Until now, though, options for holding and growing cash in Canada have been limited to high-interest savings accounts (HISAs), guaranteed investment certificates (GICs) and money market funds (MMFs). So, the arrival of an accessible notice savings account (NSA) is great news for those seeking an alternative. (Note: The EQ Bank Notice Savings Account is not yet available in Quebec.)
Read on to learn all about EQ Bank’s brand-new Notice Savings Account, which offers 4.50% or 5.00% interest, depending on which option you choose. See why it’s a great option for short-term and medium-term savings goals.
sponsored
EQ Bank Notice Savings Account
- Monthly fee: $0
- Interest rates: 4.50% for 10-day notice, 5.00% for 30-day notice. Read full details on the EQ Bank website.
- Minimum balance: n/a
- Eligible for CDIC coverage: Yes
Why hold cash in your portfolio?
When people think about investing, they often focus on stocks, mutual funds and exchange-traded funds (ETFs). Cash is less prominent than other types of investments, but it can be an important part of your portfolio, too.
For starters, cash is a way of diversifying, which helps mitigate risk. A resilient, diversified portfolio might include a combination of equities (stocks); mutual funds and/or ETFs (which invest in dozens or even hundreds of companies); fixed income (such as bonds and GICs); and cash. The exact mixture will depend on your financial goals, time horizon and risk tolerance.
Cash is stable, meaning that unlike equities or bonds, it doesn’t fluctuate in value. If you save up $1,000 and keep it in a savings account or buy a GIC, you’ll still have $1,000 in six months, plus whatever interest you’ve earned.
Finally, cash is liquid, which means that you can access it quickly and easily—a major benefit when you need funds but can’t or don’t want to sell your investments. You might need cash for an unexpected expense or emergency, or to act on a compelling investment opportunity, for example.
Where Canadian investors can hold cash
There are only so many places that Canadian investors can hold their cash, aside from a regular bank account. As noted above, traditionally these have included HISAs, GICs and MMFs, like mutual funds and ETFs. Now, however, investors in Canada can also choose the EQ Bank Notice Savings Account, the first in the nation to offer NSA benefits with no minimum deposit. And, like HISAs and GICs, NSAs are covered by the Canada Deposit Insurance Corporation (CDIC), meaning that if your financial institution fails, your funds are insured for up to $100,000 per account.
| EQ Bank NSA | HISA | GIC | MMF | |
|---|---|---|---|---|
| Interest rate or yield | 4.50% or 5.00% interest | Interest rates typically range from 0.01% to 4.00% | Varies—generally, GICs with longer terms and less flexibility have higher interest rates. Current rates for 30-day GICs (the shortest term available) range from 2.8% to 4.3%. | Currently, you can find money market funds yielding 4% to 5% |
| Withdrawal terms | 10 days or 30 days, depending on the account | Cash withdrawals are immediate; transfers may take a few days | At end of term only (unless it’s a cashable or redeemable GIC) | Usually takes a few days to withdraw |
| Minimum balance | No | No | Usually $500; only $100 minimum investment with EQ Bank | $100 to $5,000, depending on the fund |
| Maximum contribution | $200,000 for an individual account, $500,000 for a joint account | No | Non-registered accounts usually have either a very high maximum or no maximum amount. Registered accounts (RRSPs, TFSAs, etc.) have contribution limits. | No |
| Fees | None | Sometimes | None | Management fees of 1.5% to 2% |
| CDIC coverage (up to $100,000) | Yes | Yes | Yes | No |
How a notice savings account works
Although notice savings accounts are common in the United Kingdom and Australia, they’re not common in Canada and have typically been restricted to businesses or aimed at high-net-worth banking customers. The EQ Bank Notice Savings Account is the first of its kind in Canada to be available to everyday investors and savers, with no minimum balance or fees and the same rates for all account holders.
