Online Banks in Canada 2020: The Complete Guide!

May 27, 2020
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Online banks are ideal for those who prefer to do their daily banking from home or on the go and don’t want to worry about constantly having to visit a local branch. In this post, we’ll explore all you need to know about the best online banks Canada has to offer and how to choose the perfect one for you.

There is an option for every type of account holder, be it investors, millennials on a budget, those that need to send or receive international transactions and more. However, after comparing account features, interest rates and credit cards, we firmly believe Tangerine Bank to be the best online bank for most Canadians

Online banks have taken the scene for Canadians and with all of the perks, they bring it’s no surprise! We are witnessing the birth of another form of banking, and traditional banks as we know them may be on the brink of disappearance. 

In this day and age, Canadians have a lot of choices to pick from when it comes to online banks. They just need to find the one that better suits their banking needs and from there it should be easy. However, as we said before, there are too many choices so comparing them can be a bit overwhelming. In this post, we have compiled and compared all online banks Canada has to offer and we’ve reached the final conclusion that there is definitely one that stands out. Keep reading to find out which, but first, let’s cover the basics of online banking.

What are Online Banks?

Online banking usually involves all things related to managing your bank accounts with your computer, tablet or smartphone and, as such, it can apply to regular brick & mortar banks. However, for the purpose of this post, when we refer to an “Online Bank” and “Online Banking”, we are talking about banks which you can only access through the internet.

These online banks do not require you to constantly visit a location at all and, in some cases, these banks don’t even have a physical location!

According to the Canadian Bankers Association, more than 75% of Canadians use online and mobile banking for their daily banking transactions. 

So it is no surprise that more and more people embrace online banks as they launch since virtual banks offer their customers easy access to their features, higher interest saving rates and no minimum balance for very low fees! Or even for no fees at all!

You Should Use Online Banks If…

  • You can do most of your banking without needing branches or brick and mortar locations. 
  • If you don’t mind having limited options when it comes to account types and investment products.
  • You like the convenience and versatility of doing everything online with the security of traditional banks.

You Shouldn’t Use Online Banks If…

  • You need to make more complicated transactions that require you to have human assistance.
  • You want to have all of your banking products and services in just one place. Most online banks only offer chequing and/or savings accounts. 

Pros and Cons of Online Banks 

Here are some advantages and disadvantages you can expect from online banks.

Pros

  • Lower Fees: Since online banks don’t have to spend money on branch maintenance, they usually offer lower fees or charge no fees at all. Considering how much Canadians can pay on average in banking fees per year (about $216!), lowering the fees you pay in your account may be a good way to better your finances.
  • Higher rates: Once again, avoiding the cost of managing physical locations redirects these savings to customers which means online banks can offer higher interest rates on savings and term deposits. 
  • Convenience: In this modern era, people want access to everything as quickly as possible without having to go from one place to another. This is where online banks also stand out because you can do most of your transactions just by using their apps or visiting their online platform. Pay your bills, deposit cheques, transfer money between accounts and more.
  • Security: This is another big pro for online banks. You get the convenience of doing everything on the Internet with the security measures and standards of traditional banks.  All funds deposited in online banks are safeguarded by the Canada Deposit Insurance Corporation (CDIC) or the relevant credit union deposit guarantee corporation, just like any other bank. 
  • Versatility: Budgeting and money managing are so much easier with online banks because you can connect easily and track your spending from your phone using an app to stay on top of your finances. 
  • Time-saving: Avoid long waiting periods in traditional banks. Everyone hates waiting in line to get anything done at the bank. This isn’t something you have to worry about with online banks because you’ll be conducting all your banking from your phone, tablet or computer whenever you want. And if you need assistance, you can reach customer service via phone or chat.

Cons

  • Transaction limitations: If you’re used to making complicated transactions such as bank drafts, wiring money abroad or need a safety deposit box, then online banks perhaps won’t be able to supply your needs.
  • The attention is less personalized: Like the issue mentioned above, anything that may be considered more “complicated” and requires human assistance can be hard to do through an online bank. You won’t be getting face-to-face to anyone when you make a deposit or a withdrawal. 
  • Services can be limited: While some online banks like Tangerine offer an “all-in-one package” with chequing or savings accounts that can hold your investments and mortgage account with them, this isn’t available for all online banks. Consequently, you will most likely need to find those additional services from another physical bank. 
Online banks

Are Online Banks safe?

