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Best Tax-Free Savings Accounts (TFSA) In Canada

How to get the best TFSA interest rates in Canada

WARNING: You should not be using your TFSA as a high interest savings account. Getting the best TFSA interest rate is possible, BUT you’re way better off to use your TFSA to invest in low cost index funds within the stock market.

That’s because the TFSA is specifically design to give you tax, free withdrawals when you’re retired. So if you grow your TFSA to $1 Million, then you can take out $1 Million and pay $0 in tax 😱

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Quick Pick A Section:

Comparing The Best TFSA Interest Rate Accounts

Mark’s Fav TFSA Account

How To Earn The MOST Interest In Your TFSA

TFSA FAQ’s

TFSA Interest Rate Summary

TFSA interest rate comparison matrix

Which Has The Best TFSA Interest Rate?

Do not just read the Canadian government’s description of what a TFSA is and does. A TFSA is a type of investment account! Where you can choose a managed portfolio like from a Wealthsimple, or Questrade. Or open a self-directed TFSA which is what you must do if you go to a big bank like BMO or TD.

The big catch? If you’re not certain on what you need to do – the big banks will open a managed TFSA account. Where you do not have access to buy and sell low cost index funds or ETFs. Instead the bank will just manage your money for you. Which means you would pay 5x higher fees than you would have in a self-directed TFSA.

*Note this page may use affiliate links where I may get a small commisison if you signup after clicking my links. My promise to you – is that I’ll promote the best products. Regardless weather I get a commission or not.

WealthsimpleBMOTDQuestrade
Type Of TFSAManaged PortfolioSavings AccountSavings AccountManaged Portfolio
Ease Of Use5/53/53/54/5
Management Expense Ratio (MER)0.12%0.75%0.39%0.25%
Interest Rate Earned (approx)~7.5%2.5%4.5%~7.5%
Mobile AppYes, but it sucksYes, but it sucks
My Rating⭐️⭐️⭐️⭐️⭐️⭐️⭐️⭐️⭐️⭐️⭐️⭐️⭐️⭐️

The 3 Big Mistakes When Choosing A TFSA

#1 Opening a “money market” or high interest rate TFSA

If you walk into any big bank and tell them you want to open a TFSA account and want to earn a high interest rate on it. They’ll say GREAT! And most likely sign you up for a TFSA account that is a managed account (which means you can’t buy and sell investments yourself).

Plus they’ll “invest” your money in one of their own bank money market funds. Which essentially functions like a high interest savings account. I know this is true, because it is exactly what happened to me.

If you do this you’ll be passing up on hundreds of thousands, or millions of dollars that you could earn in a self directed TFSA.

#2 Opening a TFSA with one of the big banks

The big banks in Canada have been robbing Canadians for decades. As oligopolies the banks have no competition. So they collude and set prices, and charge us high fees every time we sneeze. Avoid opening a high interest rate TFSA with them at all costs.

#3 Not finding the lowest MER (management fee)

To the unsuspecting eye, 1% management fee doesn’t sound like a big deal. Until you start to do the math and realize that a 1-2% management fee vs a 0.12% management fee means you’ll pay upwards of $300,000 MORE to your bank or fund manager! 😱 Avoid high fees at all costs.

Wealthsimple TFSA account growth snapshot

Mark’s Top Pick: Wealthsimple

$0 monthly fee

Access to $0 fee index fund purchasing

Invest & earn maximum returns!

How To Earn The Most Interest In Your TFSA

#1. Open a self-directed TFSA

Self-directed TFSA’s like what Wealthsimple offers are the best option for Canadians looking to maximize the returns on your savings.

#2. Buy low cost index funds

Buying low cost index funds is the easiest way to earn a high rate of return, with minimal fees. Checkout my favourite; VGT, VFV, and VTI.

#3. Max out your contribution limit

TFSA accounts are very powerful – when used correctly. That’s why the government limits how much money you can contribute. Check your CRA account to find your limit, and fill it up as soon as you can!

#4. Wait…

One of my favourite features with Wealthsimple is the ability to automatically re-invest your dividends, re-invest your cash back, and setup auto deposits.

Putting your money to work, on autopilot.

TFSA Interest Rate FAQ’s

Which bank has the highest interest rate for TFSA?

In Canada, the big banks have high fees, and low returns. So to get the highest interest rate on your TFSA you should open a self-directed TFSA with a company like Wealthsimple or Questrade. Then use the money inside your TFSA to signup for their managed investment portfolios, or buy low cost index funds in a self-directed account.

That will give you the highest interest rate in your TFSA!

What is the biggest mistake Canadians make with their TFSA?

In my opinion the biggest mistake Canadians are making is putting cash into their TFSA – then not investing the cash inside their account. Any withdrawals from your TFSA are TAX FREE! So it’s ideal for long-term retirement savings. Whereas any other investment or savings account in Canada you’ll pay tax on your profits.

How can I get $25 free in my TFSA?

By using my referral code KBYLNW you will get $25 when you signup for a TFSA using Wealthsimple.

best TFSA interest rates

Money With Mark’s Summary:

My Personal Thoughts On TFSA Accounts

If you can avoid making the 3 common mistakes that destroy your TFSA returns. You’re going to be in a good place. After that choosing an investing platform is really up to your own preferences.

For the easiest TFSA account I would use Wealthsimple. For the lowest fees I would use Questrade. And I would never ever signup with a big bank again.

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Money With Mark is a personal finance speaker, influencer, author and content creator on YouTube, Tik Tok, and Instagram.