BMO savings accounts earn interest, but the rate depends on the account type and balance tier
BMO offers several savings accounts, and each one has a different interest rate. The rate you receive depends on which account you open and how much money you keep in it. BMO adjusts these rates periodically, so the number you see today may not be the same next month.
The main savings products at BMO are the BMO Savings Account (the basic option), the BMO Premium Savings Account (for larger balances), and the BMO TFSA Savings Account (for tax-free savings). Each earns interest at a different rate. Some accounts also have tiered rates, meaning you earn more interest on higher balances.
Interest is calculated daily and paid monthly. That means BMO looks at your balance each day, adds up those daily amounts, and deposits the interest into your account once a month. The actual dollar amount you earn depends on your balance and how long the money sits in the account.
Key Takeaways
- BMO savings accounts have different interest rates depending on the account type—basic savings, premium savings, and TFSA savings all pay differently.
- Interest rates vary by balance tier, so keeping more money in the account typically earns you a higher rate.
- BMO calculates interest daily but deposits it once per month, so your balance grows gradually over time.
- Interest rates change regularly and are not may provide to stay the same, so check BMO's website or call your branch for the current rate on your specific account.
- The interest you earn is taxable income (except in a TFSA), so you will receive a tax slip at the end of the year.
How to find the current rate on your specific account
BMO publishes its current savings rates on its website under the savings accounts section. The rates shown there are the ones new customers see when they open an account. If you already have an account, your rate may be different—older accounts sometimes carry older rates that BMO no longer advertises.
The fastest way to know your exact rate is to log into your online banking, call BMO at 1-800-363-9992, or visit a branch in person. Your statement also shows the interest rate applied to your account, usually at the bottom or in the account details section. If you have not seen a rate listed, ask—BMO is required to disclose it.
Rates change without notice, and BMO may lower the rate on your account at any time. You will receive notice of a rate change, but you are not required to be told in advance. If your rate drops and you want to move your money elsewhere, you can close the account and open one at another bank.
The difference between account types and their rates
The BMO Savings Account is the standard option. It has no monthly fee and no minimum balance requirement. The interest rate is typically the lowest of BMO's savings products because there are no restrictions on how much you can withdraw or how often.
The BMO Premium Savings Account pays a higher rate but usually requires a larger balance—often $5,000 or more—to earn the top tier. If your balance drops below the threshold, the rate drops as well. This account is designed for people who can keep a steady, larger amount in savings.
The BMO TFSA Savings Account holds money in a Tax-Free Savings Account, which means the interest you earn is not taxed. The interest rate on a TFSA savings account is often lower than on a regular savings account because the tax advantage makes it more attractive. You can only contribute a limited amount per year to a TFSA (the annual limit changes; check the Canada Revenue Agency website for the current year).
How interest is calculated and when you receive it
BMO uses daily compounding, which means it calculates interest on your balance every single day. Here is how it works: if you have $1,000 in the account on Monday and the rate is 0.50% per year, BMO calculates one day's worth of interest on that $1,000. On Tuesday, if your balance is still $1,000, it calculates one day's interest again. If you deposit $500 on Wednesday, the daily calculation now includes the $1,500.
At the end of each month, BMO adds up all those daily interest amounts and deposits the total into your account. So if you earned $0.42 in interest over the month, you will see that $0.42 appear in your account on the deposit date. The next month, your balance is slightly higher because of that deposit, so you earn a tiny bit more interest.
This is different from straightforward interest, where the bank would calculate interest only on your starting balance. With daily compounding, your money grows faster because you earn interest on the interest itself.
Why BMO savings rates are lower than other options
BMO is a large bank with physical branches across Canada. That infrastructure costs money, and those costs are reflected in lower interest rates. Online-only banks and credit unions often pay higher rates on savings because they do not maintain branch networks.
If earning the highest possible interest is your priority, compare BMO's rate to rates at online banks and credit unions before you decide. A difference of even 0.5% per year adds up over time. On $10,000, the difference between 0.50% and 1.00% is $50 per year.
That said, some people choose BMO despite lower rates because they value the ability to visit a branch, the integration with other BMO products, or the familiarity of a large institution. The choice depends on what matters most to you.
What happens to your interest if rates drop
When interest rates in the economy fall, BMO lowers the rates it pays on savings accounts. This happens automatically—you do not have to do anything, but your rate will decrease. BMO does not have to ask your permission or give you advance notice, though it typically sends a letter or email when a rate change takes effect.
If BMO drops your rate and you want to move your money, you can transfer it to another bank or account. There is no penalty for closing a savings account. Some people move money to a high-interest savings account at an online bank or to a GIC (may provide Investment Certificate) if rates are expected to stay low for a while.
Conversely, when interest rates in the economy rise, BMO may raise the rates it pays—but this happens more slowly and less often than rate cuts. Banks tend to lower rates quickly but raise them gradually.
Tax implications of savings account interest
Interest earned in a regular BMO Savings Account or Premium Savings Account is taxable income. At the end of each calendar year, BMO sends you a T5 slip (a tax document) showing how much interest you earned. You must report this amount on your tax return, and you will pay tax on it at your marginal tax rate.
If you earned $50 in interest and you are in a 30% tax bracket, you will owe approximately $15 in tax on that interest. This is why the actual after-tax return on a savings account is lower than the stated interest rate.
Interest earned in a TFSA is not taxed, which is one reason people use TFSAs for savings. You do not report TFSA interest on your tax return, and you do not pay tax on it. The tradeoff is that you can only contribute a limited amount per year to a TFSA.
Frequently Asked Questions
Can I move my money to a different BMO savings account if the rate drops?
Yes. You can close your current account and open a different BMO savings account (like the Premium Savings Account) if it offers a better rate. There is no fee to close a savings account. The transfer typically takes one to two business days.
Does BMO may provide its interest rate will stay the same?
No. BMO can change the interest rate on your account at any time. You will receive notice of the change, but you cannot prevent it. If you want a may provide rate, you would need to open a GIC instead of a savings account.
How much interest will I earn on $5,000?
That depends on the current rate and how long the money stays in the account. If the rate is 0.50% per year, you would earn approximately $25 per year (before tax). Check BMO's website or call your branch for the current rate, then multiply your balance by that rate to estimate your earnings.
Is interest paid monthly or yearly?
Interest is calculated daily but deposited into your account once per month. You will see the monthly deposit appear on a set date each month, usually near the end of the month or the beginning of the next month.
What is the difference between a savings account and a GIC at BMO?
A savings account lets you withdraw money anytime without penalty, but the interest rate is lower and can change. A GIC locks your money in for a set term (like one year or five years) and pays a higher, may provide rate. You cannot withdraw early without losing some interest.