Set up direct deposit and skip the monthly fee. Free to open, and the Easy plan has no monthly fee. Worth doing if you will actually move your pay or your CRA deposits over, not if the card sits unused. Code BREMO2026.
Both the TFSA and RRSP are powerful Canadian savings tools, but they work differently and suit different situations. The short answer: use both if you can. But if you must choose, the right account depends on your current tax rate versus your expected retirement tax rate.
TFSA vs. RRSP Comparison Tool
TFSA vs. RRSP — Side-by-Side Comparison
TFSA
After-tax contributions
Tax-free growth
Tax-free withdrawals
Withdrawals restore room next year
No income required
No effect on OAS/GIS/CCB
Room: $102,000 since 2009 (at age 18+ in 2009)
Any age can contribute (no upper limit)
RRSP
Tax-deductible contributions
Tax-sheltered growth
Fully taxable withdrawals
Withdrawals do NOT restore room
Requires earned income
Withdrawals count as income (may affect benefits)
Room: 18% of prior year income, max $31,560
Must convert to RRIF by age 71
When RRSP Wins
The RRSP is better when your tax rate in retirement will be lower than your current rate. This typically applies to:
High-income earners (top marginal brackets) with modest retirement income expectations
Defined benefit pension plan members who will have predictable but moderate retirement income
People wanting to reduce current-year income (e.g., large bonus year)
When TFSA Wins
The TFSA is better when your tax rate in retirement will be equal or higher than today. This applies to:
Young people early in their careers (low income now, higher later)
Low-income earners where RRSP deductions provide minimal benefit
Retirees who already have substantial taxable income (CPP, OAS, pension) and want tax-free supplemental withdrawals
Anyone concerned about OAS clawback (TFSA withdrawals don't count as income)
Best strategy for most Canadians: Maximize your TFSA first, then contribute to your RRSP when you're in a higher tax bracket. The tax refund from RRSP contributions can be re-invested in your TFSA — effectively giving you a double benefit.
Both Accounts: The Ideal Approach
For most Canadians earning a moderate to high income, the optimal strategy is to use both accounts strategically:
Maximize TFSA room (especially in early career at lower rates)
In higher-earning years, maximize RRSP to defer taxes
Invest RRSP refund in your TFSA
Consider a spousal RRSP for income splitting
In retirement, draw down RRSP/RRIF first if OAS clawback is a concern
Start Saving Today with KOHO
Whether you're saving for your TFSA or RRSP, KOHO's high-interest account helps your cash work harder while you decide where to invest. Zero fees, instant access.