How to Earn Higher Interest on USD Savings

The US Federal Reserve has started to lower its target interest rate. We set out some strategies for earning more interest on USD savings.

Earning higher interest on USD savings requires a little more effort than finding a Canadian Dollar high interest savings account, but the increased return on your savings can be worth your while. 

USD Savings Accounts

Savings Accounts with U.S. Banks

The highest yielding USD savings accounts offered by U.S. Banks currently offer interest rates of about 4.75% per annum but these accounts are generally offered only online and are restricted to US resident taxpayers. 

For Canadians who travel frequently to the U.S., opening an account at a brick and mortar branch of a bank is possible with the proper identification and proof of residency but that is not a realistic option for many people. 

USD Savings Accounts with Canadian Banks

The major Canadian banks currently offer interest rates on USD deposits ranging from 0.00% p.a. (not a typo!) to 0.05% p.a. (RBC and Bank of Nova Scotia) – a relative pittance, though they sometimes offer limited time promotional offers.

Many of the niche players that offer competitive Canadian Dollar high interest savings accounts do not offer USD savings accounts; those that do generally have higher interest rates than the major Canadian banks but those rates are still rather underwhelming. 

EQ Bank’s U.S. Dollar Account – A Gamechanger

EQ Bank now has a U.S. Dollar Account with a very competitive everyday interest rate, which we profile here.

EQ Bank’s U.S. Dollar Account is our #1 choice for USD savings.

Tangerine’s Special Offer is Almost Too Good to be True – Jump On It If You Can…

Tangerine currently offers a savings rate of 0.10% per annum but has a special offer that expires October 31, 2024 which increases this to 6.00% per annum. This promotional rate makes the Tangerine USD Savings Account the highest yielding savings account we could find in North America! It’s surprising to us that the offer has not gotten more attention.

USD Savings Accounts with Smaller Banks

After EQ Bank (and Tangerine’s promotional offer) there is a rather large drop off.

ICICI Bank Canada, a CDIC insured wholly owned subsidiary of ICICI Bank (India), has a little known retail presence in Canada. It may be worth checking out. It tends to offer good savings rates on its USD Savings Account.

The best rates among the smaller banks we could find were with a couple of Ontario credit unions: DUCA – a Thrifty favorite – and FirstOntario Credit Union — but neither rate is high enough, in our view, to warrant a new customer who does not already do business with these institutions, to open an account.

Note that USD deposits are not covered under Ontario’s Deposit Insurance, whereas CDIC now insures foreign currency deposits.

Don’t Forget GICs

GICs are another option to consider. Of the major players out there, Tangerine offers USD GICs with competitive interest rates. Of course, with a GIC you are getting a higher yield at the cost of liquidity.

SBI Canada Bank is little-known in Canada, but its parent company, State Bank of India, is one of the largest banks India. As of the date of this article SBI Canada was offering a one-year GIC with a rate of 5.00% — the best rate we could find. SBI Canada Bank is CDIC insured, so your deposits are protected (within CDIC limits).

Other options for those of you with a brokerage account…

Consider an Investment Savings Account or a High Interest Savings ETF

An Investment Savings Account or a USD High Interest Savings ETF are two very easy solutions for people with brokerage accounts.

USD Savings Accounts vs USD Investment Savings Accounts – A Comparison Chart

The contrast between what Canadian banks are willing to offer to their most loyal customers who open USD savings accounts directly with them, versus what those same banks are willing to offer customers who place deposits with them through Investment Savings accounts is, frankly, startling — though with rates now nearing zero the spread is naturally narrowing.  After all, these are effectively the same, products – merely offered through different channels.

The chart below is a real eye-opener:

Bank	Interest Rate USD Savings Account	Interest Rate USD Investment Savings Account
Bank of Nova Scotia	0.01% (not a typo !) to 0.05% p.a. (depending on balance)	4.40% to 4.55% p.a.
RBC Royal Bank	0.50% p.a.	4.40% p.a.
TD Canada Trust	0.01% (not a typo !)	4.40% p.a.

As of the date of this article, the Purpose US Cash Fund was yielding 4.73% (after management fees).

For a more comprehensive listing of Investment Savings Accounts, please see Mr. Thrifty’s full write-up.

For a more comprehensive listing of High Interest Savings ETFs, please see Mr. Thrifty’s full write-up.

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