In this digital era, it is needless to say that you might have visited your brick and mortar bank ages ago! This scenario is the new normal. Digital banks, also known as online banks provide their customers with access to all the banking services without a spiked fee or you might get lucky and pay no fee, quick access to, higher rates on your savings, zero minimum balance, and protected funds. This article contains a list of the best online banks in Canada for you.
A survey done by Canadian Bankers Association found that 75% of Canadians are now accustomed to online and mobile banking to handle their daily transactions. The traditional banks in Canada that have established their presence for providing more efficient services also have an online presence. However, today we will dive deep into the best online banks in Canada that have a sole focus on providing online services to clients.
What are the Pros of Online Banks?
The most prominent benefits from online banks in Canada are as follows.
Since the online banks are void of physical branches, they save on the overhead costs and hence redirect these benefits to their customers in the form of high-interest rates and term deposits. E.g: 1.25% savings account rate in comparison to 0.05%
Many of the online banks in Canada also provide benefits on the balance in your chequing account which is not a service that you necessarily get in the traditional banks.
You can perform 100% of your bank functions online via applications or the website of your bank. This includes deposits, paying bills, transferring money from one account to another, etc.
Safety on Deposits
The funds that you put in your online bank are secured via the Canada Deposit Insurance Corporation (CDIC) and hence if you lose your funds, you still have the surety of a reputable credit union deposit guarantee.
The CDIC insures funds for up to $100,000 in each category, while the provincial deposit guarantee of 100% on an unlimited amount of funds.
Reduces Time Invested
No more queues and a headache from the ruckus of the crowd. You can perform all your banking functions from your mobile application at any time. In case you need guidance, you also have customer support that replies promptly.
These online banks not only help with banking functions but other money-related applications. For example: If you want to budget your money for prudent savings and spending, you can connect your online banks with a budgeting application. This helps you to monitor your expenses while serving monthly goals.
An average Canadian pays $200 banking fees annually. Online banks are exempt from banking fees or at least have considerably lower charges. They do not impose account maintenance fees or chequing accounts charges. They also have no-minimum banking fees.
What are the Cons of Online Banks?
Here are some disadvantages that you will have to endure with online banks.
Not an All-exclusive Deal
While online banks are convenient, many only offer the facility of opening a savings account which infers you have to open accounts in other banks for additional services.
If you prefer bank transactions with a more person-to-person approach for every deposit or withdrawal, you will not find this facility at an online bank.
Limit on the Transaction
If you often indulge in complex business transactions like money wire, bank drafts, safety deposit boxes, an online bank might not be the ideal choice for you.
Fewer ATMs Options
The type of online bank that you choose might not have too many ATMs in your area. Usage of ATMs with a large network might levy an extra fee on you.
A Comprehensive List of Best Online Banks in Canada
EQ bank has the best non-promotional savings rate in Canada making it one of the best online banks in Canada. It is the extension of Equitable Bank. It does not have any physical branches. Though it has a great online banking app for its customers.
You can open many accounts via the EQ bank as follows.
EQ Bank Savings Plus
The savings accounts on EQ come with zero fees, free transactions without limit, and a negligible minimum balance. Being a savings account, the EQ is still a mix between checking and savings accounts. Hence, you have more flexibility for unlimited Interac e-Transfers, free bill payments, electronic fund transfer, bills, and deposits, with an interest rate of 1.25%. This interest will be subject to daily calculation and you will be paid monthly.
EQ Bank GICs
At EQ Bank GIC you get high-interest GICs for a term of 1-5 years. The minimum fee that you need to open this GIC is $100.
EQ Bank TFSA and RSP
The TFSA and RSP and utilize your savings from the GICs for retirement or financial goals. The TFSA at EQ bank offers the best savings rate in Canada.
EQ Bank US Dollar account
If you want only a 1% interest rate and zero monthly fees, then this USD account is the ideal one. You are allowed many money transfers and USA funds from Canada internationally. You can attain this service through Wise from the account dashboard that you have. However, you cannot get a checking account or credit card.
Go no further! Tangerine is one of the best online banks in Canada. It is a subsidiary of Scotiabank. Tangerine provides the facility to open a savings account, credit card, no-chequing, investment in registered or non-registered, mortgage, HELOC, and business accounts.
This bank does not have any branches while the cafes are shut down due to Covid-19.
Tangerine provides 5 different savings accounts.
- High-interest savings account (0.10%)
- RRIF savings account
- US$ Savings account
Tangerine chequing account
This no-fee checking account has all the great features that you could look for in a chequing account. They levy no monthly fee, daily transactions without any limit, free cheques (First book), access to over 3,500 ATMs in Canada and over 44,000 ATMs worldwide.
You also incur interest on chequing account balance:
- $0 to $29,999.99 of 0.01%.
- $50,000 to $99,999.99 of 0.05%.
- $1000,000 and above: 0.10%
You might have to keep an eye out for the NSF of up to $40, Canadian drafts ($10), Interface e-Transfers. You will also have to pay $2 for each transaction that you go beyond the ATM network of Scotiabank or Tangerine bank.
