How to Calculate Interest on a Savings Account
Key Points
- Everyday rates can help you reach your savings goals faster than promo rates
- Avoid "too-good-to-be-true" promo rate pitfalls
- Boost your savings with simple strategies like:
• Choosing the right account
• Automating your savings deposits
• Minimizing withdrawals from your savings
• Monitoring your account for catches
- The PC Money™ Account makes reaching your savings goals straightforward
Making a habit of contributing to your savings account (opens in a new window) is key to reaching your money goals. To help ensure you’re reaching your goals, you need to earn a competitive, high interest rate (or what we call our “everyday rate”).
Think of the right everyday interest rate on your principal as track cleats for your savings goals. You can get to the finish line a lot faster with them.
But not all interest is created equal. That’s why we put together this quick and convenient guide to help you make sense of how compound interest is calculated, and what that means for your goals!
What is Interest on a Savings Account?
Earning interest, or passive income as it’s often referred to, helps your money work harder without putting in more effort.
Why Compound Interest Matters When Choosing a Savings Account
In simple terms, it’s a fast way to grow your savings.
You earn interest on the original amount you contributed, plus you earn interest on top of the interest you've already accumulated.
Let’s say you’d like to replace your kitchen appliances, and you’ll need to build up your savings over the course of a year or two. Compound interest can be calculated in different ways. Here’s an example of how your money can grow with the PC MoneyTM Account:
Interest is calculated daily based on your account balance. This means that every day, your money is working for you. At the end of each month, the total interest you've earned is deposited directly into your account. This new, higher balance then starts earning interest, allowing your savings to truly compound month after month and helping you reach your goals faster.
Those small daily gains can really add up, helping you get ahead just by keeping your money in the account and regularly contributing to your savings. See for yourself with this handy interest calculator (opens in a new window).
Interest and Money Lost when you use Annual Percentage Yields (Promo Rates)
What's the catch with promotional rates and their impact on annual interest?
When it comes to getting ahead financially, we’re all looking for an upper hand. And some banks offer big, juicy interest rates when you sign up. But if it looks too good to be true, it often is.
Those scorching-hot promos can cool off quickly once you get into the fine print. After the initial period of high interest (say a 5-month promotional rate of 4.25%), the rate often drops dramatically—sometimes all the way down to 0.25%. This significantly decreases your earnings over the 12-month period. And with the really high then really low, you’re actually losing out over time.
Whereas our everyday rate was designed to stay competitive from day one (opens in a new window) and every day forward.
It makes saving toward short- or long-term goals easier to plan for. Plus, you'll see that you can often earn more over the same 12-month period without the plummeting promo rate.
It’s a simple concept: reliable, steady growth works!
Tips for Maximizing Interest on your Savings
1. Choose the right savings account
Some savings accounts look better from a distance than they do up close. Find one that offers a competitive interest rate that isn’t promotional. This ensures your money goes further over time, especially when the account has no monthly fee, no minimum balance, and no time commitment required. This allows your money to grow without worrying about any dramatic rate drops or catches!
2. Automate your savings
Set up automatic, recurring deposits to your savings account on every payday. It’s one less thing to think about while working towards your savings goals. Even small, consistent contributions add up significantly over time, and ensure your principal balance is always growing, which earns you more interest.
3. Minimize withdrawals from your savings
Interest is calculated on your daily closing balance. Frequent withdrawals reduce the amount that's earning interest.
Leaving your savings untouched can maximize your returns. Working towards everyday growth can actually help you reach your savings goals.
4. Monitor your account
Regularly review your statements to make sure you’re not being charged for something you were unaware of. Some banks hit you with hidden transaction fees, service charges, or penalties that can eat away at your balance. Kind of defeats the purpose of saving, right?
Ready to Start (Really) Earning? Open a PC Money™ Account Today
So, if you’re doing some mental math right now and thinking your money may not be working as hard as it could be—good news!
![Why you’ll love the PC Money™ Account [PC Money™ Account] [Check] 3.1% everyday interest* The competitive rate you earn from day one [Check] No catches Access your money quickly and easily when you need it](/_next/image/?url=https%3A%2F%2Fdis-prod.assetful.loblaw.ca%2Fcontent%2Fdam%2Floblaw-companies-limited%2Fcreative-assets%2Fpc-financial%2Fimages%2Fblog%2Ffeature%2FAugust%25202025%2520PCMA%2520Blog%25202%2520Image%25203441800-In-blog_Image2.jpg&w=3840&q=75)
Earn High Interest on Savings and Points on Spending and Banking
With the PC Money™ Account, you can earn high interest on your savings with an everyday rate (think value over 12 months, rather than 3 or 6). Join thousands of customers earning over $700 in value every year†.
