The Bank of Montreal (BMO) has launched a new kind of savings account, designed to encourage Canadians to save more by rewarding them with bonus interest in exchange for making regular monthly deposits. The Savings Builder Account pays 1.3% interest provided that savings are increased by at least $200 each month. BMO is offering an introductory rate of 2.5% until June 30, 2015.

BMO says it was motivated by the findings of its recent Household Savings Report, which found that one in three Canadians now use a monthly fixed savings plan, an increase of 19% over 2014. The report also revealed, however, that 19% of those surveyed did not save anything in 2014 and that 40% of Canadians do not feel they are saving enough to meet their goals. BMO notes that data collected by Statistics Canada shows that the national household saving rate hit a five-year low of 3.6% in the last quarter of 2014, a significant decline from the average rate of 7.9% reported during the 1990s.

"This account addresses a gap in the needs of customers looking to meet and exceed their savings goals, including saving for a down payment on a home, a child's education or for a rainy day," comments Ernie Johannson, Head of North American Retail Payments and Personal Banking Canada at BMO Financial Group. "Achieving any goal – financial or otherwise –means putting a realistic plan in place while establishing a routine or behavioural habit to ensure you can meet and exceed what you set out to accomplish."