Frequently Asked Questions About FHSAs
On April 1, 2023, Questrade became the primary company to introduce an FHSA in Canada. Since then, greater than 20 other financial institutions, including all of Canada’s Big Six banks, have launched the brand new account. Additional FHSAs are expected to be available in 2024.
Overall, adoption of FHSAs has been slower than expected, and availability stays limited today, even at some large banks. For example, it’s possible you’ll have to speak with a representative in person to open an account, and a few FHSAs aren’t yet available through banks’ investment platforms. Read more about it below how you can open an FHSA at any institution.
You can open an FHSA here now
According to November 2023 data from the federal government, greater than 20 financial institutions currently offer an FHSA. The MoneyDown editorial team will update this page as more accounts turn out to be available so you may easily find the perfect FHSA. Here are the currently available accounts. Since all FHSAs are registered, the accounts and rates of interest mentioned are also registered. (Providers who didn’t provide information on their website and/or didn’t reply to MoneyDown inquiries weren’t considered.)
Compare FHSA savings rates on money
A handful of FHSAs offer interest in your savings, and a few institutions are currently offering special rates of interest for a limited time frame. The table below shows the rate of interest you’d receive when you transferred funds to the account on the time of publication. In some cases it’s a promotional price. Offers are subject to alter. Please check along with your FHSA provider.
| FHSA Providers | Savings rate | The motion ends |
|---|---|---|
| BMO | 5% | n/a |
| CIBC | 5% | n/a |
| Gardens | 5% | n/a |
| EQ Bench | 3% | n/a |
| Hubert Financial | 3.65% | n/a |
| meridian | 5% | May 31, 2024 |
| National Bank | 1.10% | n/a |
| Financially saved | 6% | n/a |
| Scotiabank | 5.10% | May 31, 2024 |
| TD | 0.05% | n/a |
MoneyDown Insight
Funds held in FHSAs at eligible financial institutions are protected inside certain limits. Up to $100,000 in eligible deposits (i.e. money and guaranteed investment certificates) are insured by the Canada Deposit Insurance Corporation (CDIC). And as much as a complete of $1 million in investments (e.g. securities, money and commodities) held in registered accounts are protected by the Canadian Investor Protection Fund (CIPF). The latter offers separate protection for other accounts and registered savings plans.
– MoneyDown Editors
How to Choose an FHSA
To select the precise FHSA, it is best to ask yourself the identical questions you’d when opening another account, says Aaron Hector, a licensed financial planner and personal wealth advisor at Calgary-based CWB Wealth. It’s vital to think about the FHSA’s investment options and costs, and likewise consider whether you are “on your own” or receiving financial advice from the corporate offering the account.
As more FHSAs turn out to be available, consider these aspects before opening the account:
- The sort of service offered: Would you relatively speak to an investment advisor? Online platforms may not offer the service you would like – ask what sort of support you may expect.
- Your investment knowledge: Consider your comfort level when investing. Experienced DIY investors might consider an FHSA with a self-directed online broker in order that they can manage their investments themselves. New to investing? You may prefer to take a position through a low-cost robo-advisor or leave your assets to an investment advisor.
- Trading and administration fees: If you favor to take a position the cash inside your FHSA, take an in depth take a look at the fees for executing trades or managing your portfolio. These costs can add up quickly. Your comfort level with paying trading and management fees also needs to influence your decision about whether to take a position in your FHSA through a broker, a reduction broker or a robo-advisor.
- Interest charges: Some providers offer competitive rates of interest on funds held inside your FHSA, akin to tax-free savings accounts (TFSAs). As a savings account, an FHSA that pays interest could also be an excellent fit for individuals who simply wish to earn tax-free interest on their money without the danger of investing in securities. If that is your strategy, select the account that gives the best rate of interest in your savings.
A Guide to FHSAs in Canada
What is an FHSA?
Abbreviated for First Home Savings Account (FHSA), it’s a sort of registered account designed to assist Canadians save for the acquisition of their first home, namely the down payment. The minimum down payment on a house depends upon the acquisition price, but many owners aim for a 20% down payment to avoid mortgage default insurance. You can contribute as much as $8,000 per yr to an FHSA, as much as a lifetime limit of $40,000.
The FHSA is analogous to the RRSP and TFSA, that are also available to Canadians. FHSA contributions are tax-deductible, like an RRSP, and the cash may be withdrawn tax-free, like a TFSA – so long as the withdrawal is used for a down payment on a house. Funds contributed to an FHSA grow tax-free and aren’t subject to capital gains taxes.
What is an FHSA? Read the MoneyDown Glossary definition.
FHSA start date
FHSAs became available on April 1, 2023 through laws passed in 2022. FHSAs may be issued by banks, credit unions, insurance firms and trust firms. Eventually it is best to find a way to search out them wherever RRSPs and TFSAs are offered.
