Knowing how much your HISA actually earns helps you decide how much to keep in cash savings versus investing in GICs, bonds, or equities. The answer depends on your balance, the current rate, and whether the account is in a TFSA.
How HISA Interest Is Calculated
Most Canadian HISAs use daily interest calculation, monthly payment:
$$\text{Daily interest} = \frac{\text{Balance} \times \text{Annual rate}}{365}$$
Interest accrues each day and is credited to your account at month’s end. The rate is typically quoted as an annual rate (APR).
Example: $25,000 at 4.5% $$\text{Daily interest} = \frac{$25,000 \times 0.045}{365} = $3.08 \text{ per day}$$ $$\text{Monthly interest} \approx $3.08 \times 30 = $92.47$$
HISA Earnings by Balance and Rate (Annual)
| Balance | 3.0% | 3.5% | 4.0% | 4.5% | 5.0% | 5.5% |
|---|---|---|---|---|---|---|
| $1,000 | $30 | $35 | $40 | $45 | $50 | $55 |
| $5,000 | $150 | $175 | $200 | $225 | $250 | $275 |
| $10,000 | $300 | $350 | $400 | $450 | $500 | $550 |
| $25,000 | $750 | $875 | $1,000 | $1,125 | $1,250 | $1,375 |
| $50,000 | $1,500 | $1,750 | $2,000 | $2,250 | $2,500 | $2,750 |
| $100,000 | $3,000 | $3,500 | $4,000 | $4,500 | $5,000 | $5,500 |
HISA Earnings by Month at 4.5%
| Balance | Per Day | Per Month | Per Year |
|---|---|---|---|
| $5,000 | $0.62 | $18.49 | $225 |
| $10,000 | $1.23 | $36.99 | $450 |
| $25,000 | $3.08 | $92.47 | $1,125 |
| $50,000 | $6.16 | $184.93 | $2,250 |
| $75,000 | $9.25 | $277.40 | $3,375 |
| $100,000 | $12.33 | $369.86 | $4,500 |
After-Tax HISA Earnings
HISA interest earned outside a TFSA is taxable. Your take-home interest depends on your marginal tax rate:
$25,000 HISA at 4.5% = $1,125 interest earned
| Province | Income Level | Marginal Rate | Tax on $1,125 | After-Tax Earnings |
|---|---|---|---|---|
| Ontario | ~$80,000 | ~33.89% | ~$381 | ~$744 |
| British Columbia | ~$80,000 | ~31.00% | ~$349 | ~$776 |
| Alberta | ~$80,000 | ~30.50% | ~$343 | ~$782 |
| Quebec | ~$80,000 | ~40.00% | ~$450 | ~$675 |
In a TFSA: You keep all $1,125 — no tax.
What Changes HISA Rates in Canada
Bank of Canada Policy Rate
The most important driver of HISA rates is the Bank of Canada’s overnight policy rate. When the central bank raises rates to fight inflation, commercial banks raise their deposit rates (including HISAs) — typically within 2–4 weeks. When the Bank cuts rates, HISA rates fall accordingly.
Competition Between Banks
Online banks compete for deposits. When one institution raises its HISA rate, others often follow to remain competitive. This is why EQ Bank, Tangerine, and Simplii often have higher rates than the Big 5 — they have lower overhead costs and use their rates to attract deposits.
Promotional Rates
Many institutions offer temporarily elevated rates for new deposits or new customers. These are typically 0.5–1.5% above the standard rate and last 3–6 months. After the promotional period ends, the rate drops to the standard rate — check the fine print.
HISA vs. Chequing Account: The Opportunity Cost
The interest rate difference between a chequing account (nearly 0%) and a HISA (4%+) creates a real cost when savings stay in the wrong account:
| Balance Left in Chequing | Annual Forgone Interest at 4.5% |
|---|---|
| $5,000 | ~$225 |
| $10,000 | ~$450 |
| $25,000 | ~$1,125 |
| $50,000 | ~$2,250 |
Keep only the minimum needed in your chequing account — transfer the rest to a HISA.
HISA vs. GIC: Comparing Returns
When HISA and GIC rates are similar, the HISA wins on flexibility. When GIC rates are meaningfully higher, locking in may be worthwhile:
| HISA (4.5%) | 1-Year GIC (5.0%) | Difference | |
|---|---|---|---|
| $10,000 after 1 year | $10,450 | $10,500 | $50 more in GIC |
| $50,000 after 1 year | $52,250 | $52,500 | $250 more in GIC |
| Accessible anytime? | Yes | No | — |
For an emergency fund: use the HISA — you cannot predict when you’ll need it. For money you won’t touch for 12+ months: compare rates and consider a GIC if the premium justifies the lock-in.