Canadian Savings Accounts: The Big Banks are the Big Winners

While looking through life’s rear-view mirror, it seems quite evident to most people that the COVID-19 Pandemic has produced financial winners and losers, which have had an impact on Canadian savings accounts. There have been countless news stories about the struggles faced by small business owners in the restaurant industry as well personal fitness and travel businesses. 

On the winning side, it has been quietly reported on that middle class workers especially in the technological and office/clerical fields have done exceptionally well financially during the pandemic. In addition to them retaining their full salaries, they have also received all the same financial grants from the Federal and Provincial government that everyone else did.  And that doesn’t even bring into account how much they are saving on fuel, take out food, work clothes etc.

 But there is one group of winners that are making out like bandits and hardly anyone is talking about them.  Canada’s Big 5 Banks are cleaning up.

You see, while it’s true that many Canadians poured money into the overheated housing market and to a smaller extent the stock market, the majority of all that cash Canadians have been saving went right into… savings.  Plain old run of the mill savings accounts,  according to a recent Globe and Mail article.

canadian savings account

At their peak there was an additional $280 Billion deposited into savings accounts, 96% of which went to the big 5. While some of this money has since been withdrawn, there is still approximately $150 billion in surplus savings sitting in these bank accounts.

The craziest thing about this is it makes the big banks the ultimate winners and all those savers, losers.

How So?  Well I’m glad you asked.  You see, the banks are currently paying next to nothing in interest on savings right now. TD Bank is currently offering 0.05% interest on their high interest savings account.  To put that in perspective, which means they are paying $3 per year in interest on a $5000 deposit. I don’t think I need to tell you that this is beyond awful.  Especially when you understand that banks are allowed to lend money at a ratio of 10 to 1 to their deposits on hand.  That means for every $10,000 in savings at 0.05%, the bank can loan $100,000 at rates anywhere from 2.5% to 7% meaning huge profits for them.

Well at least I’m not losing money” you say.  Well, if only that were true.  Unfortunately, the hard truth is that inflation in Canada is currently running at about a 3.5% to 4% pace. The cost of things like meat, vegetables, fuel, clothing, even automobiles continue to rise at a very fast pace, meaning the buying power of those dollars you’re saving continues to drop.  A rate of return of 4% is required just to keep pace.  So sadly, these savers are losers in this game.

Speaking of saving money, I love to sit and chat over a cup of coffee about Canadian savings accounts. Usually, I buy the coffee. Because of COVID, we can’t always meet in person, so I will send you a $5.00 gift card when we chat on the phone. Are you Interested? Learn more here.


I get it.  The markets can be a volatile place. Lots of ups and downs. But did you know there are ways to invest in market with a 100% guarantee of your deposit?   It is true.  And they’re much easier to find than you think.  They’re call “Segregated Funds” and they’re doing amazing things for my clients every day.

Canadian savings account Klyne Financial

Let’s be honest here. You don’t have to be that aggressive to beat 0.05%.  To put it in perspective, if the remaining 150 billion still sitting in savings accounts were to earn just 1% it would create an additional $1,500,000,000 in wealth!

I don’t want the big banks to win.  I want you to win.  I want to make sure there’s more money going into your pockets, not theirs.  If you’d like to learn more, please drop me an email at mac@klynefinancial.com of give me a call at 519-721-7254.

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