The short answer is yes. But here is why: Just like traditional banks, Virtual banks also offer a deposit guarantee. Online banks that are federally incorporated like EQ Bank and Tangerine are associated with the Canada Deposit Insurance Corporation (CDIC) so your funds are protected for up to $100,000. 

As for other online banks that are owned by credit unions, your deposits are either covered by the CDIC (that is the case for motusbank) or they are 100% guaranteed by the Deposit Guarantee Corporation of Manitoba. 

So, no matter which the case may be, you can rest assured that online banks are a safe option for your money.

Get to Know Some Of The Best Online Banks Canada Has To Offer

Tangerine Bank

Since being bought by Scotiabank back in 2012, Tangerine Bank has become one of the best online banks Canada has to offer, by delivering its customer’s competitive interest rates and no fees. Tangerine is one of the most complete online banks to this moment offering not only a lot of choices for account types but also bringing their customers investment options with five different portfolios that aim to adapt to the customer’s needs. 

The accounts offered by Tangerine are:

  • Chequing Account – Interest rate: Up to 0.65%
  • Savings Account – Interest rate: 2.75% for 6 months (1.10% regular)
  • Tax-Free Savings Account 
  • RSP Savings Account 
  • US$ Savings Account 
  • RIF Savings Account

Additionally, something pretty neat about Tangerine that stands out from other online banks is their Sign-Up bonuses. You get 2.75% Interest on your savings account for the first 6 months when you sign up with them. You can also get a $50 referral bonus for you and a friend if you use their Orange Key. These perks flow and vary depending on the time of the year, but they do offer them often. Just google it beforehand and check if you can find some of these promotions.

Want to know more about this bank? Check our post on Tangerine.

EQ Bank

EQ Bank is the online version of Equitable Bank, so it launched in 2016 with back up of Canada’s ninth-largest independent Schedule I Bank. Equitable Bank is a federally regulated Schedule I Bank with over 900 employees across Canada.

Right now, the only account offered by EQ bank is their Savings Plus Account with a high-interest rate of 2.0% that is calculated daily and paid monthly. This account is considered to have one of the highest savings rates among online-only banks. Some of the features of this account include:

  • Zero Minimum Balance
  • Zero Monthly Fees
  • Unlimited Free Interac e-Transfers®
  • Unlimited Bill Payments
  • Free Electronic Funds Transfer
  • Free and Unlimited Day-to-Day Transactions
  • 10 Free Linked Accounts
  • Free Mobile Cheque Deposits
  • Mobile Banking App

Other products offered by EQ Bank are GICs (Guaranteed Investment Certifies) as well as international transfers.

Oaken Financial 

Oaken Financial is another Canadian online bank that offers a high-interest savings account and GICs to its customers. It was launched in 2013 by Home Trust, giving customers both a long-established tradition of good service along with a fresh perspective on what they need to make the most out of their money. All Oaken deposits are held with either Home Bank or Home Trust Company, both of which are separate members of the Canada Deposit Insurance Corporation (CDIC).

Like EQ Bank, Oaken Financial only offers one account type: The Oaken Savings Accounts that have an interest rate of 2.30% along with some other cool features such as: 

  • Zero monthly fees
  • Free unlimited transactions
  • No minimum balance
  • Helps you build your savings
  • Setting up automatic contributions
  • Establish an emergency fund.

Other products by Oaken Financial are their GICs. These are the options available:

  • Non-registered GICs
  • Tax-Free Savings Account (TFSA)
  • Retirement Savings Plan (RSP)
  • Retirement Income Fund (RIF)
  • Commercial GICs

Want to know more about this bank? Check our post on Oaken Financial. 

Motusbank

Motusbank was launched in April of 2019, and it’s one of Canada’s newest digital online-only banks. Launched by the popular Meridian Credit Union that has been around for over 75 years. Motusbank is also a federally chartered bank in Canada and a member of the Canada Deposit Insurance Corporation (CDIC). It is a completely digital bank with no physical location, and it is available in all provinces except Quebec. These are the accounts offered:

  • High-interest savings account – 2.25%
  • RRSP savings account – 2.10%
  • TFSA savings account – 2.53%
  • No fee-chequing – 0.25%

Other products include:

  • GICs
  • Personal loans
  • Personal line of credit
  • Secured Line of Credit
  • Mortgages

