It’s quite possible to have a large amount of money that needs to be kept as cash, not invested, because it will be needed either within a few months or on very short notice. We have such a stash of cash so I spent some time recently trying to decide where to safely store it to make the most interest while we wait.
Why Do People Have Thousands of Dollars in Cash? Why Don’t They Buy Stocks or Shares With It?
Here are some examples of reasons you could have tens of thousands of dollars sitting in cash, un-invested:
- you’ve got your tuition for the year or the next two years saved up and you are in a high cost university program like medicine, engineering or law
- you have the money saved up to pay your rent for the next year at university
- you sold a home and are shopping for a new one soon
- you are almost ready to start your renovation and of course you saved for it instead of charging it all to a HELOC or credit card
- you are almost ready to buy a vehicle, which could even be a new boat
- you or your partner will be going on maternity leave soon and you have money saved up for when the new Mom is not working for pay
- you are retired and need to have cash to pay the bills for the next year or more that is not going to vanish if the markets tumble
- you have a generous emergency fund because you have to keep an entire family and house going if you lose your job
In those types of cases you don’t want to risk losing the money due to a sudden drop in equity or bond prices. You do want to make as much interest as you can, though.
Highest Daily Interest Savings Accounts
One place to put cash is in a savings account. The ones offered at most of the Big Canadian Banks, though, don’t offer much interest. (There can be exceptions when Big Banks offer special promotions. Credit Unions can also offer special deals with good rates so keep an eye on your largest local unions.)
That leaves the smaller banks. Some of these banks offer full-service features such as debit cards and ABM access. Others are eBanks.
An eBank usually doesn’t offer a debit card nor can you put in and take out money using an ABM. Instead, you usually must have a chequing account at another bank and move your money in by cheque or electronic funds transfer and out by EFT.
Which High Interest Savings Accounts at Which Banks Did I Look At Recently?
Here are some of the banks and eBanks I looked at:
- Alterna Bank
- EQ Bank (eBank)
- Oaken Financial (eBank)
- President’s Choice Financial
- Zag Bank (eBank)
What’s the Best Highest Interest Rate I Can Get from These Banks?
The annoying thing with banks is that they can change a “daily” interest rate daily. So as soon as I write and publish this, the rates could jump around. Always check the newest rate before investing.
The good thing is that you can MOVE YOUR MONEY if the rate changes. I have an account at EQ Bank, Oaken Financial, PC Financial and Tangerine. (I opened one at Zag Bank but I won’t use it (yet anyway). If one of them offers a better rate, I move my money. At the time I am writing this, on April 14 2016, there is no fee to move my money. So if I can earn higher interest by moving it, I do.
In most cases, I can move the money immediately. It may go “on hold” for a few days but it still starts earning the higher rate.
- 2.5% Zag Bank (eBank) But this rate is only on offer until June 1, 2016. There’s no telling what the rate will be on June 2.
I wouldn’t recommend Zag Bank to my friends and relatives because I was not happy with my account setup.
I’ve read comments from lots of other people who have been happy with the service, though, so I don’t know what to think. I’m still not sure whether I want to risk putting my money here so I’ve only got a few dollars in the account.
- 2.25% EQ Bank (eBank) As of April 18, 2016, they are dropping their rate from 3% to 2.25%.
You also have to go on a waiting list to open a new account until they catch up with demand.
- 1.85% Alterna Bank eSavings Account ONLY
Note: you don’t want their regular savings account if you are looking for their high interest account. You want the limited access eSavings Account. This is CDIC insured unlike some other Alterna products because Alterna is a credit union.
- 1.75% Oaken Financial (eBank)
They’ve offered this rate for a long time, specifically since May 12, 2015 till now April 14, 2016.
- 0.8% President’s Choice Financial
PC Financial offers special rates, though, from time to time. You have to keep an eye on it.
- 0.8% Tangerine But Tangerine is always tinkering.
Recently, in April 2016, they started emailing special short-term interest rate offers to some customers.
I got offered a rate of 1.81% but only on new deposits and only for a few months.
Others, like my husband, got offered nothing.
Still others were offered 3%!
They are also offering today, April 14 2016, a bonus rate of 2.4% for six months for customers opening their first (ever) account at Tangerine or ING Direct.
Which Bank Do I Recommend?
None of them.
I mean I have used most of them, except Alterna and I had a problem with Zag, but I don’t personally recommend any financial service.
You have to nose around yourself and decide whether you like the service and the offerings.
I’ve had acceptable service from Oaken Financial, Tangerine, PC Financial and EQ Bank but I’ve read comments from others who haven’t. I have never heard of anyone losing money at any of these banks, though.
Right now, on April 14, 2016, I have most of my cash at EQ Bank and at Oaken Financial. But if someone else offers me a better rate, I’ll be moving it.
If you open your first ever account at Tangerine (or ING Direct) and use my Orange Key, I will get a cash bonus. You have to actually type in my key, though, there’s nothing sneaky hidden in some link or whatnot.
I don’t get anything cash or otherwise from any of these other banks, in case you’re curious.
There are some Google ads on my website pages. If I’m lucky I make a few cents if you see an ad that interests you and you click through and buy something or do something similar. You’re right that I don’t make much money off this website!
Caution: If You Need IMMEDIATE Access to Your Cash These Banks May Not Be Right For You!
It’s important to know it could take up to 10 business days to get your cash back out of some of these eBanks. If you might need your cash immediately check the details very carefully for the bank you pick to put your cash into.
For example, it can take 8-10 days, possibly business days, to withdraw a large amount of cash from EQ Bank as of April 14, 2016.
It usually only takes 2 business days to push money out to a Canadian Big Bank from Tangerine or PC Financial as of April 14, 2016.
I have not tested how long it takes to get money out of an account at Alterna, Oaken Financial, or Zag Bank.
- How to Open an Account at Tangerine
- How to Open an Account at EQ Bank
- How to Open an Account at Oaken Financial
- How to Open an Account at PC Financial
- How to Open an Account at Zag Bank
Do you use an eBank to park your cash? Where do you get a good rate and good service? Please share your experiences with a comment.