Try the following experiment. Walk to your bank branch on a Friday afternoon. What do you see? You see a huge line up. Ew. You wait patiently for 20 minutes and finally, it is your turn. A bank teller greets you with an energetic smile. You are impressed. During the conversation, you smile dutifully at one of his witless jokes. As you are done with your transaction, the bank teller offers you a credit card with zero percent interest for the next six months. Alas, you are not impressed with him anymore.
Does this sound familiar? Sure, it does. Banks are not your friends. Banks’ primary goal is to make their shareholders happy. Period. Full stop. They are in the business of selling their products – credit cards, mortgage, line of credit (LOC), insurance et cetera. On top of that, banks hit you with banking fees. WTF? Many Canadians are fed up with paying for banking fees, transaction fees and monthly fees. Rightly so. Now, some will bemoan this fact, wag their fingers in my direction and tell me, I am wrong. Indeed, some will argue that as long as you maintain the minimum monthly balance, your monthly fees will be rebated. Agreed. Then, to their astonishment, they find this. The average Canadian pays $200 a year in banking fees. Choosing the right online bank account can easily save some cash for you and earn more interest too.
Five online banks you should bank with.
EQ Bank: EQ made some noise in January 2016 by pitching in a delicious 3% return on their savings account. I jumped on it. They have lowered their rate since. Personally, I have an account with EQ. Their current savings interest rate is 2.30%. Impressive when I compare it to my other bank which is green in colour. My banking needs are minimal with my green bank. Additionally, no minimum balance is needed and zero monthly fees. Plus, EQ offers unlimited transactions. This does not include Interac e-transfers but you do get 5 free Interac e-transfers per month. I love this feature, as I do Interac e-transfer quite often. I rarely use cheques. I know, I know typical millennial. A drawback for EQ would be there is no debit card or credit card option. There are no bank branches as everything is online. However, it would be unwise to pass 2.30% interest savings rate. If you are saving for short-term goals such as travelling or purchasing a car, EQ is the bank.
Tangerine: Some of you might have noticed Tangerine ads while watching the Toronto Raptors play. I will say the ads are pretty neat and I am a big Raptors fan. Tangerine became the official and exclusive bank of the Toronto Raptors on July 2018. But Tangerine has been one of the major players in the online banking sector ever since Scotiabank acquired it in 2012. Akin to EQ, you will enjoy no minimums, no service charges and no fees with a tangerine savings account. You will also earn high interest on every dollar, every day as mentioned on their website. Tangerine’s current interest is 1.25%. Yes, lower than EQ but it is still better than the rate offered by the big banks. Tangerine does offer debit and credit cards. You will have free access to Scotiabank’s ATM network. Lastly, Tangerine offers investing and borrowing products as well.
Alterna Bank: Most of you probably have never heard about Alterna Bank. I heard about it recently as well. Alterna Bank is an online bank owned by credit union Alterna Savings. Like EQ and Tangerine, Alterna Bank offers a no-fee chequing account. Alterna’s current hight interest eSavings account offers an appetizing 2.35%. Furthermore, Alterna offers unlimited Interac e-transfers. I love it. Unlimited Interac e-tranfers? What an astonishing idea. What a fabulous discovery for those who can’t maintain the minimum balance of 3K or 4K. ATM access is available through The Exchange.
Simplii Financial: Simplii is one of the online players owned by CIBC. Simplii also charges no monthly fees with no minimum balance. You will have free access to over 3,400 CIBC ATMs across Canada. Simplii’s current high interest savings account offers a decent 1.25%. Plus, you can send money for free with Interac e-transfer. Another fabulous discovery. To conclude, Simplii offers investing and borrowing products also.
Motus Bank: Motus is the new player entering the online banking sector. Indeed, Motus has not even launched yet. They plan to launch in spring of this year. On their FAQs page, one of their answer is “Instead of shareholder returns, we’ll focus on offering better pricing and services”. What a grand statement. They plan to offer day-to-day banking, including a no-fee chequing account, a high interest savings account, loans, lines of credit, investments, and mortgages. Please note Motus’ parent company is Meridian Credit Union, which is the largest credit union in Ontario.
All of the five online banks mentioned above are covered by Canada Deposit Insurance Corporation (CIDC), which means they insure up to a maximum of $100,000 – both principle and interest combined. Still not comfortable with online banking? Here’s further proof: More than two-thirds (68%) of Canadians now do most of their banking digitally, using online and mobile banking.
My opinions about Canada’s big banks have not earned me the smoothest of relations with some of my peers that do work in banks currently.
I am profoundly unapologetic about my remarks.