Want to know more about this bank? Check our post on motusbank

Motive Financial

Motive Financial is an online-only Canadian bank that is a direct bank arm of the Canadian Western Bank that was founded in 1984 in Edmonton. Motive was launched in 2008 but rebranded in 2017. Currently, Motive Financial offers one the highest interest savings account in Canada along with some of the best TFSA, RRSP and GIC rates in the country as well. These are the account and products offered:

  • Motive Cha-Ching Chequing Account 
  • Motive Savvy Savings Account™
  • Motive Savings 

Simplii Financial

Simplii Financial was launched in 2017 as a direct baking brand of the Canadian Imperial Bank of Commerce. Like other online banks, Simplii Financial comes to the scene offering services that are just a click away while maintaining the good service tradition of its parent company. These are the accounts offered by Simplii Financial:

  • No-fee Chequing Account – Interest rate: 0.05-0.50%
  • High-Interest Savings Account – Interest rate: 1.05%

Other products include:

  • The Simplii Financial Credit Card
  • Mortgages
  • Investments (TFSA, RRSP, RRIF and RESP or a non-registered investment account)
  • Personal Loans

Alterna Bank

Alterna Bank has been operating since 2017 with most customers accessing their accounts through the bank’s website. Alterna is the banking arm of Alterna Savings and Credit Union Ltd. It is an online bank so you can do most of your transactions via the internet but you get to also access their face-to-face service through Alterna Savings branch locations in Quebec and Ontario. These are the account types offered by Alterna Bank:

  • No fee eChequing Account – Interest rate: 0.05% on deposits in an Alterna Bank Interest account.
  • High-Interest Savings Account – Interest rate: 2.20%

Other products include:

  • GICs
  • TFSA
  • RRSP

Outlook Financial

Like Alterna, Outlook Financial is also a direct banking arm of a credit union, in this case, the Assiniboine Credit Union which was founded back in 1943 and it’s Manitoba’s second-largest credit union. An interesting fact about Outlook Financial is that customers of Outlook Financial get the chance to become members and part-owners of the Assiniboine Credit Union and get the right to vote for the Board of Directors along with having a say in how the annual profits of the firm are distributed. Here are the account types and products offered by Outlook Financial:

  • High-Interest Savings Account – Interest rate: 2.40%
  • GICs
  • TFSAs
  • RRSP
  • RRIF

Accelerate Financial

AcceleRate Financial is a Manitoba-based credit union that offers branchless services. It is a digital division of the Crosstown Civic Credit Union. All funds invested, both principal and interested in AcceleRate Financial are guaranteed by the Deposit Guarantee Corporation of Manitoba. You can also buy a complimentary $5 share and become a member. Products offered by AcceleRate Financial include:

  • Savings Account – Interest Rate: 2.30%
  • GICs
  • TFSAs
  • RRSPs
  • RRIFs

Achieva Financial

Achieva Financial is similar to Outlook and AcceleRate Financial in the sense that it is also a division of a credit union, in this case, the Cambrian Credit Union. Achieva is a digital bank that was established as a banking arm back in 1998. It does not limit its membership to only residents of Manitoba, anyone who is a resident of Canada can be a member. Here are the products offered by Achieva Financial:

  • Daily Interest Savings Account – Interest rate: 2.30%
  • TFSA Savings Account
  • RESP Savings Account
  • RRIF Savings Account
  • Achieva GICs

Hubert Financial

Hubert Financial is the direct online banking arm of the Sunova Credit Union, also based in Manitoba. Sunova Credit Union is the 6th largest credit union in Manitoba and its roots trace back to the 1940s. Like any other online bank, it is able to save on costs by being branchless and thus offer better rates on its higher-interest savings. These are the products offered by Hubert Financial: 

  • Happy Savings – Interest rate: 2.25%
  • Tax-Free Savings
  • RRSP and RRIF Savings
  • US Savings
  • Term deposits
  • Hubert Financial Cash Back Mastercard
  • Hubert Financial World Mastercard

Implicity Financial

Also founded in Manitoba over 50 years ago, comes Implicity, a division of Entegra Credit Union. Implicity is an online financial institution that offers great saving options and also has a 100% guarantee on all your deposits, guaranteed to grow and be safe without limit. Products offered by Implicity Financial include: 

  • High-Interest Savings Account
  • Guaranteed Investment Certificates 
  • Tax-Free Savings Account and Tax-Free Term Deposits – Interest rate: 2.30%
  • RRSP Savings Account and RRSP Term Deposits
  • RRIF Savings Account and RRIF Term Deposits 

Online Banks In Canada: Features Comparison

In the following tables, you can compare side to side each of the features the banks have to offer. You can see the account and interest rates offered by each bank as well as their investment products. 

