TORONTO - A recent survey by the Bank of Montreal has highlighted a shift in the financial behavior of Canadians, with a noted decrease in the number of Tax-Free Savings Accounts (TFSAs) held in 2023. Despite the economic headwinds, such as rising living costs and high household debt, the average balance in these accounts has seen a growth of about 9%, reaching $41,510.
The survey findings come at a time when the Bank of Canada has maintained a steady interest rate of 5%. In the face of these economic conditions, the study found that only 62% of eligible Canadians held TFSAs last year, marking a decline that the report attributes to the financial pressures faced by households.
Interestingly, the contribution limit for TFSAs has been increased to $7,000, which seems to have prompted approximately one-fifth of Canadians to plan on raising their contributions to these accounts. However, nearly half of the TFSA holders have shown a preference for cash holdings within their accounts, possibly reflecting a cautious approach to investment given the current economic climate.
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