Open a Tax-Free Savings Account! -- Part 2

Now, Onus has done some homework about which TFSA is the best, and the answer lies in what you want to do. Generally, there are currently three different ways to open up a Tax-Free Savings Account. We'll be going through the Savings TFSA today.

A Savings TFSA is simply a place to save your cash with no wish to invest. For this method, you want to find an investment savings account that pays the highest interest rate while allowing your capital to be liquid. One of the beauties of the Tax-Free Savings Account is its ability to remain tax-free if withdrawn. Locking yourself into a GIC eliminates this advantage for a certain period. It is important to note that a couple of the Banking Representatives immediately suggested their GICs as a way to increase the rate of return. You'll probably note that some of these rates beat the GIC rates of most banks (with the exception of some of the longer-term ones).

See our breakdown of the rates of return below...keep in mind, these are variable rates and subject to change.

PC Financial Tax-Free Interest Plus Savings Account 3.75%/year
HSBC Direct TFSA 3.75%
CIBC Savings TFSA 3.0%
BMO Savings TFSA 2.75%
ING Savings TFSA 2.7%
Scotia Savings TFSA 1.75%
TD Savings TFSA 1.75%
RBC Savings (that option was not available we were told...we would have to invest in GICs)...However, Ellen Roseman posted a 2.5% for RBC in her Toronto Star article, "Still Time for Tax-Free Savings Accounts," which makes more sense.

If you're not looking to invest and simply to save your money, your answer is some sort of investment savings account. Both PC Financial and HSBC deliver.

Learn about the Investment TFSAs in our next post!