Park $10,000 in a typical big bank savings account and you might earn around $150 in interest over a year. If inflation sits at 2.8%, that same $10,000 loses roughly $280 in purchasing power — a net loss of $130. The numbers don’t balance, and they haven’t for a while. The reason isn’t complicated: big banks have little incentive to raise rates when mortgage lending slows and deposits are easy to come by.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
That gap between what big banks pay and what inflation costs is where most Canadians lose money without noticing. The habit of parking savings in the same place as your everyday spending is convenient, but it comes with a quiet cost. Here’s what you actually need to know.
What This Article Is Really About
What I tend to notice is that most people know the big banks pay less, but they underestimate how much less — and what that difference costs over time. The central concept here is purchasing power.
Where the Rates Actually Land — and What They Cost You
The big five banks don’t set savings rates in a vacuum. They use deposits to fund mortgage lending, and when mortgage demand slows, there’s less reason to compete for your money. A WealthRocket analysis shows Scotiabank at 1.5%, CIBC at 1.4%, TD at 1.6%, and RBC at 1.5% on standard savings accounts. Meanwhile, online banks offer rates that run a full percentage point higher.
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| Institution | Rate | Account Type |
|---|---|---|
| RBC | 1.5% | Everyday Savings |
| TD | 1.6% | Everyday Savings |
| Scotiabank | 1.5% | Everyday Savings |
| CIBC | 1.4% | Everyday Savings |
| EQ Bank | 2.5% | High-Interest Savings |
| Alterna Bank | 2.5% | High-Interest Savings |
| Wealthsimple Cash | 3.0% | Cash Account (with direct deposit) |
The difference between 1.5% and 2.5% on a $10,000 balance is $100 a year. That’s not life-changing, but over five years — with compounding — it’s roughly $550. And the gap widens with larger balances. The reason big banks can get away with these rates is structural: mortgage lending has slowed, so they don’t need to attract more deposits to fund new loans. Without that pressure, there’s no incentive to raise what they pay you.
That 15% represents people who acted on what they saw. The other 85% either didn’t notice or didn’t move. A Vanguard survey found that limited understanding of how inflation affects savings is a major barrier — not lack of access to better products.
Where People Get This Wrong
Staying with the big bank out of habit
The biggest mistake is not looking. A 2023 Vanguard survey found that many people simply don’t check what their savings account pays. If you’re earning 1.5% at a big bank while inflation is at 2.8%, your money is losing real value every month. The fix takes about 15 minutes: open an online HISA, transfer your balance, and set up automated transfers. CDIC coverage still applies, so you’re not taking on extra risk.
Assuming the big bank rate is the only option
Scotiabank runs a promotion offering 5% for five months on select accounts, but it requires opening a new account or adding extra products. After the promotional period ends, the rate drops to the standard 1.5%. Many people leave their money in the account after the promotion expires, effectively signing up for the low rate again. Set a calendar reminder for when the promo ends, or move the money to a consistently high-rate account instead.
Ignoring GICs for money you don’t need right away
If you have savings you won’t touch for a year, a guaranteed investment certificate can lock in 5.05% at Oaken Financial or 4.75% at EQ Bank — more than three times what the big banks pay on demand accounts. The trade-off is access: you can’t withdraw early without a penalty. The mistake is leaving long-term savings in a low-rate account when a GIC would preserve your purchasing power.
Not checking CDIC coverage before switching
A WealthRocket survey found that only 13% of Canadians checked whether their bank was CDIC-insured before switching. CDIC covers deposits up to $100,000 per depositor per category at member institutions. Most online banks — EQ Bank, Alterna Bank, Wealthsimple Cash — are CDIC members. If you’re unsure, look for the CDIC logo on the bank’s website or check the CDIC member list.
How to Move Your Money to a Better Rate
Check your current rate
Log into your savings account and find the annual interest rate. If you can’t see it on your dashboard, check the account details page or call the bank. The FCAC account comparison tool lets you see what other institutions offer. If your rate is below 2%, your money is probably losing ground to inflation.
Open a high-interest savings account online
- 1Compare your optionsLook at EQ Bank (2.5%), Alterna Bank (2.5%), and Wealthsimple Cash (3% with direct deposit). All are CDIC-insured, have no monthly fees, and require no minimum balance.
- 2Complete the online applicationYou’ll need your Social Insurance Number, a government-issued ID, and a few minutes. Most approvals happen within minutes.
- 3Fund the accountLink your current bank account to the new one and initiate a transfer. Some banks allow you to do this directly from the new account’s dashboard.
- 4Set up automated transfersRedirect $25–$50 per month from your main account to the new HISA. Even small amounts add up, and automation removes the temptation to skip a month.
Use GICs for money you don’t need for a year or more
One-year GIC rates are currently 5.05% at Oaken Financial and 4.75% at EQ Bank. If you have $5,000 you won’t touch for 12 months, a GIC earns roughly $240 in interest — compared to $75 at the big bank rate. The catch is that you can’t withdraw early without losing the interest. For money you might need in an emergency, stick with a HISA.
What’s changing — and what to watch for
Bank of Canada rate decisions affect savings rates, but not equally. When the central bank cuts rates, big banks tend to lower their savings rates quickly, while online banks often hold their rates longer. If the BoC starts cutting later this year, locking in a GIC now at 5% could be a smart move. Keep an eye on the broader economic indicators that influence where rates are heading — they affect more than just your savings account.
Frequently Asked Questions
Is my money safe if I switch to an online bank? ▾
What if I have more than $100,000 in savings? ▾
Can I lose money in a GIC? ▾
What happens when a promotional rate ends? ▾
Do credit unions offer better rates than big banks? ▾
Does switching banks hurt my credit score? ▾
Your Money Is Worth More Than What Big Banks Are Paying
The reason Canadian savings accounts pay so little isn’t complicated — it’s a structural choice by big banks that face no pressure to compete. But that doesn’t mean you have to accept it. A 15-minute switch to a high-interest savings account or a one-year GIC can turn a quiet loss into a real gain. The gap between 1.5% and 3% might look small, but over five years on a $10,000 balance, it’s the difference between losing purchasing power and keeping it.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read Smart Tips for Renewing Your Home Insurance in Canada.
Sources and Further Reading
Tips for Saving Big at Discount Pharmacies in Canada — Another practical way to stretch your savings further by cutting everyday costs.
Money.ca (2024). Canadian Women, Inflation, Savings Accounts, and High-Interest Money Moves. 🔗
WealthRocket (2024). Why Most Savings Account Interest Rates in Canada Haven’t Increased. 🔗
Bank of Canada (2024). Inflation Target. 🔗
Canada Deposit Insurance Corporation (2024). Deposit Coverage. 🔗
