Are you tired of the low-interest rates of the big banks? You should be! Perhaps you’re looking to diversify your portfolio with low-risk fixed income security, a high-interest savings account is worth considering.
As online banks continue to dominate the Canadian banking industry, high-interest savings accounts (HISAs) have grown in popularity to the disadvantage of the big banks’ savings accounts.
Tangerine is currently a top contender among the providers of high-interest savings accounts in Canada.
But is it worth signing up for the Tangerine high-interest savings account? What are the pros and cons of doing so? How does the Tangerine HISA compare with other HISAs in Canada?
Keep reading to find answers to these questions and more!
Table of Contents
About Tangerine High-interest Savings Account
The Tangerine high-interest savings account refers to the savings account of Tangerine. The account has no annual fees and it offers a 1% regular savings rate with a 4.25% promotional interest.
Notably, the 4.25% promotional savings rate of Tangerine savings accounts is currently one of the highest in Canada.
While the regular interest of the Tangerine savings account competes significantly with the savings rate of the big banks, the same can’t be said of the rates of online-only banks.
If not because of the high promotional rate, the Tangerine savings account doesn’t come close to the savings rates of most online banks’ high-interest savings accounts in Canada.
But like the HISAs of other online banks, the Tangerine high-interest savings account requires no minimum balance.
As you continue reading, you will learn more about the Tangerine savings account to make an informed decision.
Pros of Tangerine High-Interest Savings Account
Even though the Tangerine savings account is not a full-fledged high-interest savings account, it has unique features that distinguish it from other savings accounts in Canada. Let’s take a quick look at them.
High Promotional Interest Rate
The Tangerine savings account has set a high promotional standard that many online banks struggle to beat.
For your first five months of opening the account, you will earn a competitive 4.25% interest on your savings.
To put it in context, you will earn $42.5 on every $1,000 saved and $425 on every $10,000 saved within the promotional period. The 4.25% interest will apply on every $1 you save up to $1,000,000.
In addition to the 4.25% interest offer, you will also earn up to a $400 bonus based on the 20% cashback offer on every eligible Visa Debit transaction.
However, you must meet the following eligibility to qualify for the promotional interest and 20% cashback offer:
- Become a client of Tangerine using the promo code “EARNMORE”
- Apply for a Tangerine Client Number by November 30, 2022
- Open an eligible Tangerine Savings Account and a Tangerine Chequing Account within 30 days of creating your Client Number
No Monthly Fees
This is not a unique feature since most online-only banks don’t charge monthly fees.
But with no monthly fees, the Tangerine savings account will earn you higher than you would from the big banks.
No Minimum Balances
Again most online-only banks don’t require a minimum balance, so the Tangerine savings account has measured up.
However, earning a high-interest rate on a no-fee savings account with no minimum balance offers a luxury feel that’s lacking at the big banks.
While most online banks allow auto-deposit, Tangerine takes a step further to offer an Automatic Savings Program (ASP) that allows you to set customized savings goals.
With this program, you can create savings goals and automatically save to achieve them. This takes away the stress of paperwork on your saving goals.
Cons of Tangerine High-interest Savings Account
What are the drawbacks of a Tangerine savings account? That’s what we’ll look at under this section.
Low Regular Rate
As noted above, the Tangerine savings account doesn’t deserve the title of (HISA) when compared to the savings account of other online banks in Canada.
With inflation hitting the roof, a 1% regular interest on savings is more significant last year than today. And Tangerine is very much aware of this because it constantly increases its promotional rate every time the Bank of Canada adjusts its prime rate.
Even though Tangerine’s 1% regular rate is 100x higher than the average rate of the big banks, the rate is considerably low when compared to the savings rates of most online banks in Canada.
Non-Sufficient Funds (NSF) Fee
A $45 fee applies on every unsuccessful pre-authorized debit on your Tangerine savings account. While some online banks also charge Non-sufficient funds (NSF) fees, others don’t.
This goes to show that the Tangerine savings account counts among the costly online-only bank accounts in Canada.
Is Tangerine High-interest Savings Account Safe and Legit?
The short answer is yes! The Tangerine high-interest savings account is safe and legit because deposits in the account are covered up to $100,000 by the Canada Deposit Insurance Corporation (CDIC).
With such deposit protection, you have nothing to worry about should Tangerine goes out of business tomorrow.
In addition, Tangerine employs state-of-the-art security technology to ensure the maximum protection of your information on its database.
How to Open a Tangerine High-Interest Savings Account
Opening a Tangerine high-interest savings account takes a few minutes as everything is done online.
But before you can open a Tangerine HISA, you need the following information and documents:
- Email address
- Phone number
- Social Insurance Number
- A valid government-issued ID
- Employment details
- Optional Orange Key (promo code)
Once you have the above information and documents ready, you can proceed to apply for the Tangerine savings account by visiting this application page here.
