These days, it’s standard to make most of our transactions online. Takeout, groceries, clothing, household items – we can get just about anything our hearts desire with a simple click of a button. The convenience is hard to beat. As such, it should come as no surprise that more and more Canadians are also going digital for their banking, whether through online bank portals or mobile banking apps.
We can handle so many aspects of our personal finances online that some banks are entirely virtual and don’t even have physical locations. If this is of interest to you, you are in the right place. This article will explore some of the most popular online banks in Canada, including what they offer and how they’re different from traditional banks.
EQ Bank is the online-only branch of Equitable Bank, following the same virtual model as banks like Tangerine. But what makes it stand out from the crowd is its savings account interest rate, which, at the time of this writing, is higher than many other competitors, at 1.25%.
There are several benefits, such as no monthly fees, no minimum balance, free bill payments, and free Interac e-Transfers.
In addition to banking that earns you money, you will have diverse investment options, such as RSPs, GICs and TFSAs, the ability to make International Money Transfers, and access more than 2,000 mortgage products.
EQ Bank deposits are Canada Deposit Insurance Corporation (CDIC) insured, so you don’t have to worry about the security of your transactions.
The Manufacturers Life Insurance Company owns this direct bank. They provide chequing accounts, savings accounts, loans, mortgages, and investment accounts. As of March 2022, they also offer a no-fees account service, but this only applies to accounts with a minimum of $1,000. If your account drops below the minimum balance, you will be charged service fees. The All-In Banking Package costs $10 per month, which is relatively low compared to other financial institutions.
Manulife Bank offers free ATM use at thousands of machines nationwide through The Exchange Network. You can handle all of your banking services online, like bill payments, transferring money, and depositing funds. You can also earn interest in a U.S. dollar savings account.
Motusbank is a digital and full-service bank that focuses on the needs of their customers rather than what’s best for their shareholders (fun fact: they don’t have any!). Because of that, they’re able to offer competitive pricing and services and the flexibility to do everything online or over the phone.
You can take advantage of several different products at Motusbank that have low or no fees and rates they offer. For example, they don’t charge any fees on their chequing account, and they offer THE EXCHANGE® Network–the largest surcharge-free ATM network in Canada. As of this writing, they also have zero transaction fees on high-interest savings accounts and cheques.
If you’re looking for help planning for your future, they offer virtual financial planning services to help you grow your wealth and save for retirement. They will work one-on-one with you to assess your budget, spending habits, and short- and long-term goals to help create a plan to get you where you want to be financially. Motusbank is owned by Meridian Credit Union.
Besides their mobile banking features, such as depositing cheques, bill payments, and e-transfers, Simplii also offers investment options like high-interest savings accounts (2.20% as of March 2022), TFSAs, GICs, RRSPs, and more.
Simplii’s credit card option has an introductory interest rate of 9.99% for the first year, plus cashback bonuses and benefits. You can also apply for a fixed-rate or variable-rate 25-year mortgage. Simplii’s financial experts can help guide you through your financial planning if you aren’t sure how or where to get started.
One of the most well-known online-only banks in Canada is Tangerine, a direct bank that doesn’t have a single brick-and-mortar branch. This saves the company on operating costs.
Tangerine is a division of Scotiabank and used to be known as ING Direct. When it launched in 1997, it was the first bank to introduce no-fee, high-interest savings accounts in Canada.
Today, you can cover all of your personal banking needs with Tangerine. They offer digital banking (online and via mobile device), credit card accounts, mortgages, and investment accounts such as GICs.
You can also grow your savings with RRSP accounts, tax-free savings accounts, and RIFs. As of March 2022, Tangerine also offers a 2.25% savings account rate plus up to $300 cashback on new chequing accounts and savings accounts. If you take advantage of this offer, the interest rate is 0.10%, there are no minimum balance requirements, and there is an option to create a personalized savings goal using their Automatic Savings Program.
While WealthSimple is not an actual bank, it is an intriguing option for Canadians looking for unique investment opportunities.
Customers can choose from a wide range of products, such as individual investment accounts, RRSPs, RRIFs, Tax-Free Savings accounts, LIRA, Business, Joint and cryptocurrency trading.
WealthSimple is known for its DIY trading. Users can take advantage of no-fee accounts and learn to trade stocks. Their target market is millennials interested in putting their money on autopilot while learning about the process. They offer educational resources for individuals looking to learn more about investing, personal finances, taxes, and more.
The Benefits of Using an Online Bank in Canada
One significant advantage of an online bank is that they typically charge no or very minimal fees on everyday banking. Banking is a breeze when you can handle all of your personal finances on your computer or mobile device.
They often offer lower interest rates on loans because they have fewer overhead costs, less employees and no physical locations to upkeep. This also allows them to offer higher interest rates on savings accounts and lower annual interest rates on credit cards.
However, there are some limitations to online banks. For example, they don’t offer all of the banking products that a traditional financial institution may, such as mutual funds or a personal loan. But most can still offer everyday banking solutions and even a line of credit.
Depending on your needs, the limited-service offerings may or may not be an issue. Sending e-transfers is easy to do, but sending an international money transfer could be tricky, even through the online banks in Canada.
Remitly makes international money transfers faster, easier, more transparent, and more affordable. Since 2011, over 5 million people have used our secure mobile app to send money with peace of mind.
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