Luisa Rollenhagen is a writer and editor who lives in Berlin.
At this point, a vast majority of our daily lives is carried out online: We find dates online, we order food online, we shop for vintage handbags and leather jackets online—and more of us are choosing to bank online. In Canada, online-only banks have proliferated, and many established banks—including the “Big 5”—have begun offering most of their services online in order to keep up with a society that increasingly conducts its daily business through its smartphone. Below, we’ve rounded up a list of 2020’s top online banks in Canada.Wealthsimple offers an automated way to grow your money like the world's most sophisticated investors. Get started and we'll build you a personalized investment portfolio in a matter of minutes.
Best online banks in Canada
Tangerinehas over 2 million users and close to $40 billion in total assets. Tangerine doesn’t charge any fees for daily banking activities, and also offers credit cards, mortgages, investment options, and five different savings accounts in addition to chequing accounts, including retirement-friendly products like RRSPs and TFSAs.
Its chequing account has no monthly fees, unlimited free daily transactions, free cheques (first book), and free access to 3,500 ATMs in Canada and 44,000 worldwide.
EQ Bank is the online banking branch of Equitable Bank. EQ Bank focuses specifically on offering high-interesting savings with no monthly fees, unlimited free transactions, and no minimum balance. Their account functions like a hybrid savings-chequing account, where users benefit from a 1.50% interest rate while also being able to use everyday banking features.
EQ Bank also offers high-interest guaranteed investment certificates with terms from 1-5 years.
Like the name suggests, this online-only bank keeps things simple with no-fee chequing accounts, high interest savings accounts, and all the usual financial products you know from traditional banks, including credit cards, mortgages, loans, and investment options. Simplii Financial is the direct banking arm of CIBC and formerly operated as PC Financial.
Its no-fee chequing account offers unlimited debit purchases, bill payments and withdrawals, free access to over 3,400 CIBC ATMs across Canada, and free Interac e-Transfers®.
Manulife Bank is a wholly-owned subsidiary of The Manufacturers Life Insurance Company. It was established in 1993 and offers chequing, savings, mortgages, loans, and investment accounts. While Manulife’s chequing accounts don’t have monthly fees, you do need to keep a minimum account balance of $1,000 in order to enjoy free banking service. Manulife also offers a 0.15% interest rate on their Advantage Account, which is basically a hybrid savings/chequing model.
Account holders also have access to over 3,500 surcharge-free ATMs across Canada through The Exchange Network.
Motusbank offers the full spectrum of banking products, including zero-fee chequing and savings accounts and personal loans and mortgages, as well as investment options. Its customers also have access to over 3,700 free ATMs across Canada through The Exchange Network.
Online banks in Canada: Comparison
Want a quick overlook of how each online bank stacks up to each other? We got you:
|Savings account||Yes (5 types)||Yes (hybrid savings/chequing account)||Yes||Yes||Yes|
|Monthly fees||$0||$0||$0||$10 per month for the high-interest savings account, but this fee is waived if you save at least $100.||$0|
|Minimum account balance||None||None||None||$1,000 for its Advantage Account||None|
|Max. savings interest rate||2.15% (for the first 5 months)0.10% after that||1.50%||0.15%||0.15%||1%|
|Investments||GICs, index funds||GICs||GICs, mutual funds||GICs, mutual funds, ETFs||GICs|
|Investment accounts||RRSP, TFSA, RRIF, non-registered investment accounts||Non-registered investment accounts||RRSP, TFSA, non-registered investment accounts||RRSP, TFSA, RRIF, non-registered investment accounts||TFSA, RRSP, non-registered investment accounts|
Other online financial institutions in Canada
As online banks have proliferated, so have alternative financial institutions that offer a variety of savings and investment accounts without actually being a bank. One of the reasons why people might choose alternative financial institutions is because they are able to focus their efforts on a very specific financial field, such as investing, and offer more bespoke service at significantly lower fees. Another reason is that alternative financial institutions often are able to offer more innovative products like hybrid chequing/savings accounts that give you all the convenience of a chequing account with the high growth potential of a high-interest savings account.
Alternative financial institutions often also offer lower barriers of entry for those looking to try out new financial products, and can help newbies build up savings or dip their toes into investing. With that in mind, here are some of Canada’s top alternative financial institutions:
You didn’t think we’d forget to include ourselves, did you? While Wealthsimple isn’t a bank, we still offer a host of no-to-low-fee financial products, including our hybrid savings/chequing account Wealthsimple Cash, as well as business accounts, joint and individual personal investing accounts, and retirement products like RRSPs, TFSAs, RESPs, and RRIFs. We also have a platform for self-directed trading, as well as the option to trade in cryptocurrencies.
With no account minimums, no trading commissions, human support from financial experts, and low management fees on investment accounts, Wealthsimple provides a wide variety of smart and savvy financial products.
Nest Wealth is a wealth management company that provides investors with a variety of simple-to-use investment accounts and portfolio options. It makes investing easy for clients by using smarter technology and proven investment principles. It was founded in 2014. Nest Weah requires no account minimum, and offers TFSAs, RRSPs, and RRIFs as well as customer support and access to financial advisors. However, it does charge fees: Nest Wealth charges $20 per month for investments under $75,000, $40 per month for $75k-$150k, and $80 each month if you invest more than $150k.
