A high interest rate is a must to help you grow your savings balance faster. But the rate isn’t the only factor that determines how much interest you earn on your account — it also depends on how often interest is calculated.
In this guide, we’ll explore how daily interest savings accounts work and how to calculate the interest on your account.
| Savings account | Standard interest rate | Interest calculated | |
|---|---|---|---|
| EQ Bank Notice Savings Account | 3% – 3.05% | Daily | |
| EQ Bank Personal Account | 1.75% | Daily | |
| Simplii High Interest Savings Account | 0.35% – 3.75% | Daily | |
| Scotiabank MomentumPLUS Savings Account | 5.25% for 3 months, 0.75% thereafter | Daily | |
| KOHO Earn Interest | 3.5% – 5% | Daily | |
| Laurentian Bank High Interest Savings Account | 2.5% – 3.5% | Daily | |
| TD High Interest Savings Account | 0.05% (balances of $5,000 and over) | Daily | |
| Tangerine Savings Account | 0.3% | Daily | |
| CIBC eAdvantage Savings Account | 0.25% – 1.2% | Daily | |
| RBC High Interest eSavings Account | 1.15% | Daily | |
| BMO Savings Amplifier Account | 1.35% | Daily | |
| PC Financial PC Money Account | 4% | Daily | |
| Neo Financial High Interest Savings Account | 3% | Daily | |
| Wealthsimple Cash Account | 2.75% – 3.75% | Daily |
A daily interest savings account is a bank account on which your interest earnings are calculated daily. On most high interest savings accounts, interest is calculated daily and paid monthly.
At the end of each day, the interest you will earn is calculated based on your closing balance. This daily interest is then added to your account at the end of the month, allowing you to take advantage of the power of compound interest and build a bigger savings balance faster.
You can calculate daily interest by:
To give you an example, let’s say you have $5,000 in a Neo Financial High Interest Savings Account, which has an interest rate of 3%. You can calculate daily interest with the following formula:
This gives you a daily interest amount of $0.41. At the end of the month, the interest you earn each day is added up and deposited into your account.
The formula for calculating daily compound interest is A = P(1 + R/N)NT
In this formula:
As an example, let’s say you deposit $1,000 for one year in an account paying 3% interest.
So A = $1,030.45.
You can calculate the monthly interest rate on your savings account by completing the following steps.
If you want to see your monthly interest rate expressed as a percentage, take the decimal figure (0.0025) and multiply it by 100. This means your monthly interest rate is 0.25%.
If you’re comparing savings accounts and deciding where to deposit your hard-earned money, you may be wondering whether a monthly or daily interest savings account is a better choice.
The answer is that daily interest savings accounts are a better option than monthly interest savings accounts. This is because the more often interest is calculated on your account, the faster your balance will increase. The difference may not be all that substantial, but it will add up over time.
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There are several competitive options worth comparing if you’re searching for the best daily interest savings account in Canada. KOHO Earn Interest pays between 3.5% and 5% interest depending on the plan you select. There are three plans to choose from, with the entry-level Essential plan paying 3.5% interest and coming with no monthly fee.
PC Financial’s PC Money Account is another popular option, paying 4% interest and also rewarding you for your spending with PC Optimum points. Then there’s the EQ Bank Notice Savings Account which pays 3% or 3.05% interest, provided that you provide 10 or 30 days’ notice before making a withdrawal.
That said, you might be able to find a higher interest rate elsewhere. But these rates may only apply for a limited introductory period, such as 3 or 5 months, or you may need a large account balance to qualify for the highest possible rate.
Find out more in our guide to savings account interest rates.
The frequency with which interest is calculated on your account has an important impact on how quickly your savings grow. With a daily interest savings account, interest is calculated at the end of each day and typically added to your account at the end of the month. Compare savings account interest rates to find the best place to deposit your money.
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