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Earn high everyday interest rates with the Scotia High Interest Savings Account
Key takeaways:
Prioritizing saving is essential to meeting your short- and long-term financial goals. But how you save can be just as important as how much you put away each month.
Two popular investment options available to Canadians are guaranteed investment certificates (GICs) and high interest savings accounts (HISAs). Each has its pros and cons, and the right choice depends on your timeline, risk tolerance, and goals.
Read on to learn more about GICs and HISAs and how they could work in your financial plan.
A GIC is one of the safest investment options available because your deposit (a.k.a. principal investment) is always guaranteed, no matter what happens in the market.
For example, if you invest $5,000 into a GIC where the returns are linked to the performance of a market index and the market doesn’t perform well, your $5,000 principal investment is still safe. GICs usually require a minimum deposit between $500 and $1,000, and you can’t touch your money unless it’s redeemable before maturity
Various types of GICs are available, generally ranging from 30 days to 10 years. Typically, you earn a higher interest rate with longer-term GICs. Traditional GICs have a fixed interest rate, while Market-linked GICs give you the potential to earn a higher rate depending on the performance of the underlying index.
On the other hand, a HISA works much like a regular savings account — but usually earns a higher interest rate than a typical chequing or savings account. How much interest you earn depends on the financial institution and how their product works, but typically, the higher your balance or the longer you keep your money in the account, the more interest you can earn. With the Scotia High Interest Savings Account you’ll be able to earn higher interest rates than with a regular Scotia savings account, depending on the balance of money that you have across your eligible Scotia accounts, also known as your Total Relationship Balance (you’ll need a minimum Total Relationship Balance of $10,000 CAD).1
What’s a Total Relationship Balance?
Your Total Relationship Balance is the combined daily balance in all your eligible accounts, including eligible Scotiabank chequing accounts, savings accounts, guaranteed investment certificates, and mutual funds available through Scotia Securities Inc. You’ll need the minimum Total Relationship Balance to earn interest on your HISA. The higher your Total Relationship Balance, the higher your interest rate that Scotiabank will apply to the funds in your Scotia HISA (up to the set maximum interest rate). This can help you reach your savings goals faster.
Visit scotiabank.com/totalrelationshipbalance to view all “Eligible Accounts” included in your Total Relationship Balance.
If you’re wondering how to choose between a HISA and a GIC, you’re not alone. Both GICs and HISAs have distinct advantages depending on your unique financial situation. The following questions can help you better determine if you should place your money in a GIC or HISA.
Both HISAs and GICs are good options, even if you are just starting to invest.
HISAs usually have no minimum deposit, making them perfect if you’re starting small or contributing regularly. With the Scotia HISA, in order to earn interest, while you don’t need to have a minimum deposit in the account, you will need to have a minimum Total Relationship Balance of $10,000. GICs often require a minimum deposit of $500 to $1,000, which is set by the financial institution.
If you have a large sum of money to invest, a GIC will usually provide the best interest rates as long as you don't need access to your cash for at least a month or longer. Even if you don't think you need access to your money for an extended period, it’s wise to ladder your GICs so that your entire investment isn’t tied up in one certificate. Laddering your GICs means dividing your investment into different GIC term lengths so they mature at varying time intervals – for example, after one year, two years, etc.
But if you want to save gradually — or you’re not ready to lock in your funds — HISAs make it easy to start with any amount and build over time, adding to your savings through the month. Many High Interest Savings Accounts allow customers to earn interest on all their balances, which is a great option if you don't meet the minimum deposit requirement for a GIC.
Remember, both products are insured (up to certain limits) by the Canada Deposit Insurance Corporation (CDIC) when held at a member financial institution, making them among the safest places to park your cash.
Your time horizon — meaning how long you have before needing to access your funds — is one of the most important factors to consider when choosing between a GIC and a HISA.
If your savings are for a short-term goal, like an upcoming vacation, home renovation, or emergency fund, a HISA is usually best. You can dip into your account whenever you need, with no penalties for withdrawals. You can start saving today with the Scotia High Interest Savings Account.
But if you’re saving for something for at least a year or longer— say a home renovation, tuition, or a car purchase — a GIC may be a better fit. Because your funds are locked in for a fixed period of time, you’ll benefit from a higher interest rate than most savings accounts.
