That’s why it can be a good idea to have a number of different savings accounts, with each one for a specific type of saving. For example, you could use one savings account to cover unexpected costs, one to save up for a holiday, one to build up a down payment for a home, and so on.
| Account type | Key features |
Good for? |
|---|---|---|
| Instant access savings accounts (also called Savings Account or Demand Deposits) | Fast or immediate access to your money, but the interest rates offered are often very low. | Money you don’t need for day to day expenses, but that you might need at short notice for emergency or unexpected expenses. |
| Regular or basic savings account |
Often come with rules about minimum monthly deposits, or maximum withdrawals, but may offer a slightly higher interest rate in return. | Putting aside a proportion of your monthly income. |
| Fixed rate savings (also called GIC’s or term deposits) | Better interest rates than a regular savings account. Your money is ‘locked in’ and inaccessible for a fixed period of time, from a few days to several years. They usually require a minimum investment, and there will be a penalty for securing early access to your money. They offer higher interest rates than many other savings accounts. | Depositing funds that you know you aren’t going to need for a while; can also be suitable for meeting longer term savings goals. |
| Government backed savings (Tax-Free Savings Account – TFSA) | TFSA is a savings account that offers you the flexibility to invest and pay no tax on any investment earnings. Your savings will grow faster because income and capital gained accumulate tax-free. |
TFSAs are a great way to save. Your money grows faster because income and capital gains are tax-free. Plus, they encourage you to start saving early to meet the demands of the future without having to worry about taxes on your earnings and withdrawals. |
| Investments |
Comes with the risk that you might not get back what you invest. But if you’re able to set your money aside for 5 years or more, investing in mutual funds or shares has the potential to make your money work harder than it would in a savings account.
We explain the pros and cons of investing money in more detail here. |
Setting aside money you're not going to need for years, such as your retirement savings. |
| Account type | Instant access savings accounts (also called Savings Account or Demand Deposits) | Instant access savings accounts (also called Savings Account or Demand Deposits) |
|---|---|---|
| Key features |
Fast or immediate access to your money, but the interest rates offered are often very low. | Fast or immediate access to your money, but the interest rates offered are often very low. |
| Good for? |
Money you don’t need for day to day expenses, but that you might need at short notice for emergency or unexpected expenses. | Money you don’t need for day to day expenses, but that you might need at short notice for emergency or unexpected expenses. |
| Account type |
Regular or basic savings account |
Regular or basic savings account |
| Key features |
Often come with rules about minimum monthly deposits, or maximum withdrawals, but may offer a slightly higher interest rate in return. | Often come with rules about minimum monthly deposits, or maximum withdrawals, but may offer a slightly higher interest rate in return. |
| Good for? |
Putting aside a proportion of your monthly income. | Putting aside a proportion of your monthly income. |
| Account type | Fixed rate savings (also called GIC’s or term deposits) | Fixed rate savings (also called GIC’s or term deposits) |
| Key features |
Better interest rates than a regular savings account. Your money is ‘locked in’ and inaccessible for a fixed period of time, from a few days to several years. They usually require a minimum investment, and there will be a penalty for securing early access to your money. They offer higher interest rates than many other savings accounts. | Better interest rates than a regular savings account. Your money is ‘locked in’ and inaccessible for a fixed period of time, from a few days to several years. They usually require a minimum investment, and there will be a penalty for securing early access to your money. They offer higher interest rates than many other savings accounts. |
| Good for? |
Depositing funds that you know you aren’t going to need for a while; can also be suitable for meeting longer term savings goals. | Depositing funds that you know you aren’t going to need for a while; can also be suitable for meeting longer term savings goals. |
| Account type | Government backed savings (Tax-Free Savings Account – TFSA) | Government backed savings (Tax-Free Savings Account – TFSA) |
| Key features |
TFSA is a savings account that offers you the flexibility to invest and pay no tax on any investment earnings. Your savings will grow faster because income and capital gained accumulate tax-free. |
TFSA is a savings account that offers you the flexibility to invest and pay no tax on any investment earnings. Your savings will grow faster because income and capital gained accumulate tax-free. |
| Good for? |
TFSAs are a great way to save. Your money grows faster because income and capital gains are tax-free. Plus, they encourage you to start saving early to meet the demands of the future without having to worry about taxes on your earnings and withdrawals. | TFSAs are a great way to save. Your money grows faster because income and capital gains are tax-free. Plus, they encourage you to start saving early to meet the demands of the future without having to worry about taxes on your earnings and withdrawals. |
| Account type |
Investments |
Investments |
| Key features |
Comes with the risk that you might not get back what you invest. But if you’re able to set your money aside for 5 years or more, investing in mutual funds or shares has the potential to make your money work harder than it would in a savings account.
We explain the pros and cons of investing money in more detail here. |
Comes with the risk that you might not get back what you invest. But if you’re able to set your money aside for 5 years or more, investing in mutual funds or shares has the potential to make your money work harder than it would in a savings account.
We explain the pros and cons of investing money in more detail here. |
| Good for? |
Setting aside money you're not going to need for years, such as your retirement savings. | Setting aside money you're not going to need for years, such as your retirement savings. |
