Borrowing for Your RRSP

There may be some benefits to borrowing money for your RRSP contributions. Contributing early in the year maximizes the deferral on the income earned by the RRSP. Try to secure the loan with collateral to obtain a lower interest rate.

To make it worthwhile, pay back the loan within one year. Interest paid on the borrowed money is not tax-deductible. Ideally, the loan should be paid off when you get your income tax refund. Often, banks will offer “deals” on RRSP loans just before the RRSP contribution deadline at the end of February.