EQ Bank and Tangerine are two of the most popular online-only banks in Canada.
More Canadians are choosing to go digital with their banking, with recent stats showing that more than three-quarters of Canadians now use online and mobile interfaces for conducting their banking transactions.
This increasing adoption of online banking is a boon to relatively newer entrants into the banking industry i.e. online banks.
Not many people like to pay the ever-increasing banking fees charged by traditional brick and mortar banks. Forget about ATM fees, NSF, overdraft, account transfer, transaction fees, and so on. What usually irks me is the monthly chequing account maintenance fees.
I am simply unable to rationalize paying to keep money in my account when the bank is already making money off of it. Canadians pay in excess of $200 per year on average in banking fees!
Online-only banks come with their own pros and cons. A major differentiating feature between them and traditional banks is that they usually offer a no-fee, no-minimum balance chequing account and/or a high-interest savings account. They also offer very little in the way of in-person assistance.
Some of the major online-only banks present in Canada today include EQ Bank, Tangerine, Wealthsimple, and Simplii Financial.
In this post, I compare the services offered by two of the most popular digital banks in Canada – Tangerine and EQ Bank.
Table of Contents
Tangerine Bank
Tangerine is a subsidiary of Scotiabank and was formerly known as ING DIRECT.
It does not have branches, however, in addition to having access to a 24/7 call centre, you can walk into Tangerine pop-up locations, cafes, and kiosks around the country if you must speak to someone in person.
As a customer, you also have access to over 44,000 ATMs around the world through Scotiabank’s Global ATM Alliance.
Tangerine Bank offers a suite of financial products including:
1) Savings and GICs
2) Spending: No-Fee Chequing Account and Tangerine 2% Money-Back Credit Card
3) Investing: Tangerine Investment Funds, TFSA, RRSP, and RRIF
4) Borrowing: Mortgage, HELOC, and RRSP Loans
General features you can expect on their savings and chequing accounts include:
- Zero monthly bank fees
- Interest earned on chequing account balance (up to 0.10%)
- Free and unlimited debit transactions, bill payments, and pre-authorized payments.
- No minimum account balance
- Automated Savings Program
EQ Bank
EQ Bank is the online-only arm of Equitable bank – a Schedule I bank with total assets of approximately $36 billion.
The bank operates strictly online and they have no brick and mortar branches you can walk into. It is the overhead saved from not having to pay for building and other maintenance costs that they pass on to customers through higher savings interest rates.
Although it is without a physical location, you can always reach someone to talk to via phone if you have any questions.
EQ Bank offers customers a high-interest savings account (known as Savings Plus Account) and GICs. Features of its savings and GIC account offerings include:
- No monthly fees
- No minimum balance
- High-interest savings rates (1.25%*)
- Free unlimited electronic fund transfer
- Unlimited bill payments
- Unlimited FREE Interac e-transfers per month
- Free mobile cheque deposits
- Joint accounts available
- Cheap international money transfer
Open an EQ Bank Savings Account: General Savings (1.25%*) or EQ Bank TFSA (1.25%*).
Tangerine vs. EQ Bank Comparison
1. Savings Rate: As of today (July 22, 2021), EQ Bank offers a 1.25%* non-promotional interest rate on its general savings account, while Tangerine is offering a 2.10% promotional rate for 5 months and 0.10% after.
Let’s drill down into the numbers using a savings account with $10,000 and a 1-year term:
EQ Bank: $10,000 x 1.25%
Interest earned = $125 per year.
Tangerine ⇒ First 5 months ⇒ $10,000 x 2.10% x 5/12 year
Interest earned during the first 5 months: $87.50
Remainder of year (7 months) ⇒ $10,000 x 0.10% x 7/12 year
Interest earned during the last 7 months = $5.83
Total interest earned for Year 1: $87.50 + $5.83 = $93.33
EQ Bank wins this round by offering a significantly higher interest rate overall. If we assume rates stay the same in Year 2, EQ Bank will still pay $125 interest on a $10,000 savings, while earnings on a Tangerine account drops to $10 (no promo rate in the second year).
The same scenario also plays out with GICs, with EQ Bank offering higher rates. Compared to the pittance offered by the major banks, these rates are good.
2. Convenience: Both banks generally do not have a brick and mortar presence, however, depending on your location, you may be able to find a Tangerine location if meeting people in-person is a requirement for you.
Both banks have mobile apps that are accessible on both android and iOS devices.
If you are looking for an online-only bank that handles everything from chequing and savings to general investing, TFSA, RRSP, and RRIF, Tangerine is the better option. With Tangerine, you can really move all your banking needs over.
EQ Bank has no chequing account, however, its savings account works like a hybrid account since you can deposit cheques into it and make bill payments. You can connect up to ten accounts from other banks and transfers are FREE. EQ Bank now also offers TFSA and RRSP accounts.