BankAccounts OfferedInterest RatesInvestments OfferedCovered by the CDIC?
Tangerine-Chequing-Savings-Tax-Free Savings-RSP Savings-US$ Savings-RIF SavingsFor chequing: 0.65%
For all other accounts: 2.75%
Investment Funds Portfolios: Balanced Income BalancedBalance GrowthEquity GrowthDividend
EQ BankSavings Plus Account2.30%GICs
Oaken FinancialSavings Account2.30%Non-Registered GICs
Retirement Savings Plan (RSP)
Retirement Income Fund (RIF)
Commercial GICs
MotusbankHigh-interest savings 
RRSP savings 
TFSA savings 
No fee-chequing
HISA – 2.25%
TFSA – 2.53%
RRSP -2,25
No-chequi0.25%
GICs
Motive FinancialChequing Account
Tax-Free Savings account
Savings account
Chequing – 0.60%
Cha-Ching Chequing – 0.%
TFSA – 2.40%
RSP Savings –  0.25% – 1.25% 
GICs.
Simplii FinancialNo-fee Chequing 
High-Interest Savings 
Chequing: 0.05-0.50%
HISA: 1.05%
TFSA, RRSP, RRIF and RESP or a non-registered investment account.
Alterna BankNo fee eChequing Account 
High-Interest Savings 
eChequing: 0.05% on deposits.
HISA: 2.20%
GICs
Outlook FinancialHigh-Interest Savings 2.40%GICsTFSAsRRSPRRIFGuaranteed by the DGCM.
AcceleRate FinancialSavings Account 2.30%GICsTFSAsRRSPsRRIFs
Guaranteed by the DGCM.
Achieva FinancialDaily Interest Savings Account2.30%Achieva GICsGuaranteed by the DGCM.
Hubert FinancialHappy SavingsTax-Free SavingsRRSP and RRIF SavingsU.S. SavingsHappy Savings: 2.25%
TFSA: 2.25%
RRSP and RRIF: 2.25%
U.S. Savings: Earn a rate of 0.75%
VirtualWealth
Guaranteed by the DGCM.
Implicitly FinancialHigh-Interest Savings 
Tax-Free Savings 

HISA – 2.30%
TFSA – 2.30%

GICs.Guaranteed by the DGCM.

In this next table, we have more features. In this case, we’re focusing on the additional perks each bank offers, such as referral programs, purchase coverage, travel insurance and international transfers. 

BankReferral ProgramPurchase CoverageTravel InsuranceInternational Transfers
TangerineYes, on the Money-Back Credit Card.
EQ BankOccasionally, they offer a bonus for referring friends.
Oaken Financial
Motusbank
Motive Financial
Simplii FinancialThey have the Simplii Financial Foreign Cash Referral.Yes, on its Simplii Financial Cash Back Visa.
Alterna BankOffers buyer protection and Extended Guarantee
Outlook Financial
AcceleRate Financial
Achieva Financial
Hubert FinancialYes, on the Hubert Cash Back MastercardYes, on the Hubert World Mastercard®
Implicitly Financial

In Summary…

While online banks may seem limited in features, they actually offer what most Canadians need to do their day-to-day banking, which is why they have become such a popular alternative. 

Some of them offer Credit Cards with purchase coverage, some of them are great for loans and mortgages, and even newer and younger financial institutions offer great rates on their chequing and savings accounts. 

The bank you choose to use depends on your needs and preferences, for example:

  • If you’re looking for great mortgages rates you can check motusbank. This is also a great bank for people starting to save for things like a house or a car and they offer a line of credit.
  • If you want a bank that offers credit cards, you can check Tangerine and Hubert Financial (these two also offer travel insurance!) 
  • For banks with more investment options, you can check Oaken Financial and Simplii Financial.

For more options, just look at the table provided before to compare all features and see for yourself which one suits you the best. However, in our opinion, we firmly believe that Tangerine Bank is the among all the online banks Canada offers as of writing this post. Not only does it offer great rates and the highest interest rate in the country, it also offers the most complete and in well-rounded banking experience when it comes to online banks in Canada. Investing, saving, credit cards, Tangerine has it all! Aditionally, you also get awesome benefits that include a referral program and other promotions that simply give more and more to the customer. 

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