Scotiabank TFSA Review 2024 - NerdWallet Canada (2024)

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Scotiabank TFSA pros and cons

Scotiabank TFSA full review

Scotiabank’s TFSA is a tax-advantaged registered account. It can hold cash and investments to help you save and invest in tandem. Uninvested cash earns interest; investment options are limited to Scotiabank products.Tax-free savings accountcontributions are capped at $6,500 annually for 2023.

Benefits of a Scotiabank TFSA

Scotiabank TFSAs earn interest on cash contributions and can hold Scotiabank investment products, likemutual fundsandGICs. Interest, investment gains and dividends are tax-free, and there are no monthly fees.

Scotiabank tax-free savings accounts qualify for Scotiabank’s Savings Accelerator program, an interest-generating add-on that lets you earn 0.75% to 0.80% on any uninvested cash in your account. Without it, uninvested cash balances currently earn just 0.01%.

Drawbacks of a Scotiabank TFSA

Contribution limits — a TFSA regulatory restriction you’ll encounter regardless of the provider — restrict the amount you can deposit into your account annually. In 2023, the annualTFSA contribution limitis $6,500.

You can invest through a regular Scotiabank tax-free savings account, but you’re limited to Scotiabank mutual funds and GICs. If you want a broad spectrum of investment options, like stocks and exchange-traded funds, you’ll need to select a self-directed TFSA and sign up for ScotiaMcLeod or Scotia iTrade, Scotiabank’s investment platforms.

If you add the Savings Accelerator to your TFSA, you’ll be charged $5 per in-person account withdrawal, though online and phone transfers are free.

And you can’t apply for a TFSA account online unless you’re already a Scotiabank customer.

What is Scotiabank?

The Bank of Nova Scotia, or Scotiabank, offers personal and business banking services to customers across the Americas. It was founded in 1832 in Halifax, Nova Scotia, and is one ofCanada’s Big Six banks. While it offers Canadians over 900 locations to bank from, its branch network spans some 40 countries with locations that number in the thousands.

Scotiabank customer satisfaction ratings

Scotiabank ranks fourth in customer satisfaction with retail banking advice, according to J.D. Power’s 2023 Canada Retail Banking Advice Satisfaction Study, a survey of 2,911 retail bank customers in Canada[1].RBC Royal Bankhas the highest ranking.

Scotiabank ranks second in online banking satisfaction according to J.D. Power’s 2023 Canada Online Banking Satisfaction Study, a survey of 8,242 retail bank and credit card customers nationwide[2]. CIBC ranks highest in online banking satisfaction, while RBC Bank ranks third.

At the time of this writing, Scotiabank had a Trustpilot rating of 1.2 out of 5 possible stars, based on more than 870 customer reviews.

At the time of this writing, Scotiabank had a Better Business Bureau rating of 1.19 out of 5 possible stars, based on just over 110 customer reviews.

Is Scotiabank reliable and secure?

Scotiabank carriesCanada Deposit Insurance Corporation (CDIC)insurance, which protects deposits of up to $100,000 in the unlikely event that Scotiabank goes under.

Scotiabank also offers an online security guarantee which aims to protect its customers from fraudulent activity that may occur on its online banking platform. The guarantee pledges to fully reimburse lost funds so long as you’ve adhered to Scotiabank’s online security guidelines.

Scotiabank TFSA details and eligibility

Who qualifies for Scotiabank TFSA?

To open a Scotiabank TFSA, you must:

• Be a Canadian resident.
• Be over the age of majority in your province or territory.
• Have a valid Social Insurance Number (SIN).

Who should get a Scotiabank TFSA?

Anyone interested in a tax-advantaged account that lets you simultaneously save and invest should consider a Scotiabank TFSA. This account could be an especially convenient fit if you already bank with Scotiabank. You can manage your accounts from a single platform and cut back on account transfer fees — Scotiabank charges $150 for transfers to accounts outside its network.

As a straight-up savings account, the 0.75% to 0.80% interest rate you get with Scotiabank’s TFSA isn’t particularly competitive, so if you don’t plan to invest, this account may not be worth it.

How to know if a Scotiabank TFSA is right for you

If you’re eager to earn untaxed interest on your savings and investments, have unused TFSA contribution room, and are already a Scotiabank customer, a Scotiabank TFSA might be right for you.

