HISA
Higher interest rates with full liquidity. Perfect for emergency funds and short-term savings goals.
Professional Explanation
A High-Interest Savings Account (HISA) is a savings account offered by financial institutions that provides significantly higher interest rates than traditional savings accounts, while maintaining full liquidity and accessibility. Unlike GICs, funds remain accessible at any time, making HISAs ideal for emergency funds and short-term savings goals.
Current Market Rates (2025):
- • Standard range: 1.75% to 3.0%
- • Promotional rates: Some institutions offer 4%+ for limited periods
- • Often better rates from digital/online-only banks vs traditional brick-and-mortar branches
Key Features:
- • No lock-in period: Access funds anytime
- • No minimum balance: Many have $0 minimums (check institution)
- • CDIC insured: Up to $100,000 per account category per institution
- • Tax on interest: All interest earned is taxable (can shelter in TFSA/RRSP)
- • Flexibility: Can add or withdraw funds as needed
When to Use HISA:
- • Emergency fund (3-6 months of living expenses)
- • Short-term savings (under 1 year)
- • Money you might need access to quickly
- • Bridge fund while waiting to invest elsewhere
- • Parking cash while deciding on investments
HISA vs GIC:
- • HISA: Flexible access, slightly lower rates, perfect for short-term
- • GIC: Locked-in term, higher rates, better for known timeline
Tax Efficiency:
Interest earned is fully taxable at marginal rate. However:
- • Can shelter HISA in TFSA for tax-free growth
- • Can hold HISA in RRSP for tax-deferred growth (though less common)
- • Example: 2.0% in TFSA HISA (tax-free) vs 2.75% in regular HISA (taxable at ~50% marginal rate = ~1.4% after tax)
Simple Explanation
Easy to UnderstandA HISA is basically a savings account that pays you way more interest than a normal savings account at your bank. Instead of getting 0.01% interest, you might get 2-3% interest, or even more if they're running a promotion.
You can put money in, take money out, whenever you want. No restrictions. The money is there for whenever you need it. It's super liquid, meaning it's easy to access.
The catch: The interest you earn is taxable—you have to pay taxes on it. But if you put your HISA inside a TFSA (tax-free savings account), then all that interest is completely tax-free.
It's perfect for an emergency fund or money you're saving for something that might happen in the next year or two. It's not as good as a GIC for long-term savings (because GICs pay more), but it's way better than letting money sit in a regular savings account earning basically nothing.
Best For
- Emergency funds
- Short-term savings (under 1 year)
- Quick access to cash
- Bridge funds
Key Benefits
- No lock-in period
- Higher rates than regular savings
- CDIC insured
- Can shelter in TFSA for tax-free growth
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