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What is a Cash Account?
In the context of investing platforms like Wealthsimple, a cash account is a high-interest account designed to hold money you're not actively invested in — earning a competitive interest rate while staying fully liquid. Unlike a bank savings account, these often pay rates that meaningfully beat the big bank offerings.
It's not a registered account — it's more like a holding area for your cash between investments, or a better alternative to leaving money in a low-interest bank account.
Cash accounts are ideal for: emergency funds you want to earn something on, short-term savings goals (vacation, car, etc.), money waiting to be invested at the right time, and funds between trades in your investment accounts.
How Does a Cash Account Compare?
| Account Type | Typical Rate (2026) | Insured | Lock-in |
|---|---|---|---|
| Wealthsimple Cash | ~3.5–4.5% (varies) | CDIC protected | None |
| EQ Bank Savings | ~3.0–4.0% | CDIC protected | None |
| Big Bank Savings (TD, RBC, etc.) | 0.01–0.50% | CDIC protected | None |
| Big Bank TFSA (savings type) | 0.50–2.0% | CDIC protected | None |
| GIC (1 year) | ~4.0–5.0% | CDIC protected | 1 year |
Rates change with the Bank of Canada policy rate. Always check current rates on each platform before deciding.
Wealthsimple Cash
Wealthsimple's cash account product is one of the more popular options in Canada. Key features include:
- Competitive interest rate paid daily
- No minimum balance or monthly fees
- Instant transfers between your Wealthsimple investing accounts
- CDIC deposit protection
- Works alongside your TFSA, RRSP, and investing accounts in the same app
The key advantage over a standalone high-interest savings account is integration — your cash and investments live in the same platform, making it easy to move money when an opportunity arises.
Cash Account vs TFSA Savings
If you're comparing a cash account to keeping savings in a TFSA, always put your savings in the TFSA first — the interest you earn in a TFSA is completely tax-free. A cash account interest is taxable as regular income.
Use a cash account for funds that exceed your TFSA room, or for short-term money you may need quickly before your TFSA room has been established.
✅ Advantages
- Much higher rates than big banks
- Fully liquid — withdraw anytime
- CDIC deposit insurance
- Integrates with investment accounts
- No lock-in period
❌ Limitations
- Interest is fully taxable (use TFSA instead when possible)
- Lower returns than investing
- Not a replacement for investing
- Rates fluctuate with Bank of Canada rate