Which bank is best for you?
BMO, Scotiabank both offering bonus interest
Earlier this year, two of Canada’s big banks sought a way to make saving more interesting, adding incentives to encourage Canadians to sock away more money.
BMO’s Savings Builder Account rewards customers with bonus interest when they save $200 or more each month. Scotiabank’s Momentum Savings Account pays extra interest every 90 days if no withdrawals are made. Here’s how the accounts compare:
SCOTIA MOMENTUM SAVINGS ACCOUNT Base rate: 0.75% Incentive bonus: 0.75% Total interest rate: 1.5% Minimum balance: $5,000 Maximum balance: N/A What do they want you to do? Leave your money in for 90 days Account fees: None Other fees: $5 per withdrawal Moving your money: Unlimited transfers to other Scotia accounts
Scotia’s Momentum Savings Account pays regular interest of 0.75 per cent when you keep a balance of $5,000 or more. If you resist the temptation to withdraw from your account for 90 days, you’ll receive a 0.75-per-cent bonus, for a total interest rate of 1.5 per cent.
There’s no cap on the account, so if someone wants to park $250,000 or more in a savings account, they can still get the bonus rate.
The downside to Scotia’s account is that customers need to have a high starting balance ($5,000) just to qualify for the base rate of 0.75 per cent and before getting a chance to earn the incentive bonus.
BMO SAVINGS ACCOUNT BUILDER Base rate: 0.30% Incentive bonus: 1% Total interest rate: 1.3% Minimum balance: $0 Maximum balance: $250,000 What do they want you to do? Save $200 or more per month Account fees: None Other fees: $5 per withdrawal Moving your money: One free transfer per month to another BMO account
BMO’s Savings Builder Account rewards those who save consistently from month to month; active members who save $200 or more each month will get bonus interest of 1per cent and a total interest rate of1.3 per cent. Customers can start with a $0 balance and earn bonus interest right away by setting up an automatic monthly deposit of at least $200. That aligns with the “pay yourself first” mantra, which has long encouraged healthy savings habits.
The bonus interest caps out once balances reach $250,000 and customers are only allowed one free transfer to another BMO account each month. It’s a $5 charge per withdrawal, transfer, or debit transaction.
The verdict
We pitted these accounts head-tohead; however, each targets a different customer. BMO’s Saving Builder Account is aimed at those who are just starting out with short- to medium-term savings goals, and who can be rewarded for consistently adding to the account every month. Scotia’s Momentum Savings Account rewards inertia, and therefore is best suited for customers who already have a pile of money saved up and just want to park it.
You have to do more — i.e. save $200 per month — to get the bonus rate on the BMO account, but with no minimum starting balance it’s much easier to get started. On the other hand, for consumers who are only interested in getting the best rate, Scotia’s account wins handsdown.