No Monthly Fee, No Catches
And unlike some bank accounts, the PC Money™ Account comes with no catches. That means no monthly fee1 eating away at your money. No minimum balance required to take advantage of our high interest rate. And no minimum time commitment, so you can access your money whenever you need it.
Funding your account is as easy as 1, 2 or 3
Setting yourself up for savings success starts with regularly contributing. Once you’ve attached the Savings feature to your PC Money™ Account, you can fund your account (opens in a new window) by:
1. Requesting an Interac e-Transfer® deposit from yourself or third parties to move funds.
2. Linking an external bank account to seamlessly add funds directly to your PC Money™ Account.
3. Set yourself as a payee in your other bank to automatically transfer funds
So, start making the most of every dollar to reach your savings goals faster! Open your account today.
General information not about PC Financial® products is provided for your reference and interest only. The above content is intended only to provide a summary and general overview on matters of interest and is not a substitute for and should not be construed as the advice of an experienced professional. PC Financial® does not guarantee the currency, accuracy, applicability, or completeness of this content.
*Interest is calculated daily at the current rate on the total closing savings balance in the PC Money™ Account and paid monthly to the savings balance. It is a simple interest calculation. Interest rates are annual and subject to change without notice. Visit pcfinancial.ca for current rates and more information.
1Information about fees for special requests and services for the PC Money™ Account is available here.
†Value shown is for illustrative purposes only; results may vary based on individual purchase behaviour and savings. Annual value of $700 includes:
• Up to $60 in points annually: Earn a monthly bonus of up to 5,000 PC Optimum™ points when you deposit funds to your PC Money™ Account using automatic payroll or pension direct deposits. Payroll or pension deposits totaling between $1,500 and $2,999 within a calendar month will earn a bonus of 2,000 PC Optimum™ points, and deposits totaling greater than $2,999 will earn an additional bonus of 3,000 PC Optimum™ points, for a maximum monthly bonus of 5,000 PC Optimum™ points. Limited to one bonus per customer, per month, even if you have multiple PC Money™ Accounts. The classification of a direct deposit as a payroll or pension direct deposit is determined solely by President’s Choice Bank. Interac e-Transfer® services, electronic funds transfers, and other forms of deposits or transfers to your account do not count towards this bonus. Bonus points will be awarded to your PC Optimum™ account within 2-7 business days of when you meet the minimum direct deposit amount(s)
• Up to $60 in points annually: Earn a bonus of 1,000 PC Optimum™ points for each of up to five bill payments of $50 or more to unique payees, per calendar month, made using a valid PC Money™ Account. Bonus points will be awarded to your PC Optimum™ account within 2-3 weeks of a successful bill payment.
• Estimate of $80 in points annually when you use the PC Money™ Account as your primary spending account: Spending estimate of $1,166.67 monthly (with 15% spent at eligible stores and 85% spent everywhere else) is based on 2023 annual purchase data of PC Money™ Account holders who use the account as their primary spending account. Earn at least 5 PC Optimum™ points per dollar on qualifying purchases with your PC Money™ Account, wherever your card is accepted. Earn 10 PC Optimum™ points (5 regular PC Optimum™ points plus a bonus of 5 PC Optimum™ points) per dollar on qualifying purchases at participating Loblaw banner stores, Shoppers Drug Mart® stores, Joe Fresh® stores, and Esso™ and Mobil™ stations in Canada. Bill payments, electronic funds transfers, account fees and interest are not qualifying purchases for the purpose of earning PC Optimum™ points. PC Optimum™ points will be deducted for any credits or returns. President's Choice Bank reserves the right to cancel, change or extend regular and bonus points earning rates at any time. Account must be in good standing at time of qualifying transaction and awarding of points. Value shown is for illustrative purposes only; results may vary based on individual purchase behaviour.
• Estimate of $12 in savings annually from foreign exchange transaction fees. Calculated based on a monthly spend of $40 at a 2.5% foreign exchange fees.
• Up to $203 in savings annually: Savings on monthly fees based on an average of moderately priced, unlimited transaction chequing accounts at the big 5 Canadian banks. Some banks may rebate or waive monthly fees for customers who hold multiple products or maintain a minimum account balance each month.
• An estimated $285 in interest earned on your savings balance, calculated using a simple interest calculation and assuming a minimum annual interest rate of 2.85% and a daily closing savings balance of $10,000.