Other Tangerine Savings Accounts
Tangerine has a wide range of registered and non-registered savings accounts. In this section, we’ll take a brief look at other Tangerine savings accounts for your comparison.
1. Tangerine Tax-Free Savings Account
The Tangerine Tax-Free Savings Account is a tax-advantaged account with a 1.00% regular interest rate and a 4.25% promotional savings rate.
As with other TFSA accounts, your savings and withdrawals on Tangerine TFSA are tax-free. The account doesn’t also have monthly fees and a minimum balance requirement.
However, how much you can save on Tangerine TFSA depends on your contribution room. The general contribution room for 2022 is $6,000. But you can contribute up to $81,500 this year if you’ve never contributed to a TFSA since 2009 when it started.
With no monthly fees, minimum balance, taxes on savings and withdrawals, the Tangerine TFSA could be your umbrella on rainy days.
2. RSP Savings Account
Savings in an RSP savings account attract a partial tax advantage compared to savings in a TFSA. This is because deposits on an RSP savings account are not taxed until withdrawal.
Nevertheless, a Tangerine RSP savings account could be your best retirement planning vehicle because the account also offers a 1.00% regular interest rate and a 4.25% promotional savings rate.
In addition, the Tangerine RSP savings account has no monthly fees and minimum balance. But as with every other RSP account, there is an annual limit you can contribute to the Tangerine RSP savings account.
The 2022 limit is $29,210 and you can carry forward unused RSP contribution room until you reach 71 years when you’re expected to close the account.
Related: Best RRSP Rates in Canada
3. RIF Savings Account
RIF stands for Retirement Income Fund. You’re expecting to convert your RSP savings to a RIF account when you reach 71 years old.
The Tangerine RIF Savings Account allows you to withdraw your retirement savings while enjoying a 1.05% regular interest rate and 4.25% promotional savings rate.
The interesting part is that your interest in Tangerine RIF Savings Account is tax-free. You will only be taxed on the compulsory RIF annual minimum payment.
As with other Tangerine savings accounts, the RIF savings account doesn’t require monthly fees and a minimum balance.
4. Children Savings Account
Are you looking to imbibe your children with the habit of savings? Catch them young with a Tangerine Children Savings Account.
This account helps parents and legal guardians to teach their children how to save by providing a separate Client Number to each child. That way, your child can log in to their account and view past transactions.
Interestingly, the Tangerine Children Savings Account has a 1.10% regular savings rate which is higher than all other Tangerine savings accounts. The drawback is that the Tangerine 4.25% promotional rate doesn’t apply to this account.
But as with the above Tangerine savings account, the Tangerine Children Savings Account doesn’t require monthly fees and minimum balance.
5. US Dollar Savings Account
If you’re looking to save in US dollars, you can earn interest with the Tangerine US Dollar Savings Account while saving from foreign conversion fees.
As with the above Tangerine savings account, this account doesn’t require monthly fees and a minimum balance.
Even though the 4.25% promotional savings rate also applies to the Tangerine US Dollar Savings Account, the account has the lowest regular interest of 0.10%.
Notwithstanding, the Tangerine US Dollar Savings Account, provides you with the opportunity to save your money in one of the highly stable and strongest currencies of the world.
Related: Tangerine Credit Card Promotions
Alternatives to Tangerine High-Interest Savings Account
By now you must have noted that I’m not in support of classifying Tangerine savings accounts among the high-interest savings accounts in Canada. This is because its regular savings rate is below the average rate of most online banks in Canada.
For me, the Tangerine 4.25% promotional rate is a short-term trap for a long-term hook. While you can save a significant amount through the 5-month promotional period, the 1% regular will be a big drop.
As a result, I don’t recommend saving your money in Tangerine savings account for a long time. Where to go from here? You can’t go wrong with any of the following alternatives.
Which High-Interest Savings Account is Right For You?
The consistent competition among online-only banks is making it difficult to decide where to open a bank account.
The truth is, not a single online bank has it all. Even though Tangerine has below average regular savings rate, it’s currently trending for its above-the-roof promotional interest.
So in practice, you need to look beyond the interest rate when determining which HISA to sign up with. Another major factor you need to consider is the fee involved. This includes inactivity fees, NFS fees and transaction fees.
In addition, it’s essential to consider your banking needs and savings goals when looking for the best high-interest savings account in Canada.
Notwithstanding, you can’t go wrong with any of the above alternative high-interest savings accounts.
The Bottom Line
For years, Canadian banks have been in the business of enticing new clients with competitive offers. While some welcome offers have long-term value, others expire as soon as the offers expire.
No doubt, the Tangerine savings account has a mouth-watery offer compared to the average savings rate in Canada. But how long does the promo last? 5 months. What follows after that? A below-average regular interest of 1%.
With many alternatives to consider, I can’t recommend the Tangerine savings account to any serious saver that’s looking for long-term earnings.
Above all, you’re in the right position to determine the perfect high-interest savings account for you in Canada. What could that be? Kindly let me know in the comment.