If it has been a while since you last made your way into a brick-and-mortar bank branch, you are not alone.
Current data from the Canadian Bankers Association shows that more than 75% of Canadians now use online and mobile banking to conduct most of their day-to-day banking transactions.
Online banks aka digital banks or virtual banks offer their customers access to low-fee (or no-fee) banking and easy access, higher interest savings rates, no-minimum balance banking, and security of funds.
Traditional banks in Canada also have an online presence to provide their services, however, this write-up focuses on those branchless direct banks whose main service delivery model is via the internet i.e. they have zero or very limited physical locations you can walk into.
Read on to see the options available to you if you are considering an online-only bank for your banking needs.
Advantages of Online Banking
Here are some of the benefits you can expect from online banking:
1. Convenience: These days you can conduct most of your transactions using your bank’s mobile app or by visiting their online platform. Easily pay bills, deposit cheques, transfer money between accounts, and more.
2. Better Rates: Online-only banks save on the overhead costs that come with managing physical locations. They redirect some of these savings to their customers by offering high-interest rates on savings and term deposits. For example, a 1.70% savings account rate as opposed to 0.05%.
Many internet banks even pay you interest on your chequing account balance which is something you won’t find with traditional banks.
3. Lower or No Fees: Canadians pay an average of $200 per year in banking fees. Many online banks do not levy a monthly account maintenance fee for chequing and their service fees are often cheaper. Online-only banks also offer no-minimum balance banking.
4. Save Time: Hate waiting on the line for services at a bank? Conduct your banking using your mobile app while you are on the go. If you need assistance, you can reach customer service by phone or chat.
5. Versatility: If you are using a budgeting or money management application, you can easily connect your online banking account in order to track your spending and stay on top of your finances.
6. Security: The funds you deposit in online-only banks are protected by Canada Deposit Insurance Corporation (CDIC – similar to traditional banks) or the relevant credit union deposit guarantee corporation (similar to credit unions).
CDIC guarantees deposits up to $100,000 per category, while provincial deposit guarantee corporations may guarantee up to 100% of your deposits regardless of the amount.
Disadvantages of Online Banking
When you choose a digital bank, here are some of what you may miss:
1. Less Personalized Service: If you prefer to interact with a person face-to-face every time you make a deposit or withdrawal, a virtual bank does not provide this perk.
2. Fewer ATMs or Automated Banking Machines (ABMs) as they are now referred to. Depending on your choice of an online bank, they may not have as many ATMs available in your area like the resident traditional banks.
When you use ATMs tied to other networks, you may have to pay. That being said, the online banks in this post are either owned by a bank or are related to an established credit union which makes this issue less of a problem.
3. Transaction Limitations: If you routinely conduct “complicated” banking transactions e.g. bank drafts and wiring money abroad, or need a safety deposit box, an online bank is not for you.
4. Lack of an All-in-One Package: Online banks like Tangerine provide an all-in-one solution so that you can easily hold your investments, chequing, savings, and mortgage accounts with them. Some online banks only offer a savings account which means you will need to source additional services from another bank if required.
Best Online Banks in Canada
The top 3 online-only banks in Canada offer free online chequing accounts, savings accounts, or a combination thereof.
1. Tangerine Bank
Tangerine is my top pick among digital banks in Canada. A subsidiary of Scotiabank, Tangerine offers a savings account, no-fee chequing, credit card, investments in registered and non-registered accounts, mortgage, HELOC and business accounts.
While they do not have branches, Tangerine clients have access to cafes where they can chat with Tangerine staff in Toronto, Vancouver, Montreal, and Calgary. You can also use over 3,500 ATMs for free across Canada.
Savings Account
They offer 5 different savings accounts:
- High-interest Savings Account
- TFSA
- RRSP
- US$ Savings Account
- RRIF Savings Account
Given the poor rates offered by the big banks, Tangerine clients can earn more with their higher interest savings rates.
