A high-interest savings account (HISA) is precisely what the name entails. Deposited funds earn high interest savings account rates at a higher rate than what is offered through traditional bank accounts. Before the recession happened, banks frequently paid 5 percent interest on regular accounts. These days, interest is a small fraction of 1 percent.
To receive a higher rate of interest, it is necessary to research high interest savings account providers to get the highest return on investment. Most of the banks compound interest quarterly. Some banks and financial institutions compound interest daily (daily interest savings), which is preferrable, particularly if your account balance tends to fluctuate.
Fortunately, because of the internet, it is simple to search high interest savings account rates from the comfort of your own home. With the click of a mouse, consumers can quickly evaluate a variety of banks to compare minimum opening and balance requirements, services offered, service fees, and interest rates.
Credit unions and banks frequently provide incentives for opening a high interest savings account in Canada, but these days, “online” banks tend to have lower fees, higher interest rates, and lower minimum balance
requirements. In all cases, it is vital to read the fine print to determine what fees there may be, and if the benefits provided outweigh the fees charged. Banks might provide a temporary high rate of interest but charge hefty fees when the balances fall below their minimum balance requirements. Some even charge fees for paper bank statements or the use of debit cards.
First-time home buyers frequently fail to understand they should provide a down payment using funds from their ownsavings accounts. Government regulations require that your down payment not be gifted or loaned from external sources. If you plan to receive some, or all, of your down payment from a friend or family member, this will impact your ability to qualify for a mortgage on your own. Average down payment requirements for purchasing a house range between 5 to 20 percent of the purchase price.
The sooner you start contributing to the best high interest savings account, the sooner you will be able to reach your financial goals. Start by setting aside at least 5 percent of your weekly income and strive to reach a minimum of 10 percent to enhance saving potential.