When is a lower interest rate a better return?

At first glance, a higher interest rate on a savings account may seem better for your savings. But depending on how this interest is calculated, you could actually receive a better return on a daily savings account with a lower interest rate. ‍

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Some high interest savings accounts calculate interest based on a minimum monthly balance, paying its interest only annually.

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This means if you had $5,000 in your savings account for the entire month, with the exception of one day where the balance fell to $1,000, the interest earned for that month is only on the $1,000, which is then calculated and paid annually.

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In other words, you don't benefit from the power of compound interest on your full $5,000 calculated daily and paid to you monthly.

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Here at Cambrian, we offer an interest rate of 3.45%* on your entire balance. Interest is calculated on the daily closing balance and paid monthly, allowing your savings to compound its interest throughout the year.

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This will allow your savings to grow more quickly than it would at a higher interest rate calculated on the lowest monthly balance paid annually.

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For more information about Cambrian’s Premium Savings Account, visit us in-branch or book a meeting online with one of our Digital Advisors.

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*Effective October 20, 2023, and subject to change without notice.