Money-back credit card by Tangerine
The tangerine money-back card is one of the best zero-fee cash-back cards in Canada. You don’t have to pay an annual fee and get up to 2% cashback on one of three categories that comprise restaurants, gas, groceries, drugstore purchases, entertainment, and 0.50% cashback on the remaining things.
There is no cap on the amount of cashback that you can acquire, that trait pushes this card in the category of best money back card in Canada. Tangerine World Mastercard is the latest addition to the family of Tangerine. Just like the money-back card, you will not pay any annual fee and won’t have to pay an annual fee. Additionally, you will get free wi-fi, rental car insurance, free mobile device insurance, and other such benefits.
Simplii Financial, formerly PC Financial, is the direct banking extension of CIBC. The clients at Simplii get to have a zero-fee checking account, credit card, mortgages, savings, etc. The customers can also withdraw their money easily from a network of over 3,400 CIBC ATMs over Canada without paying any fee. These qualities lead this bank to be on the list of best online banks in Canada.
Higher interest rates Savings
You get a standard rate of 0.10% for this account and you won’t have to pay the monthly or annual fee. You also have the choice to retain your funds in the TFSA or RRSP savings account at a rate of 0.10%.
Simplii allows opening a zero fee chequing account just like the Tangerine bank without any heavy fee imposed on it. You also don’t have to maintain any minimum balance, transactions without limits, and interest of around 0.05%.
Additionally, you are allowed to make unlimited Interac e-Transfers. Be on the lookout for a bank draft ($7.50),$1.50 in Canada, and $3 outside Canada if you withdraw money through a non-CIBC ATM. You can also have a Simplii credit card.
Best Online Banks in Canada: Credit Union Owned
There are also many best online banks in Canada that are owned by credit unions. Let us have a look at them.
Motusbank is a new member of the collection of banks. Ir’s owner is Meridian Credit Union which is a credit union based in Ontario.
In Motusbank, you can open many accounts like chequing, investments, high-interest, mortgages, and personal loans. The ATM network spans over 3,700 free ATMs throughout Canada via the EXCHANGE network. It is a federal member of CDIC.
Alterna Bank is the extension of Alterna Savings Credit Union in Ontario. There are zero branches of this credit union and it is a part of the CDIC family.
You can open a zero-fee chequing account and incur high-interest savings and term deposits for both registered and non-registered accounts. You can also take out mortgage loans and invest online with the help of Robo-advisors. As a member of the Alterna Bank, you get access to many free-of-charge ATMs because of the EXCHANGE network.
Outlook Financial is a fragment of the Assiniboine Credit Union, which s a credit union in Manitoba. If you are a member of Outlook financial, you can also qualify for membership of the Assiniboine Credit union having voting rights.
You also get savings accounts and GIC with high interest. You can use them with registered accounts such as TFSA, RRSP, and RRIF. The deposits that you make at the Alterna Bank are protected by DGCM ( Deposit Guarantee Corporation of Manitoba).
Accelerate is an online division of the Crosstown Civic Credit Union which is a Manitoba financial institution. This was launched in the online banking world in 2010.
You get high-interest savings accounts, investments in RRSPs, GICs, TFSA, and RRIF accounts. Your funds are secured by DGCM for 100%.
Achieva Financial bank is owned by Cambrian Credit Union. In alignment with the other best online banks in Canada owned by credit unions, this bank also allows you to open high-interest savings accounts, GICS which have investment options with RRIF, RRSP, and TFSA.
The parent company of Achieva is located in Manitoba, and your deposits are 100% secure through the DGCM. This coverage of DGCM coverage is also for non-residents of Manitoba.
This online bank is a division of the Sunova Credit Union. You get a high-interest savings account, TFSA, RRSP, mortgage loans, US savings, and credit cards. All the deposits are fully converged by the DGCM.
This is the online division of Entegra Credit Union. In this bank, you get a high-interest savings account, GICs, and investment options in TFSA, RRSP, and RRIF accounts.
Implicitly also provides a debit card to the customers which is free of charge for use at ding-free ATMs. These ATMs are present in more than 1,800 locations all over Canada. The DGIC is also secured by DGCM.
Some other virtual banks that give you high-interest savings at less fee are:
- Wealth One Bank of Canada
- Motive Financial
- Oaken Financial
Are the Canadian Online Banks Secured?
The security in digital banks is the same as that of traditional banks. The federally incorporated banks like Simplii, Tangerine, etc. are secured with the Canada Deposit Insurance Corporation also known as the CDIC. Hence you get insurance of up to $100,000.
As for online banks owned by the credit union, the deposit for banks like Alterna or Motusbank are covered by CDIC or you get a 100% deposit from Deposit Guarantee Corporation of Manitoba (Hubert, Accelerate, and Outlook).
How Can You Choose the Best Online Banks in Canada?
The online bank you choose is dependent on your needs. If you are prepared to replace your traditional bank entirely with an online system, for example, savings, chequing, mortgage, etc. then Tangerine and Simplii Financial are the ideal choices.
However, if you already have a checking bank that suits you but you want a new savings account with better rates in Canada, EQ bank is the best as it provides Savings Plus Account, free transactions without any cap, GICs, and USD accounts with high rates.
In the end, as mentioned above it comes down to your needs and preferences. What you can do is research well for the best online banks in Canada, compare them, and make a prudent decision!