Personal Finance

I have $25000 and help me chose a bank account for this

  • Last Updated:
  • Jan 12th, 2019 6:10 pm
[OP]
Jr. Member
Jun 16, 2015
124 posts
50 upvotes
Burnaby, BC

I have $25000 and help me chose a bank account for this

I just got a cheque for $25000. What is the good bank I could deposit this into? I don't want to lock this for many years so I want to have option of able to withdraw this for rainy day.

I also don't know how interest rate works. I saw some bank giving 3%. Does it mean I give them the 25000 and they pay me 3% every month. Sorry I am not too savvy with these terms hence asking your help here.
4 replies
Sr. Member
Oct 14, 2012
615 posts
319 upvotes
Woodstock
No. Interest rates are almost always annual (for the year) rates. When they say 3% they mean for 25k left in for 365 days you would get $750. You then have to report that as "interest income" on your tax return, so some of that money will go to the government when you file your return in April of the following year. (If you have 25000 in TFSA room if you put it in a TFSA savings account you will not have to pay tax on anything it earns. It is harder to find a TFSA savings account that pays 3% though.)

The biggest trick right now is many banks are not offering 3% for the full 365 days. They are offering it for a few months. That means after those months are up, you will get what interest rate they drop down to. That will reduce your earnings from 750 a year to less.

To deal with that, many of us move our money each time the interest rate deal runs out. So we might put it in at Tangerine for 4 months at 3%, then if Simplii offers 3% after that, transfer it there, then if all that's available is 2.3% at EQ move it there. Bank accounts at Simplii, Tangerine, and EQ are free with no minimum deposit required, so we just keep accounts open at all 3.

Keep asking questions, it's the only way to learn.
Jr. Member
Aug 1, 2006
165 posts
59 upvotes
Also, if your TFSA isn't maximized make sure you put the 25,000.00 in a high interest TFSA ( tax free savings account ) . You can take out the money any time but can't put it back into a TFSA till the following year.
Deal Addict
User avatar
Nov 18, 2007
3401 posts
435 upvotes
Valleywood
Tangerine, Simplii, EQ Bank, etc., offer up to 3% on their daily interest savings accounts.

For a savings account the interest will be paid monthly. $25000 for 30 days will get about $61. But unless you put the money into a TSFA, there will likely be taxes owed when filing in 2020.

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