When you open an account here, you qualify for a 2.50% rate for 5 months on their savings accounts. There are no monthly account or service fees and no minimum balance requirement.
Chequing Account
Their no-fee chequing has all the bells and whistles you can look for in a chequing account, including no monthly fees, unlimited free daily transactions, free cheques (first book), free access to 3,500 ATMs in Canada and 44,000 worldwide.
Additionally, you earn interest on your chequing account balance as follows:
- $50,000 or less: 0.15%
- $50,000 to $99,999.99: 0.55%
- $100,000 or more: 0.65%
Watch out for the $40 NSF fee, Interac e-Transfers (now FREE!), Canadian drafts ($10) and $1 per ATM transaction outside the Tangerine or Scotiabank networks.
Tangerine Money-Back Credit Card
This Tangerine credit card is one of the best no-fee cash back cards in Canada. It has no annual fees and offers a 2% cash back on up to 3 categories of spending including groceries, restaurants, gas, entertainment, drugstore purchases and more plus 0.50% cash back on everything else.
With no limits on how much cash back you can earn, the Tangerine Money-Back Card is one of the best in its category.
Read more about the Tangerine Money-Back Credit Card here.
Tangerine also recently introduced the Tangerine World Mastercard. Similar to the Money-Back card, it offers up to 2% cash back and no annual fees. In addition, it also offers free mobile device insurance and several other perks.
Read my Tangerine World Mastercard review here.
For more details about the investment options at Tangerine, check out my review of Tangerine Investment Funds.
2. EQ Bank
If you are looking for the best non-promotional savings rates, EQ Bank is in the lead.
EQ Bank is the direct online banking arm of Equitable Bank. It has no physical locations, however, customers have access to a well-rated mobile app for online banking access.
They offer two main accounts:
EQ Bank Savings Plus
Their high-interest account comes with no monthly fees, unlimited free transactions, and no minimum balance.
Although it is a savings account, the EQ Bank Savings Plus functions as a hybrid between savings and chequing, allowing you to send unlimited free Interac e-Transfers, electronic fund transfers, deposit mobile cheques, and earn a standard 1.70% interest rate.
The interest is calculated daily and paid out monthly.
EQ Bank GICs
They offer high-interest guaranteed investment certificates with terms from 1-5 years. The minimum deposit to open a GIC account is $100.
EQ Bank does not currently offer a chequing account or credit card.
Read my complete EQ Bank review for more details about their offerings.
3. Simplii Financial
Simplii Financial is the direct banking arm of CIBC and formerly operated as PC Financial.
Simplii clients have access to a no-fee chequing account, savings, credit card, mortgages, investments, and more. Additionally, customers can use over 3,400 CIBC ATMs across Canada for free.
Simplii High-Interest Savings
This account offers a standard rate of 0.20% and has no monthly account fees.
You also can choose to keep your funds in an RRSP or TFSA savings account at the same rate of 0.20%.
Simplii Chequing
Their no-fee chequing account is similar to Tangerine’s and offers no monthly fees, no minimum balance, unlimited transactions, and interest up to 0.15%.
In addition, you can send unlimited free Interac e-Transfers.
Check out for their $45 NSF fee, bank drafts ($7.50), and $1.50 (Canada) or $3 (outside Canada) when you use a non-CIBC ATM.
Simplii also offers a credit card. You can read my review of the Simplii Financial Cash Back Visa Card.
Best Online Banks Owned by Credit Unions
The provision of free online bank accounts is not limited to digital banks owned by Canadian banks. Credit unions have also launched several of these virtual banks as a way to increase their customer base beyond their province of residence.
4. Motusbank
motusbank is the latest kid on the block in the online banking world. It is owned by Meridian Credit Union, an Ontario credit union.
motusbank offers a variety of accounts including high-interest savings, chequing, investments, mortgages and personal loans. Their customers have access to over 3,700 free ATMs across Canada through The EXCHANGE Network.
motusbank is federally incorporated and is a member of CDIC.