If you’ve already saved up a sum of money to invest, a GIC may make the most sense. With a GIC, your investment is safe, and your principal amount is guaranteed no matter how the market fluctuates.
One thing to consider about a GIC is that once you purchase it, you can’t continue adding to it. It’s the pressure cooker of savings, so once it’s locked in, it’s best to leave it alone until the maturity date. You can always open another GIC once you have saved the minimum deposit needed.
If you’re contributing gradually, a HISA is the more flexible choice. Every dollar earns interest as soon as it hits your account, and you can set up automatic contributions to build savings painlessly.
A High-Interest Savings Account is a good choice for individuals who are saving more gradually for their financial goals, like building an emergency fund or saving for a car.
How much money are you hoping to earn on your investment? Research the interest rates for different GIC terms and HISAs. Comparing GIC and HISA offerings will also allow you to choose how often you’re paid interest.
Some GICs allow interest to be paid out while your principal remains invested, while others payout interest at the time of maturity. If you want instant access to interest earned, the monthly payouts might suit your financial needs better.
HISAs usually offer variable interest rates that financial institutions can change. While this gives you flexibility, it can also mean lower or fluctuating returns compared to a GIC.
Another consideration is inflation. If inflation is running higher than your HISA or GIC rate, the real purchasing power of your savings may shrink. That’s why many Canadians balance these products with other investment options, like mutual funds or ETFs, for longer-term goals.
Accessibility — or liquidity — is where HISAs really shine. If you might need your money on short notice, you’ll want it in a HISA. Think of it as your rainy-day umbrella, ready whenever the skies open up.
Use a HISA to build up your savings without losing access to your money in the case of an emergency. Once you have saved $500 to $1,000 that you can comfortably live without, even in a costly emergency, consider investing in a GIC.
If you’re confident you won’t need access for a set period of time, a GIC can reward you with a higher rate.
When deciding on how to balance HISAs and GICs in your plan, keep these considerations in mind.
|
Pros |
Cons |
GICs |
Safe, can get a guaranteed return with predictable growth, can be held in a registered investment account |
Less accessible if locked in for a set period of time, minimum deposit required |
HISAs |
Flexible, no minimum deposit, easy to access funds |
Variable interest rate (growth can be harder to predict), typically lower return than GICs |
GICs can be held inside a registered account, such as a Tax-Free Savings Accounts (TFSA), Registered Retirement Savings Plan (RRSP), or First Home Savings Account(FHSA), which can boost your savings with tax-free (TFSA, FHSA) or tax-deferred (RRSP) growth.
But remember, withdrawals from registered accounts sometimes come with restrictions or tax consequences — so make sure your money is in the right account for your needs.
So which is better — a GIC or a high-interest savings account? The truth is, it depends on your situation:
- Choose a HISA if you need flexibility, want to make ongoing contributions, or are saving for short-term goals.
- Choose a GIC if you have a lump sum to invest, can commit for a set period of time, and want the certainty of a fixed return.
Life can be unpredictable, so it’s wise not to tie up all of your money in one place. Ideally, the best long-term savings strategy would be to use multiple GICs and a HISA account together. However, if you are just starting your savings journey, a HISA is a great place to start.
Though GICs and HISAs work differently, both are wonderful tools to help you build your savings and reach your financial goals.
This article is provided for information purposes only. It is not to be relied upon as investment advice or guarantees about the future, nor should it be considered a recommendation to buy or sell. Information contained in this article, including information relating to interest rates, market conditions, tax rules, and other investment factors are subject to change without notice and The Bank of Nova Scotia is not responsible to update this information. References to any third party product or service, opinion or statement, or the use of any trade, firm or corporation name does not constitute endorsement, recommendation, or approval by The Bank of Nova Scotia of any of the products, services or opinions of the third party. All third party sources are believed to be accurate and reliable as of the date of publication and The Bank of Nova Scotia does not guarantee its accuracy or reliability. Readers should consult their own professional advisor for specific investment and/or tax advice tailored to their needs to ensure that individual circumstances are considered properly and action is taken based on the latest available information.
Commissions, trailing commissions, management fees and expenses may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed or insured by the Canada Deposit Insurance Corporation or any other government deposit insurer, their values change frequently and past performance may not be repeated.
