TFSA savings accounts are a great option to grow your savings.
Compare Tax Free Saving Accounts (TFSAs)
Rates updated:
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$150 first year return based on$5,000 balance
- Monthly fee
- $0.00
- Transaction fees
- $0.00
- E-transfer
- $0.00
Interest calculated: daily
Interest paid: monthlyMinimum balance: $0Insurance: CDIC eligible
CIBC Tax Advantage Savings Account
0.90% after$94 first year return based on$5,000 balance
- Monthly fee
- $0.00
- Transaction fees
- $0.00
- E-transfer
- $0.00
Interest calculated: daily
Interest paid: monthlyMinimum balance: $0Insurance: CDIC eligibleScotiabank Savings Accelerator Account (TFSA)
$38 first year return based on$5,000 balance
- Monthly fee
- $0.00
- Transaction fees
- $5.00
- E-transfer
- $0.00
Interest calculated: daily
Interest paid: monthlyMinimum balance: $0Insurance: CDIC eligibleBank of Montreal BMO TFSA Saving Account
$3 first year return based on$5,000 balance
- Monthly fee
- $0.00
- Transaction fees
- $0.00
- E-transfer
- $0.00
Interest calculated: monthly
Interest paid: monthlyMinimum balance: $50
(required) Insurance: CDIC eligible
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Frequently Asked Questions
Who has the best TFSA rates in Canada?
The best TFSA for 2023 belongs to EQ Bank which had one of the highest standard interest rates amongst its competitors. This pick helps you grow your money tax-free even faster. This account comes with:
- CDIC insured
- No monthly fees
- Easy linking to internal or external accounts
- User-friendly online portal
Check out Ratehub'sPersonal Finance Award winnersfor 2023 to see our opinion of the best accounts on the market today.
What is the contribution limit for 2024?
Looking ahead to 2024, the Canada Revenue Agency (CRA) has officially raised the TFSA contribution limit to $7,000 due to rising inflation.
In 2023, there was an 8.3% increase in the TFSA limit, rising from $6,000 to $6,500. Typically, the CRA announces these changes late in the year, allowing Canadians to plan contributions. The recently confirmed $500 increase in the 2024 limit will help Canadians combat inflation's impact and maximize TFSA tax benefits.
When is the best time to make a TFSA withdrawal?
If you need to make a withdrawal from your TFSA, you should consider making a withdrawal before December 31. Contribution space from TFSA withdrawals is not renewed until the following year - for example, if you withdrew $1,000 in 2023, that amount will only be made available in your contribution space on January 1, 2024.
What are the pros and cons of a TFSA?
TFSAs certainly have a place in someone’s overall portfolio and can help TFSA holders take advantage of tax-free compounding interest to build medium to long-term wealth. Here are some of the pros and cons to consider while deciding if a TFSA is right for you.
Pros
- Helps to minimize taxes on your investments
- Provides additional flexibility compared to a savings account or RRSP- you’re allowed to invest in mutual funds, stocks, bonds, and GICs.You can use a TFSA to build an emergency fund, save for retirement, save for a home, or all three
- Withdrawals can be made at any time
- Get more contribution room every year - you can determine your personal TFSA limit with our handycalculator
- Equal contribution room - contribution room is not based on your income
Cons
- No tax advantage at the time of contributions; TFSA contributions can't be used to lower your taxable income unlike RRSPs
- Withdrawals cannot be replaced until the following year
- Penalties will apply should you accidentally over contribute
What are other popular types of savings accounts?
TFSAs savings account are a great option to grow your everyday savings - but not the only ones available to Canadians.
High-Interest Savings Accounts (HISAs)
Most high-Interest Savings Accounts (HISAs) offer interest over 1.00%. Unlike the TFSA, income tax is charged on interest earned, as it is a non-registered account. They do offer high-interest, however, and are excellent options to reach short-term savings goals. This type of account also comes with compound interest.
Registered Retirement Savings Plan (RRSP)
ARegistered Retirement Savings Plan(RRSP)is a savings plan which offers tax-benefits for retirement saving. Like a TFSA, it comes with a contribution limit.
Youth Savings Accounts
Some banks and credit unions offer exclusive savings accounts just for kids, allowing them to save their own money and learn how banking works. Interest is usually lower, and accessibility is typically limited.
Senior Savings Accounts
Canadians 65 and over can take advantage of seniors savings accounts that have lower transaction fees and other perks just for seniors.
