I think my logic and math skills may be getting rusty with old age, but the more I look into TFSA, the more all I can see is a scam.

It really seems like the government is really only interested in helping corporations make money of the back of Canadians.

1. TFSA were toted as being take your money in and out for your needs and you can invest up to $5,000 per year".  Actually, you can only invest 18% of your income or $ 5,000 maximum (whichever is less). If you want the capacity to take money "in and out of the account at will" you have to get a savings deposit account which has an interest rate of 1%. All other options ( GICs, mutual funds, market GICs, etc.) you cannot removed the money unless your term is complete. If you invest more than 18% of your income you pay 1% penalty to the federal government. Why shouldn't all Canadians have the right to invest $5,000? So much for being user friendly and easy access to money...

2. TFSA-interest rates are not competitive across the board at all major banks.. I went to several banks today and the interest offered was significantly less than a "normal" GIC rates.  A 5yr fixed TFSA is about 3.5%and a "normal" currently about 6%. Market GIC and Mutual Funds seem to have the same issues.

3. Most annoyingly, TFSA saves the government money not Canadians. Why you ask? If Canadians think that TFSA are better than RRSP, the government does not have to pay for the RRSP tax benefits if everyone is putting their savings into TFSA thinking they are coming out better ahead. It is more likely you will do better with a RRSP than TFSA. RRSP typically gives you back 40% in tax benefits.

4. Banks charge a withdrawal/administrative/service fee of 25-50$ so any tax free benefit you might have gotten in the first year or two on the $5000 will be wiped out if you take your money out of the bank.

TFSA are only good if you have already maxed out your RRSP and you have money you can put aside for 10-20 years, but the odds are you can do better with other investments in the long run..

Sources:
http://www.getsmarteraboutmone.....tfsa-tias-story.aspx
http://re-educationthroughtruth.blogspot.com/2009/10/tfsa-scam.html
http://blog.canadianbusiness.com/commentary-on-tfsa-changes/
http://www.canadiancapitalist.com/which-tax-free-savings-account-tfsa/