With regards to ATMs, Tangerine customers have access to over 44,000 ATMs worldwide. EQ Bank does not currently issue a debit card, therefore all transactions are completed online.
Tangerine Bank wins the round on convenience.
3. Safety of Funds: Both EQ Bank (via Equitable Bank) and Tangerine are insured by Canada Deposit Insurance Corporation (CDIC). What this means is that your deposits are insured by CDIC up to $100,000 per account category (i.e. Savings, Chequing, and GICs).
EQ Bank = Tangerine for this feature.
Conclusion
The factors that individuals take into consideration when choosing a digital bank will vary based on their needs and expectations. For some people, any monthly banking fee is anathema, and they want an online bank that can handle all their day-to-day banking needs – such as with Tangerine.
If you are looking for the best savings rates for your money or are looking for high interest rates GICs, TFSA, or RRSP savings accounts, EQ Bank is an excellent choice.
I switched to Simplii Financial back when it was PC Financial because of a really good points promotion they had. Now that they’ve done away with the points I’ve been thinking of switching over to Tangerine. The interest rates at EQ sound great so I might have to look into that for some emergency savings.
@Sarah: I also signed up for PC Financial when we started using the PC Mastercard for our grocery shopping. However, since they rebranded to Simplii and parted ways with PC, I have simply abandoned the account. EQ Bank definitely has one of the best non-promotional rates available today.
Hi Enoch, I need to park some cash with a higher interest, and have been looking at that Motive Financial and their “Savvy” account. I read, they are CDIC insured, but would like your input on the Company, if allowed. Thanks, Matt
@Matt:
Yes, your funds with Motive Financial are CDIC insured. I have a review of the bank here: https://www.savvynewcanadians.com/motive-financial-review/
Hi Enoch , I’ve been thinking of switching over to meridian or there new digital bank called motusbank, what do you think of that online only bank ?
EQ Bank does have a referral program, which seems to run every year, but only for a couple months. Check it out!
good points
Good article. I like the factual, unbiased approach, and the the way it was easy to read, understand, and compare ( in other words, layman terms). Info like this is what helped me make my decision.
@Andrew: Happy to hear you found the post useful!
This is a nitpick, but your interest calculations totally ignore monthly compounding. The interest is calculated daily, but paid monthly, so the January interest would be added to your balance for February to earn interest on. It doesn’t make much difference in one year, but over time it will. It makes EQ Bank look that little bit better.
@Jeremy: True, this is the simplest way to show the differences in the interest rates. For larger amounts, the monthly compounding interest would amplify the higher EQ Bank rate.
Hi Enoch,
I’m a senior and planning to invest 10,000 $ in Tfsa, eq online bank. Is it a sensible thing to do as a senior?
@Htin: That’s a difficult question to answer as it will depend on your overall financial picture and your investment needs. That said, if you are looking to park money in savings and you want to get a great interest rate in Canada, EQ Bank offers one of the best rates we have found by far as of today.
Hi Enoch, I have a savings account at Tangerine bank now & my wife is joint with me on it (joint depositer) If I open a savings account for my wife at Tangerine, will she get the 2.1% if we leave it in for 5 months only ?
@Fred: I’m not sure how Tangerine considers joint account holders and whether she will be treated as a first-time client when she opens an individual account. My guess is they won’t consider her to be a first-time client, however, you should probably check with their customer service.
Hi Enoch! l want to park funds in EQ TFSA for the higher interest rates. Although, for daily banking EQ does not offer a debit card for cash withdrawals. I have been comparing Tangerine or Wealth Simple for non fee checking accounts and still having access to a debit card . What are your recommendations between the two and what would you lean towards?
Thanks,
@Tim: Personally, I would do both EQ Bank and Tangerine. EQ Bank is one of the best for non-promotional (i.e. long-term) high-savings rates and Tangerine’s chequing works well. If you already have a Wealthsimple Invest account, you can also benefit from its Cash savings account, however, its chequing features are mostly pending.
Hi Enouch
I am planing to open New no fee account. Also I need to get secured credit card to build my credit Score. Which No fee account will help me.?
Thanking you in advance
I appreciate your services to many people, Be blessed
Sam
@Sam: EQ Bank and Tangerine are both good online banks. That said, just opening a chequing account may not improve your credit score significantly. If you are eligible for a regular credit card, you can try the Tangerine Money-Back Credit card. It has a minimum annual income requirement of $12,000 and I think you will need a good credit score to qualify. If you are unable to qualify for a regular credit card, you can try some of the secured cards on the list below:
https://www.savvynewcanadians.com/best-secured-credit-cards-canada/
Here’s also a link to a resource on how to improve your credit score: https://www.savvynewcanadians.com/ways-to-improve-credit-score-fast-canada/
Cheers