How Do Interest Rates Affect Savings?

Interest rates directly control how fast your savings grow.

When rates are higher, your savings earn more interest. When rates are lower, your money grows more slowly, and you may need to save more or look for better rates to hit the same goals.

KOHO High Interest Savings

If interest rates are going to affect your savings anyway, you want your money sitting somewhere that takes advantage of them, not wastes them.

With KOHO High Interest Savings, you can:

• Earn a high interest rate on the cash you’ve set aside

• Keep your money flexible and accessible in the app

• Use it as a hub for things like an emergency fund or short-term goals

When Interest Rates Are Higher

Higher interest rates are generally good news for savers:

• Your savings earn more interest, so your balance grows faster

• You may reach goals like an emergency fund or vacation sooner

• High interest savings accounts become more attractive than leaving cash in a low- or no-interest chequing account

The trade-off is that borrowing (like mortgages, lines of credit, or loans) can be more expensive—but from a pure savings perspective, higher rates help.

When Interest Rates Are Lower

Lower interest rates usually mean:

• Your savings grow more slowly

• You might need to save more each month to reach the same goal

• The gap between a regular savings account and a high interest option can matter even more

In low rate environments, it’s especially important not to leave extra money sitting in an account that pays almost nothing.

Why Compounding Matters

Interest rates don’t just affect how much you earn this month—they also affect how much you earn on your new, bigger balance in the future.

Even a small difference in rate can add up over time:

• A higher rate means more interest each year

• That extra interest gets added to your balance

• Next year, you’re earning interest on a larger amount

The longer you save, the more this compounding effect matters.

How to Make Interest Rates Work for You

To get the most out of whatever the current rate environment is:

• Keep day-to-day spending in chequing, but move surplus cash to a high interest savings account

• Automate transfers so you’re consistently adding to your savings

• Review your accounts periodically to make sure your savings aren’t stuck at a low rate

You can’t control where interest rates go, but you can choose where your money sits and how hard it’s working for you.