What this topic covers
Most of the money a household holds at any moment is not invested. It sits in chequing and savings accounts waiting for rent, the next bill, or an emergency. This topic covers that cash layer: the account types available, how savings accounts calculate interest, and how to decide what belongs in savings and what belongs in an investment account.
The core mechanics are the same everywhere — interest compounds daily or monthly, and the annual percentage yield (APY) is the figure that lets you compare accounts fairly. The products differ by country. In Canada that means high-interest savings accounts, GICs and the option of holding savings inside a TFSA; in the US, high-yield savings accounts, money market accounts and certificates of deposit. The guide covers both.
Who these guides are for
They are for anyone setting up an emergency fund, saving toward something one to three years away such as a down payment or a car, or holding cash while deciding what to do with it. They are also for anyone who has left savings in a default account for years and wants to check whether it still makes sense.
Savings accounts are for liquidity and keeping capital safe, not long-term growth. Money for goals many years away usually belongs in the investing topic instead, and the guide explains where that line tends to fall.
A note on rates
Savings rates change often and differ by institution, so these pages do not quote a current rate. Check the rate and any conditions — minimum balances, promotional periods, fees — with the institution directly, and use the calculators below with the figure you are actually offered.
Where to start
- Compound Interest Savings Accounts: How They Work — How savings accounts compound, APY versus APR, standard versus high-yield accounts, and the Canadian and US account options side by side.
Calculators for this topic
- Emergency fund calculator — set the target for the account that has to be there when something goes wrong.
- Compound interest calculator — see how a balance grows at a given rate and compounding frequency.
- TFSA calculator — for Canadians, estimate contribution room and project savings held inside a Tax-Free Savings Account.
