TFSA, making it a user-friendly option for both short-term and long-term savings
TFSA rules 101
A lot of Canadians get tripped up on the rules around TFSAs. The essential thing to understand is that any income you make on the money you hold in a TFSA is exempt from tax—even when you make a withdrawal. It’s this tax-free status that makes it different than any other kind of high-interest savings account or investment account on which you have to pay taxes. Even an RRSP, which does have the benefit of reducing your taxable income, is subject to tax when you make a withdrawal.
Of course, there are a few rules you have to follow. The contribution allowances for TFSAs are very strict. How much money you can deposit to your TFSA is based on your current annual TFSA contribution room, plus any unused contribution room you have from the previous years. Since TFSAs were introduced in 2009, your contribution room only goes back to that date. For 2024, the annual contribution limit is $7,000. Canadians who were at least 18 years of age in 2009 can have up to $95,000 total in a TFSA.
There are also some withdrawal rules as well. Though you can make withdrawals at any time, any funds you take out can only be added back to your TFSA the following year (unless you have contribution room left over from previous years). You can confirm your overall contribution allowance by checking your CRA account.
Over time, a TFSA is an unbeatable way to reap the rewards of compound interest tax-free, which is why every Canadian should have one.
READ MORE: A guide to TFSAs
The bottom line: Take charge of your savings with a TFSA
As Canadians, we’re fortunate to have such a flexible financial instrument like a TFSA that can give our savings a substantial step up. Because the income in a TFSA is 100% tax-free and you can make withdrawals at any time, it’s the perfect place to park your emergency or bucket-list fund. The best way to maximize the power of your TFSA is to do your research and ensure whatever bank (or banks—you can spread out your TFSA accounts across institutions) you choose has the services you need and offers some of the best TFSA rates available.
Now that you’re in the know, what are you waiting for? Just go for it!
READ MORE: TFSA vs RRSP: How to choose between the two?
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