The Benefits of High-interest Savings Accounts
(Hey Everyone! I’m on holidays this week so while I’m away check out this great post from Rate hub about the benefits of High Interest Savings Accounts)
If you want to save, you have a number of options of where you can put your money. You could settle for a low interest rate or you could shop around for a high-interest savings account.
Here are some of the benefits of this type of account:
Returns are guaranteed
Mutual funds and stocks can provide you with the ability to earn greater returns on your investment. However, past performance is no guarantee of future results. A high-interest savings account will provide you with a guaranteed return on your money. Although interest rates aren’t as high as they once were, the money you’ll earn will be more than what you’d get if you used a regular savings account. A high-interest savings account is one of the few options where you’ll get a guaranteed return on your money.
Savings are guaranteed
Up to $100,000 of your savings are guaranteed if your financial institution is a member of the Canada Deposit Insurance Corporation (CDIC). If your savings are held by a credit union or caisses populaires, your deposit will be protected by a non-government insurer or a provincial corporation. The minimum guarantee is up to $100,000 in some provinces while others have no maximum. If you invest in stocks or mutual funds, there are no guarantees you won’t lose money.
There are other guaranteed savings vehicles, such as GICs, but the money could be locked in for a certain period of time if you choose a non-redeemable GIC. If you do choose to withdraw money early, you could lose some or all of the interest you’ve earned. There are also redeemable GICs but the interest rates will be lower. If you don’t want to lock in your money but still get an interest rate that’s comparable to or even higher than what GICs pay, you should consider getting a high-interest savings account.
Save for a home
If you want to buy a home in the near future, you shouldn’t invest in stocks because there’s a risk you could lose a portion of what you’ve invested. That’s why a high-interest savings account makes perfect sense.
Stash your emergency cash
Because your money is easy to access, a high-interest savings account is a great place to build up an emergency fund. It’s always a good idea to have some extra money lying around in the event you lose your job or have unexpected home repairs. Most financial experts recommend having at least three months’ worth of living expenses. An emergency fund will save you from going into debt should you have any unforeseen costs.
The bottom line
A high-interest savings account offers some great benefits to other savings and investment options and it can be used for many different purposes.
RateHub.ca is a website that compares mortgage rates, credit cards and deposit rates with the goal to empower Canadians to search smarter and save money.