How to open a Scotiabank TFSA

Method and general steps

If you’re a Scotiabank customer, you can sign in to your online account and fill out a TFSA application. Otherwise, you’ll need to book an appointment at a Scotiabank location during business hours to apply.

Deposit and withdrawal process

Deposits can be made by cash, cheque or electronic funds transfer. Scotiabank’s TFSA cannot receiveInterac e-transfers. Deposits can be made through Scotiabank’s online banking platform, mobile app or in person at a branch during business hours. Before making a deposit, ensure doing so will not cause you to exceed annual contribution limits.

Uninvested TFSA funds are available for withdrawal at any time. If you’ve invested in any mutual funds, your withdrawal request may take up to three business days to process. If you’ve invested in Scotiabank GICs, you may pay a penalty for withdrawing funds before the term ends.

If you add the Scotiabank Savings Accelerator to your TFSA, in-person withdrawals are subject to a $5 fee.

Customer service options

Contact the Scotiabank customer support team by:

• Live chat.Connect with a Scotiabank rep 8 a.m. to 10 p.m. ET any day of the week.
• Phone.Call 1-800-472-6842 to talk to a member of the team 24/7.
• In person.Visit a Scotiabank location during business hours.
• Social media.Connect with Scotiabank on Twitter.

How to maximize the benefits of a Scotiabank TFSA

To get the most out of your tax-free savings account, you’ll want to:

• Invest.Failing to take advantage of the TFSA’s ability to hold investments is a missed opportunity for profit.
• Add the Savings Accelerator.This Scotiabank add-on lets you increase the interest rate on your uninvested cash.
• Don’t overcontribute.Any contribution you make over your annual TFSA contribution limit will be taxed at 1% monthly until it’s withdrawn.

Scotiabank TFSA alternatives

Tax-free savings accounts are a nearly ubiquitous offering across financial institutions, which means you have plenty of alternatives to choose from if Scotiabank’s TFSA doesn’t appeal.

Reasons you might want a different TFSA

Some account drawbacks, like over-contribution rules, are standard for TFSAs and out of Scotiabank’s hands. Other shortcomings are specific to Scotiabank and may prompt you to seek an account elsewhere:

• Higher interest rate.Scotiabank’s current TFSA interest rate, even with the Savings Accelerator add-on, isn’t much to write home about. As far as the Big Six Banks are concerned, Scotiabank’s rate is typical, but credit unions andonline-only banksmay offer higher rates.
• Online application.Scotiabank’s online TFSA applications are limited to existing customers, so if you don’t want to visit a branch to open an account, consider a TFSA elsewhere.
• In-person withdrawals. The $5 per in-person withdrawal penalty only applies if you’ve added the Savings Accelerator to your account, but this fee isn’t standard for TFSAs.

Tax-free savings account vs. High-interest savings account

Both TFSAs andhigh-interest savings accountscan help you grow your wealth, but what separates these accounts may help you determine which is best for your finances.

Scotiabank TFSA facts

What is a TFSA?

Atax-free savings account, or TFSA,is a registered account designed to hold cash and investments. The uninvested cash in a TFSA earns interest, like a savings account. And investments in the account, like mutual funds and GICs, have the potential to earn market-based gains.

Investment gains, interest and dividends are tax-free. Annual account contributions are limited, and contributions beyond your annual limit are taxed.

Interest Rates

Ongoing interest rate as of January 2024

The standard interest rate for Scotiabank’s TFSA is 0.01% as of Jan. 5, 2024.

Savings Accelerator rate as of January 2024

The Savings Accelerator rate for Scotiabank’s TFSA is 0.75% to 0.80%, depending on the balance, as of Jan. 5, 2024.

Minimum balance

There is no minimum deposit requirement to open a Scotiabank TFSA and no minimum balance needed to avoid any account fees.

Contribution limit

The annual TFSA contribution limit for 2023 is $6,500.

Fees

Monthly fee

There are no monthly account fees for Scotiabank’s TFSA.

Transfer fee

There is a $150 fee associated with transferring funds from a Scotiabank TFSA to an external account.

Withdrawal fee

There is a $5 fee associated with in-personal transfers from a Scotiabank tax-free savings account.