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It is no easy job keeping the money you earn in the bank, especially when you have a lot to do with it outside. Equally, it’s great to save your hard-earned money in the bank for safekeeping. But what about if you could save and generate even more cash?

That’s what a tax-free savings account (TFSA) is all about? It helps you make more money at an interest rate, with no tax your earnings.

You expect a higher income tax rate by the time you withdraw money out of your TFSA

All the money you deposit into the tax-free savings account is already taxed. So, with a higher marginal tax rate, withdrawal of your payment will incur lesser or no tax deductions. The reverse is true when you are saving in RRSP. High tax rate with time increases the tax bill by the time you are withdrawing from your RRSP savings.

It is one of the most flexible saving plans

You have the option to carry forward any fallow contributions into your tax-free savings account to the future years. When you withdraw all your TFSA savings, you still have the opportunity to deposit back the full amount at a later date and still save the most at the end of every year.

It helps you reduce taxes on investments

When you open a TFSA, you can use it to shelter some of your investments that would else be taxed at very high rates. That’s because you pay no tax on the earnings from your TFSA. For instance, foreign dividends or interest income. It is essential to seek some expert advice on how to use the TFSA effectively to make the most from your tax-free savings account.

There are many benefits to having a TFSA, even with just a little savings every year. Your savings will grow faster since you pay no tax on any of your earnings in that account. Search online for banks offering tax-free savings accounts. Also, check on the current interest rate to compare with what other banks have to offer. Ensure you compare all options so that you can choose the right and best TFSA for your money.