Koho is a Canadian financial institution that provides fee-free chequing accounts with the perks of a credit card and a savings account, including 0.5% cashback on all purchases and a roundup feature, which rounds up your purchases to the nearest buck or two (or five or ten) and then stashes that amount away. You can set saving goals that are linked to your Koho card (which is a reloadable prepaid Visa). While Koho doesn’t replace all banking necessities, its account works as a convenient chequing account with added perks and greater spending/saving oversight thanks to their app.
CI Direct Investing (formerly Wealthbar)
CI Direct Investing (formerly Wealthbar) is a registered portfolio manager and full Life Insurance Agent in British Columbia and Ontario. They describe themselves as offering premium online investing without the premium price. They have over $275 million in assets under management, and are a robo-advisor, just like Wealthsimple and Nest Wealth.
CI offers investment products like personal investment accounts as well as RRSPs, TFSAs, RRIFs, and corporate accounts that are professionally managed. However, CI Direct Investing does have an account minimum of $1,000.
Moka (formerly Mylo)
Moka (which used to be called Mylo) is a savings app that allows Canadians to round up purchases from a linked debit or credit card and then puts the spare change into an investment account. In addition to the round-up feature, users can set automatic recurring investments so that their savings can grow even further. Moka’s portfolio manager invests your money using a diversified portfolio of low-cost ETFs.
Moka charges a flat fee of $3 a month to use its services, as well as charging management fees that range from 0.06% to 0.38% for your portfolio.
Benefits and drawbacks of online banking
While many users value the history and human service of brick-and-mortar banks, online-only banks have become increasingly popular because of the convenience they offer. All your banking can be done from your laptop or even from an app on your smartphone, without ever having to get up from the sofa. Online banking generally comes with lower-to-nonexistent fees. But there are drawbacks to choosing to do your banking purely online. Here’s the lowdown:
Benefits of online banking
24/7 access. As long as you have a WiFi connection, you can check your account, transfer funds, set recurring deposits, open and close accounts, and much more. Many online banks now even allow you to apply for a loan or a mortgage, buy insurance, and set up retirement accounts with the click of a few buttons. Some allow for free withdrawals from a wide network of participating ATMs.
And while online banks primarily rely on you conducting your business through an app or website, many also offer hotlines you can call to talk to a real-life customer service agent.
Low-to-no fees. While most accounts at brick-and-mortar banks will charge you an “account maintenance” fee and often require you to maintain a minimum balance lest you get charged a fine, online banks usually don’t charge anything for their accounts. They also tend to have lower or even no minimum account balances. That’s because online-only banks have way less overhead costs: They don’t have to rent space for physical branches, and they don’t have to pay tellers, security guards, and other staff. Those savings translate directly to the consumer.
Higher interest rates. Another perk of lower overhead costs: Because online banks have fewer costs, they can offer higher interest rates when holding your money—particularly in high-interest savings accounts. While traditional savings accounts usually offer rates that hover around 0.02% to 0.05%, online banks are able to offer above-average rates of 1% to even 2% (keep in mind that in some cases, these are perks for new account holders and expire after a while, so it’s always important to read the fine print).
Drawbacks of online banking
Lack of personal relationships. Having a purely online bank means that you won’t have a teller who knows your name. For some people, having a personal relationship with the staff at a bank is really important, and can be particularly advantageous when applying for loans or letting things like the occasional overdraft fee slide.
Some transactions are less flexible. While online banks offer a variety of transactions, they’re less flexible when it comes to special circumstances and unusual requests. That’s when being able to talk to someone in-person might be useful.
More limited service. The majority of brick-and-mortar banks are a one-stop shop for a wide variety of financial services, including comprehensive retirement planning, advice for first-time homebuyers, mortgage services, and investment options. Only very few online banks offer such a wide range of services, and some online banks stick to offering only chequing and savings accounts.
Accounts offered by banks in Canada
While chequing and savings accounts are the obvious contenders when it comes to accounts offered by Canadian banks, the options go far beyond that. Here’s a list of the most common accounts you can find at Canadian banks:
Chequing account: The good old chequing account is the financial workhorse of everyday banking: It holds the money you use for daily spending, is usually where money gets deposited, and is easily accessible. While many brick-and-mortar banks charge maintenance fees for their chequing accounts, most online banks don’t.
Savings accounts: This is where you keep money you’re saving up for a short-term goal—perhaps a vacation, an engagement ring, or a special treat for yourself. It’s also a great place to store an emergency fund. While all savings accounts offer some sort of interest, online-only banks tend to have higher interest rates you can take advantage of.
Student accounts: These accounts are usually the first type of bank account a young person will have in their name. Student accounts offer a significant number of perks for young people in higher-learning institutions, including no-fee accounts and sign-up bonuses.
Non-registered accounts: Since many banks, including online banks, have started offering investment options, the personal non-registered account has really taken off. For those looking for investment options beyond government-regulated accounts, a personal investment account allows you to grow your wealth through personalized portfolios, often containing low-cost ETFs and mutual funds. Keep in mind that all growth from these accounts is taxable.
Registered accounts: Here is where your government-regulated retirement accounts come in: The trusty TFSA, RRSP, RRIF, and LIRA are tax-advantaged accounts set up by the Canadian government in order to help you save for retirement. Keep an eye out for account minimums and fees when choosing these accounts.
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