Top Alternatives to Savings Accounts for Better Returns in 2025

You might be proud of the extra cash sitting in your savings account, thinking it’s the safest, smartest place for your hard-earned money. But here’s the naked truth: right now, traditional savings accounts don’t do much besides keep your money fenced in. With interest rates from Canada’s big banks hovering around a measly 0.01% to 1.5% (if you’re lucky), you’re actually losing money when you factor in inflation. So why are millions of Canadians sticking with plain old savings when better choices exist right under their noses?

Why Savings Accounts Don’t Cut It Anymore

Banks love to sell you on security and simplicity. And to be fair, a savings account does make sense for emergencies or short-term goals—think flights home for the holidays or that repaired window you didn’t see coming. They’re insured up to $100,000 by the CDIC, so you don’t lose out if your bank goes belly-up. But these days, leaving your money in savings is a bit like parking a sports car and never taking it out for a spin. The engine’s there, but you’re not using it.

Let’s talk numbers. According to the Bank of Canada, as of July 2025, core inflation sits around 2.7%. Meanwhile, if your savings account doles out 1%, you’re technically getting poorer each year, losing about 1.7% of your money’s value. You could have $10,000 sitting in savings for ten years, adding barely $100 in interest, while prices around you keep climbing. And the loyalty bonuses banks use to lure you in? They disappear after a few months—leaving you with a bland, interest-light sandwich.

Sure, it’s nice to have a safety net. But when Canadian fintech startups like EQ Bank and Tangerine regularly offer high-interest accounts with rates nearly double what the big five banks give (sometimes as high as 3%), it’s clear you have options. If you’re ready to actually make your money work for you, it’s time to break up with your regular savings account—or at least see other people.

TFSAs and RRSPs: Smarter Homes for Your Savings

Most Canadians have heard of TFSAs (Tax-Free Savings Accounts) and RRSPs (Registered Retirement Savings Plans), but few really squeeze the potential out of them. Here’s where things get interesting. A TFSA isn’t just a glorified piggy bank—it’s a powerful tool. You can use a TFSA to hold more than just cash. Think stocks, ETFs, mutual funds, GICs—your money grows, and you don’t pay tax on the interest, dividends, or capital gains you earn. That means more money stays in your pocket, plain and simple.

Here’s something that shocks people: If you invest $6,000 a year (the 2025 TFSA contribution room) in a low-fee ETF inside your TFSA, even at a modest 5% average annual return, you’ll have just over $76,000 in 10 years. You’d miss out on $14,000 in gains if you’d left that same cash in a savings account instead. RRSPs offer a different benefit—upfront tax breaks. If you’re earning a decent salary in Canada, stuffing your RRSP can shrink your tax bill and let your investments compound, tax-deferred, until you retire. Yes, you’ll pay tax when you take the money out, but most people retire in lower tax brackets, so you still win.

Remember, both accounts come with rules and limits. You don’t want to overcontribute, or you’ll get dinged with penalties. But if you’re playing the game right, both TFSAs and RRSPs can massively outperform your old-school savings. Not sure where to start? Plug your numbers into a free online calculator—there are tons of good ones, like those at Ratehub.ca or Wealthsimple—to see the impact for yourself.

High-Interest Savings and GICs: The Middle Ground

Maybe you’re not quite ready to ride the stock market rollercoaster. Fair enough; not everyone’s cut out for wild swings. This is where High-Interest Savings Accounts (HISAs) and Guaranteed Investment Certificates (GICs) come in. HISAs give you easy access to your cash, but with better rates than regular savings. With digital banks driving competition, some HISAs are paying over 3% in 2025, which is way better than 0.5% at a brick-and-mortar bank. Plus, deposits are federally insured—so you’re still playing it safe.

GICs are even more straightforward. You lock your money away for a set period—anywhere from 30 days to five years—and in return, you get a fixed interest rate. As of July 2025, some online banks are offering five-year GICs around 4% (see table below). If you know you won’t need a chunk of your savings for a while, a GIC could prevent you from spending it on something dumb (like the latest phone you don’t actually need), and you’ll beat inflation, finally.

Keep your eye out for promotional rates, but don’t get suckered into moving your cash every time. Read the fine print to check if the rate drops off a cliff after six months, and remember—you want best account types that work for you, not against you.

Stocks, ETFs, and Robo-Advisors: Take Your Savings to the Next Level

Ready to supercharge your returns? For those comfortable with more risk, investing in stocks, ETFs (exchange-traded funds), or using a robo-advisor is where you really lap the field. Let’s break it down.

An ETF isn’t as scary as your uncle makes it sound at Thanksgiving. Think of it as a basket of investments—stocks, bonds, whatever—bundled together so you get built-in diversification. Many Canadian ETFs track the market: if the TSX goes up 6% this year, so does your investment, approximately. You can buy these through your TFSA or RRSP and watch your wealth grow tax-free or tax-deferred. Do pay attention to fees; they’re tiny compared to mutual funds but still eat into returns over time if you’re not careful.

Robo-advisors are making investing brain-dead simple. Services like Wealthsimple or Questrade Portfolio IQ let you punch in your goals and risk level, and then automatically invest your money into balanced portfolios. Fees are much lower than traditional advisors, and you don’t need to know your S&P from your CPI to get started. As of summer 2025, Canadians are pouring billions into robo accounts, and the average portfolio return has been about 6.2% a year since 2018.

Investing directly in stocks carries the most risk but also the highest potential. If you’re picking household names like TD Bank, Shopify, or Telus, history shows the long-term outlook has been solid, but you need to buckle up for wild market swings. Rule of thumb? Only invest what you won’t panic about losing in a downturn, and always hold for longer stretches—ideally five years or more—so you can ride out any storms.

Is there a guarantee? Of course not. But sitting on cash in a savings account guarantees you’ll miss out. With a thoughtful strategy—mixing easy wins (like HISAs and GICs) with growth investments (ETFs or robo-advisors) in accounts like TFSAs or RRSPs—you kickstart your money into actually earning for you.

The biggest mistake? Doing nothing. Each year you delay, you’re leaving thousands of dollars on the table. Run your own numbers, check those interest rates, and make your next dollar work smarter than your last. Savings should never be the finish line—it’s just the launching pad.