Read my complete motusbank review.
5. Alterna Bank
Alterna Bank is the direct banking arm of Alterna Savings Credit Union (based in Ontario). It has no branches and is a member of CDIC.
They offer a no-fee e-chequing and high-interest savings accounts, as well as term deposits for registered and non-registered accounts, mortgage loans and online investing through a robo-advisor.
Clients of AlternaBank can access thousands of surcharge-free ATMs via The EXCHANGE Network.
Read my complete Alterna Bank review.
6. Outlook Financial
Outlook Financial is a division of the Assiniboine Credit Union, a Manitoba credit union. Members of Outlook Financial also become members of Assiniboine Credit Union with voting rights.
They offer a high-interest savings account and GIC products that can also be utilized using registered accounts like the RRSP, TFSA or RRIF.
Deposits are protected by the Deposit Guarantee Corporation of Manitoba (DGCM).
Read my full Outlook Financial review.
7. AcceleRate Financial
Accelerate Financial is the online division of Crosstown Civic Credit Union, a Manitoba financial institution. It was launched in 2010.
They offer a high-interest savings account, GICs, and options to invest using RRSP, TFSA, and RRIF accounts. Deposits with the bank are 100% guaranteed by DGCM.
Read more about Accelerate Financial here.
8. Achieva Financial
This online bank is owned by Cambrian Credit Union.
Similar to the other online banks owned by credit unions, Achieva Financial only offers a high-interest savings account and GICs with options to have these deposits products inside a TFSA, RRSP, or RRIF account if needed.
Given that their parent company is located in Manitoba, deposits in Achieva are 100% guaranteed by DGCM. This coverage protects your funds even if you are not a resident of Manitoba.
Read my Achieva Financial review.
9. Hubert Financial
Hubert Financial is a division of Sunova Credit Union. They offer a high-interest savings account (happy savings), TFSA, RRSP, US Savings, mortgage loans, and a credit card.
Customer deposits are fully guaranteed without limits by DGCM.
Read my Hubert Happy Savings review.
10. Implicitly Financial
Implicitly Financial is the online banking arm of Entegra Credit Union.
Their product offerings include a high-interest savings account and GICs which are also available in RRSP, TFSA, and RRIF accounts.
Implicitly Financial customers have access to a debit card they can use surcharge-free at any “ding-free” ATM (over 1,800 ATMs across Canada).
Deposits in Implicitly Financial are guaranteed 100% by DGCM.
Worthy Mentions
A few other virtual banks in Canada that offer high-interest savings and low fees (but not credit union affiliated) include:
Are Online Banks in Canada Safe?
Digital banks in Canada offer a deposit guarantee similar to traditional banks.
The online-only banks that are federally-incorporated (e.g. EQ Bank, Tangerine, and Simplii) are associated with the Canada Deposit Insurance Corporation. This means your deposits with these banks are protected up to $100,000.
For the virtual banks that are owned by credit unions, your deposits are either covered by CDIC (e.g. Alterna and motusbank) or they are 100% guaranteed by the Deposit Guarantee Corporation of Manitoba (Implicitly, Achieva, Hubert, Accelerate and Outlook).
Choosing an Online-Only Bank
Your choice of an online bank will depend on your banking needs. If you are looking to replace your traditional bank entirely i.e. move your savings, chequing, mortgage, investments, and more, Tangerine Bank stands out as the overall best. Simplii Financial also works well.
If you prefer to keep your current bank but want to take advantage of the superiorly better savings rates available out there, EQ Bank offers a great option with their high-interest Savings Plus account and unlimited free Interac e-Transfers.
Generally, all the online banks on this list can help you save on fees and their savings rates far exceed what is available at all the big banks as of this writing.
Online Banks in Canada Summary
Great article. There are some other entrants like Koho and WealthSimple. They basically provide an hybrid savings+chequing account with the convenience of a prepaid Visa card.
