Best Savings Rates For Lump Sum Canada

Compound Interest Formula:

\[ FV = P \times (1 + \frac{r}{n})^{(n \times t)} \]

Principal Amount (P):

CAD

Annual Interest Rate (r):

Compounding Frequency (n):

Time Period (t):

years

Future Value (FV):

Interest Earned:

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1. What is Compound Interest?

Compound interest is the interest calculated on the initial principal and also on the accumulated interest of previous periods. It allows savings to grow at an accelerating rate over time, as interest is earned on both the original amount and the interest that has been added to it.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

\[ FV = P \times (1 + \frac{r}{n})^{(n \times t)} \]

Where:

\( FV \) — Future value of the investment
\( P \) — Principal investment amount
\( r \) — Annual interest rate (in decimal form)
\( n \) — Number of times interest is compounded per year
\( t \) — Time the money is invested for (in years)

Explanation: The formula calculates how much your investment will grow based on the interest rate, compounding frequency, and time period.

3. Best Savings Rates in Canada

Details: As of September 2025, RBC High Interest eSavings offers up to 4.50% interest according to NerdWallet. Other competitive options include TD ePremium Savings (4.25%), Scotiabank MomentumPLUS Savings (4.20%), and CIBC eAdvantage Savings (4.15%). Always check current rates as they fluctuate with market conditions.

4. Using the Calculator

Tips: Enter your principal amount in CAD, annual interest rate as a percentage, select compounding frequency, and time in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between simple and compound interest?
A: Simple interest is calculated only on the principal amount, while compound interest is calculated on both the principal and accumulated interest.

Q2: How often do savings accounts typically compound interest?
A: Most Canadian savings accounts compound interest monthly, though some may compound daily, quarterly, or annually.

Q3: Are these savings rates guaranteed?
A: Interest rates can change at any time. The rates mentioned are current as of September 2025 but may vary.

Q4: Is there a minimum deposit required for high-interest savings?
A: Some accounts may require minimum balances to qualify for promotional rates. Check with individual financial institutions.

Q5: Are savings account earnings taxable in Canada?
A: Yes, interest earned on savings accounts is considered taxable income and must be reported on your tax return.