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, overdrafts, account transfers, transaction fees, etc. 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 more than $200 per year on average in banking fees!
Online-only banks come with their own pros and cons.
One 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 EQ Bank vs Tangerine, including their financial products, fees, pros, cons, and everything else you need to make an informed choice.
What is 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 the few Tangerine pop-up locations and cafes around the country if you must speak to someone in person.
As a customer, you also have access to over 44,000 ATMs worldwide through Scotiabank’s Global ATM Alliance.
Tangerine Bank offers a suite of financial products, including:
1) Savings: Multiple savings accounts are provided for personal and business clients.
2) GICs: Tangerine GICs are available with terms ranging from 90 days to 5 years. You can hold these GICs in both registered and non-registered accounts
3) Spending: A no-Fee Chequing Account and Tangerine 2% Money-Back Credit Card that’s one of the best cash back credit cards in Canada.
4) Investing: You can hold Tangerine Investment Funds in TFSA, RRSP, RRIF, and non-registered investment accounts.
5) Borrowing: Mortgage, HELOC, and RRSP Loans are available.
The general features you can expect on Tangerine’s chequing account include the following:
- 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
- Free mobile cheque deposits
What is EQ Bank?
EQ Bank is the online-only arm of Equitable Bank – a Schedule I bank with total assets of approximately $63 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 does not have a physical location, you can always reach someone to talk to via phone or chat if you have any questions.
EQ Bank offers customers a high-interest savings account (known as the Personal Account) and GICs. Features of its savings and GIC account offerings include:
- No monthly fees
- No minimum balance
- High-interest savings rates (Up to 4.00%*)
- 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 Personal Account: General Savings (up to 4.00%*) or EQ Bank TFSA (3.00%*).
EQ Bank also offers several other products, including:
1. EQ Bank GIC: Get some of the best GIC rates with EQ Bank, with terms ranging from 3 months to 10 years and GICs for TFSA and RSP accounts.
2. US Dollar Account: Save your USD cash and earn 2% interest on every dollar. You can also use this bank account to make international money transfers.
3. Join Accounts: You can open an EQ Bank savings account with friends or partners.
4. Mortgage Marketplace: EQ Bank customers can find competitive mortgage rates from more than 2,000 mortgage products.
Tangerine vs. EQ Bank: Savings Account
EQ Bank offers a general savings account interest rate of up to 4.00%*, while Tangerine offers a 5.75% promotional rate for 5 months and 0.70% after.
Let’s drill down into the numbers using a savings account with $10,000 and a 1-year term (simple interest calculation):
EQ Bank:Â $10,000 x 4.00% (you get the top rate if you set up a recurring direct deposit to your account)
Interest earned = $400Â per year.
Tangerine ⇒ First 5 months ⇒ $10,000 x 5% x 5/12 year
Interest earned during the first 5 months: $239.58
Remainder of year (7 months) ⇒ $10,000 x 1.00% x 7/12 year
Interest earned during the last 7 months = $40.83
Total interest earned for Year 1: $239.58 + $40.83 = $280.41
EQ Bank pays a higher interest rate than Tangerine. If we assume rates stay the same in Year 2, EQ Bank will still pay up to $400Â interest on a $10,000 savings, while earnings on a Tangerine account drop to $70Â (no promo rate in the second year). Over time, you could earn more with an EQ Bank account.
For TFSA accounts, EQ Bank does better with a 3% non-promotional rate (so $300 simple returns in the first year based on the scenario above).
For GICs, EQ Bank’s rates are generally higher than Tangerine’s as of this update.
EQ Bank vs Tangerine: Chequing Account
EQ Bank does not have a chequing account; however, its savings account works like a hybrid account. You can deposit cheques into it and make bill payments. You can connect up to ten accounts from other banks, and transfers are FREE.
The EQ Bank Personal account includes unlimited bill payments, debit transactions, and Interac e-Transfers.
Regarding ATMs, Tangerine customers have access to over 44,000 ATMs worldwide. EQ Bank now offers a Mastercard for free ATM withdrawals at any bank. The EQ Bank card also pays cash back on all your purchases.
Tangerine Bank has a slight edge over EQ Bank when considering its spending account options.
EQ Bank vs Tangerine: Convenience
Tangerine and EQ Bank have mobile apps accessible on Android and iOS devices, and both banks do not have a brick-and-mortar presence.
For customer support, you can contact a service rep using chat, email, or phone.
While EQ Bank now also offers TFSA and RRSP accounts (savings and GICs), with Tangerine, you can move all your banking needs over as it also provides loans and investment funds.
EQ Bank vs Tangerine: Security
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 consider 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 high-interest rates GICs, TFSA, or RRSP savings accounts, EQ Bank is an excellent choice.
You can also combine both banks to enjoy the benefits they offer.
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
Will be good to specify that EQbank is not available in Quebec…
@Cris: Good point. I believe that EQ Bank will be launching in Quebec later this year.
Hello Enoch,
On the calculation you made, you accounted for simple interest. However, interest is compound, usually compounded monthly. The EQ account makes $252.88 while the Tangerine makes $244.39. So, not as much of an edge in the first year as you described. However, still an edge to EQ. What are the cons of these bank accounts?
@Amir: True, this was meant to offer a quick look at the interest rate differential, and I checked to double confirm that it was still higher even when compounded. The main con of these online bank accounts is the lack of a physical branch you can walk into. That said, branches don’t matter as much these days. One other consideration is whether you conduct a lot of atypical transactions like wire transfers, bank drafts, etc. If you issue cheques, EQ Bank does not offer them.
Hi Enoch, I want to invest in GICs, for this I would like to have them in a joint account with my wife. We already have a Simplii account but the rates we get are lower than that of others.
Do you have any suggestions about which banks may I use to open a joint GIC account online?
Thank you in advance.
Edward Boido
@Edward: I am not aware of any online banks that offer ‘joint’ GIC accounts. EQ Bank has a joint account for savings, but I don’t think you can hold GICs in it.
Enoch, Motive Financial will do joint GIC’s but has to be done by telephone. They also mail you a GIC acknowledgement paper copy. I have done this for years now. I’ve had a very good customer experience with them so far.
Tangerine also does joint GIC’s by telephone but the time spent with their customer service is not worth it.
EQ Bank does not do joint GIC’s.
@Ron: Thanks for the update.