Does this bank’s 0.1% savings rate strike you as high interest?

Is there really such thing a thing as a high interest savings account today? Canada’s big banks think so.

Submitted for your consideration:

• Desjardins High Interest S@vings Account
• HSBC High Rate Savings Account
• National Bank High Interest Savings Account
• RBC High Interest eSaving
• Simplii Financial High Interest Savings Account
• TD High Interest Savings Account
• VanCity JumpStart High Interest Savings Account

These accounts pay a standard rate of 0.05 or 0.1 per cent, which in no way qualifies as high interest. The more apt description is pitiful. Savings accounts from alternative banks pay standard rates of as much as 1 to 1.5 per cent, while a 12-month Government of Canada T-bill has a rate of 1 per cent these days. High interest savings accounts packaged as mutual funds pay around 0.25 per cent.

We all know that interest rates are low and that high rates are nowhere to be found outside investments that carry a lot of risk. We accept that savings offer bulletproof safety as long as deposit insurance rules are followed, and that the cost of safety is a low return. But slapping the term high interest on accounts paying 0.05 to 0.1 per cent is misleading.

Some banks compound the problem by offering temporary deals for bonus interest at rates that look respectable. But these accounts always revert to the standard rate at some point.

A lot of big bank high interest accounts are legacy products that have been around since the days when rates were a lot higher. A name change would be mildly costly for banks, and counterproductive. The phrase high interest might be just the soothing assurance a busy customer needs to park money in a big bank savings account instead of a competitor that pays more.

Your homework is to check the interest rate on your big bank savings account and then read my Tuesday newsletter. The fifth instalment of the Back to Basics series will look at how to ensure you get a decent rate of return on your savings.

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Rob’s personal finance reading list

Cheap housing, high quality of life

This ranking of best places to live in Canada considers a wide variety of factors, including housing costs. Many ideas here for people looking to move to a city with affordable houses, and a high quality of life.

How does your online bank account stack up?

Best online banks for global banking, for seniors, for reward collectors and more. Also, best overall online bank. Worth a read to see how your own account package compares.

DIY body repairs for your car

How to economically fix a dent on your own, or with professional help.

A blogger’s favourite RRSP facts

Everything you need to know about registered retirement savings plans for the 2021 tax year. To start, the deadline for a contribution you can use for a deduction on your ‘21 tax return is March 1.

Q&A

Q: Is it really true that you need to spend less than you earn to get ahead? What about people who buy real estate they can’t afford to keep and then flip it for a profit?

A: Real estate flipping works for some, but I’ll stick with saving and investing steadily over a lifetime as the more reliable wealth-builder over the long term. House prices will not keep rising at current rates indefinitely. At a certain point, flippers will hit a wall.

Today’s financial tool

An alternative to hard-to-remember online passwords – introducing the passphrase.

Who I’m following on Twitter

David Coletto, CEO of the polling firm Abacus Data. Lots of useful intel on attitudes toward issues of the day, many of them finance-related.

The Money-Free Zone

Writing about saving put me in mind of the great Aimee Mann song Save Me.

In case you missed these Globe and Mail personal finance-related stories

• Anxious about math? It could be impacting your finances
• Roy and Gail need to consider all the angles if they want to retire abroad
• Squabbles over a ring provide estate planning lessons for the rest of us

More Rob Carrick and money coverage

Subscribe to Stress Test on Apple podcasts or Spotify. For more money stories, follow me on Instagram and Twitter, and join the discussion on my Facebook page. Millennial readers, join our Gen Y Money Facebook group.

Even more coverage from Rob Carrick:

• 🎧 Catch up on Stress Test: Are your parents giving you money? • Why it’s time to stop shaming the renting lifestyle • Is now the right time to buy a house? • Why are young Canadians leaving the cities they love? • Eating in: How COVID has shifted our food spending • Crisis-proof your finances? • Can you afford to live downtown? • The cost of kids
• ✔️ The housing file: The housing boom is ripping apart the financial fabric of Canada • Shut out: A well-qualified millennial home seeker throws up his hands after losing multiple bidding wars • Big city housing affordability is over – now what? • She sold her Toronto house to retire somewhere cheaper, but it didn’t work • How young adults and the whole country win with a tougher mortgage stress test for home buyers • Can’t afford your house? It’s likely not your fault
• 📈 Investing: Robo-advisers have grown out of the novelty stage. Here’s help in finding one right for you • The 2021 ETF Buyer’s Guide: Best Canadian equity funds • The 2021 Globe and Mail online brokerage ranking: Who’s best for investing … and answering the phone • Are these the stock market returns of a lifetime? • On the cusp of retirement and wondering about an ETF that pushes the limits on aggressiveness
• 💰 Your money: The five most important numbers for checking the health of your personal finances • Today’s freakishly low mortgage rates can’t last. What will pandemic home buyers do when they rise? • There’s a cost in money, isolation and family stress when seniors choose to remain in their own private homes • Taking CPP early can cost you $100,000 and limit your long term options • Fleeing the city for the suburbs? Watch out for higher property taxes, more cars and other costs

Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.