@Afolabi: These fintechs really do not want to be referred to as banks right now, however, they are indeed banks on some levels…with the downside that you can’t use them as your sole financial institution. Wealthsimple is pretty close to offering a full package with its recent introduction of Wealthsimple Cash.
I have reviewed both in the links below:
https://www.savvynewcanadians.com/koho-review/
https://www.savvynewcanadians.com/stack-koho-mogo-prepaid-credit-cards-canada/
https://www.savvynewcanadians.com/wealthsimple-cash/
Doc,
Do you have a similar article on the list of virtual banks, on a yearly basis? When did virtual banks start?
Thanks!
@Laurice: No, I don’t. I did a quick search online and couldn’t find a definitive list there either. Sorry.
This is from Tangerine dated June 2, 2020
Not as happy with them as I used to be. Do you know if any of the other online banks are moving to this kind of ….. um.. Terms of Service?
Here’s a summary of the change:
We’re clarifying your responsibility to review your Account activities regularly. The new clause requires you to notify us of any errors, irregularities, or unauthorized transactions immediately. Effective July 1, 2020, if you see an irregularity from a previous month and don’t notify us within 30 days from whichever is earlier of (a) the date you actually saw the irregularity or (b) the 15th day of the current month, we’ll deem your Account activities to be accurate and authorized by you, and you’ll have no claim against us for the irregularity. Previously, you had to notify us within 30 days of the date of the Account Statement or the transaction date.
Thanks for the great content as always! I’m currently with Tangerine but they don’t offer RESP, I also use CIBC but they’re not forward thinking at all, it’s so restrictive, I have to call in to deposit money into an investment fund, unlike Tangerine where I can simply do an online transfer. I also have to keep a minimum balance in my chequing with CIBC to avoid monthly fees.
So I’m looking for a great bank with no chequing fees that offers RESP and also one for Business account. Unfortunately, Tangerine doesn’t offer these, otherwise I would be content to do all my banking with them
@Mo: Yes, it is unfortunate that Tangerine does not offer RESPs. Wealthsimple would have been a good option for all your needs, however, their cash account is not yet fully functional. You could go with an online bank like Tangerine, Motive Financial or Alterna for your chequing/savings and use the TD e-series for your RESP if you are comfortable with re-balancing. Some sample portfolios are linked below:
https://www.savvynewcanadians.com/td-eseries-funds-review/
https://www.savvynewcanadians.com/sample-td-e-series-portfolio-updated-2018/
My personal financial set-up:
1. EQ Bank for 2.00% savings account for job pay deposits, working capital and no fee interacc transfers (how I pay family and friends $). EQ is CDIC insured;
2. 2 credit cards (one of each, M/C and VISA): Rogers Bank M/C (high rewards) as primary card and Home Trust VISA for the periodic US$ purchases (best USD exchange rate);
3. Questrade for investment funds: margin, RRSP and TFSA accounts
I don’t need an ATM card or cheques. I haven’t used either in years. I pay everything on my high cash back Rogers Bank M/C and pay the account balance automatically each month. Excess EQ Bank cash gets swept periodically to Questrade for active self-directed investment management.
4. Digital applications submitted when home mortgage renews; this goes to a mortgage broker. I don’t care who lends me the money; I just want the lowest interest rate. If the lender goes under, good (? – maybe they’ll lose track of my mortgage then? (no likely)).
There is no need for bricks and mortar banks anymore (and their daily 10-4 M-F hours). This “feeling” that people need their big 5 bank is a fallacy. People used to feel the same way about Sears Roebuck, but they appear to be getting by just fine without them.
By the way, about time (Ontario, Sep 2020) schools will be introducing personal finances to school curriculum. Inane that schools teach and train students for careers and then they don’t know how to manage the money they make and borrow, frittering away a lot of it. Governments can come around eventually; might take 50 years, but …..
@David: You have a great set up! Interesting to hear about Ontario’s new personal finance curriculum. That’s great news…hopefully the idea will spread to other provinces too.