TFSAs vs. RRSPs: Which one is right for you?
The answer to theTFSA vs. RRSP debate relies heavily on your personal goals, and to an extent, your financial standing. It’s also worth noting you can contribute to both a TFSA and RRSP at the same time.
The advantages of a TFSA is it’s a straightforward tax shelter - helping grow your savings and investments tax-free - while also allowing for flexible anytime withdrawals. This makes TFSAs ideal for general savings and short-to-medium term financial goals as well as for Canadians in lower tax brackets (e.g. anyone earning under $50,000) who may not be in a position to benefit as much from the tax deduction benefits of an RRSP.
Contributing to your RRSP will reduce your overall taxable income for the year (which is beneficial since it serves as a tax break and can increase your tax refund). Whatever amount you withdraw from your RRSP is taxable, but only at the time of your withdrawal; the idea being you should wait to withdraw your RRSP until retirement when you’ll be in a much lower tax bracket and pay far fewer taxes.
What can I invest in a TFSA?
In a Tax-Free Savings Account (TFSA), you can invest in a wide range of assets, including stocks, bonds, mutual funds, ETFs, all GICs all while earning tax-free returns on your investments. It's important to remember contributions limits to your TFSA and any investment income or capital gains earned within the account are not taxed when withdrawn.
The best overall savings accounts in Canada
Sponsored
EQ Bank
3.00%
No Monthly Fees
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Sponsored
EQ Bank
3.00%
EQ Bank Tax Free Savings Account
get this rate
Sponsored
CIBC
5.60%
Special offer: Open your first CIBC eAdvantage Savings Account and get up to 5.60% for 4 months.
get this rate
Featured
Simplii Financial ™
6.00%
Earn 6% interest for 5 months on your first Simplii Financial High Interest Savings Account. Limits apply. Offer ends January 31, 2024.
get this rate
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Natasha Macmillan, Business Unit Director - Everyday Banking
What is a TFSA?
A Tax-Free Savings Account (TFSA) isn’t merely a savings account but a registered investment account that offers tax-shelter benefits from the Government of Canada. You can hold a wide range of investments and securities inside a TFSA, including cash, stocks, bonds, mutual funds, guaranteed investment certificates (GICs)and exchange traded funds (ETFs). The reason it’s called a Tax-Free Savings Account is because all the earnings generated by the investments in your TFSA aren’t taxed, that is, your savings are allowed to grow tax-free.
There are limits to how much you can contribute to a TFSA that increase every calendar year. As of 2024, the contribution room increased to $7,000.
How do TFSAs work?
1. How do TFSA contributions and withdrawals work?
There are government-mandated limits to how much money you contribute to your TFSA (aptly known as aTFSA contribution limit). This limit increase with the start of every new calendar year.
In 2024, the contribution limit increased by $7,000. The great thing about TFSAs is that any unused contribution room from previous years carries over.
If you've never contributed to a TFSA before and were at least 18 years old (and a Canadian resident) in 2009 - the year when TFSAs were first launched - your total lifetime contribution limit will be $88,000.
Your lifetime TFSA contribution room begins from when you turned 18, or for newcomers to the country, the year you became a Canadian resident. You can find how much TFSA contribution room you have available online on your CRA My Account profile.
It's also important to know how withdrawals can impact your TFSA contribution limits, as any amount of money you withdraw from your TFSA is temporarily deducted from your contribution room until the start of the next calendar year.
2. How can a TFSA be used?
Depending on your financial goals, there are different types of TFSAs that you can benefit from:
- High-interest TFSA: This type of account acts very similar to a high interest savings accounts, but with the tax-exemption benefits.
- TFSA term deposit: This type of account is lock-in for a defined period of time using a tax-free GIC or term deposit.
- TFSA investment account: This type of account allow you to invest your TFSA funds which can be managed by your financial institution, robo-advisor or online brokerage. Your TFSA funds can be invested in mutual funds, publicly traded securities (stocks, exchange traded funds - ETFs, etc.), guaranteed investment certificates, or bonds.
Also read:
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Natasha Macmillan, Business Director of Everyday Banking
With over a decade of experience in the finance industry, Natasha works closely with Canada's top financial institutions - from banks to credit unions - to help Ratehub.ca's 1,200,000 monthly users get matched with the right banking products. read full bio
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