motusbank is the latest digital (online-only) bank in Canada offering its customers zero-fee chequing accounts that earn interest, high-interest savings accounts, and highly competitive personal loans and mortgage rates. Launched on April 2, 2019, by the popular Meridian Credit Union, motusbank is a continuation of the fee-cutting trend and digitization of Canada’s banking landscape.
As the newest entrant into the digital banking space, motusbank will compete directly with other online-only banks like Tangerine, EQ Bank, and Simplii Financial. This review of motusbank covers their account offerings, account benefits, challenges of online-only banking, and more.
Who Is Motusbank?
motusbank is a full-service digital bank owned by Meridian Credit Union which has been around for over 75 years and is based in Ontario. Meridian Credit Union is the largest credit union in Ontario and the third-largest in Canada with more than 337,000 members and over $20.6 billion in assets under management.
motusbank is a federally chartered bank in Canada and is a member of the Canada Deposit Insurance Corporation (CDIC). As a digital bank, they do not have any brick-and-mortar locations. Customers can conduct their banking online and reach customer service by phone when required.
motusbank is available in all the provinces, except Quebec.
Motusbank Account Offerings
motusbank launched with a variety of eye-popping offers and accounts that rival or beat some of the best offers available in Canada today.
1. Motusbank Mortgages
The line of mortgage offerings by motusbank are truly revolutionary and “worth getting excited about.” motusbank recently dropped the rates on their 1-5 year mortgage terms as follows:
- 5 year fixed mortgage rates: 2.84%
- 4 year fixed mortgage rates: 2.85%
- 3 year fixed mortgage rates: 2.86%
- 2 year fixed mortgage rates: 2.88%
- 1 year fixed mortgage rates: 2.84%
This is one of the best rates you will find in all of Canada as of today. Lower competitive rates are also available on their variable mortgage terms. In addition to motusbank’s low mortgage rates, their mortgages come with some great features which can save you money and/or make your life easier.
20% Lumpsum Prepayments: You can pay down up to 20% of your original principal every year without a penalty.
20% Regular Payment Increase: This allows you to increase your normal monthly payments by up to 20% without a penalty.
Skip-a-payment: You can skip up to one month of mortgage payments per year.
Flexible payment schedule: Choose to pay your mortgage weekly, bi-weekly, monthly, or semi-monthly. You can also save on interest fees by making accelerated weekly or bi-weekly payments.
If you are not sure about how much house you can afford, they have various calculators that can be of help:
- Mortgage Affordability Calculator
- Mortgage Payment Calculator
- Mortgage Prepayment Calculator, and more.
Check out some of the best mortgage rates in Canada here.
2. Motusbank Savings Accounts
They offer a high-interest savings account (2.25%), TFSA savings account (2.50%), and RRSP savings account (2.25%).
Their smart savings accounts offer the following features:
- Competitive high-interest rates (currently up to 2.50%)
- Zero monthly fees and no minimum balance requirement
- Unlimited debit purchases and withdrawals
- Access to over 3,700 FREE ATMs across Canada
- Deposit insurance up to $100,000 by CDIC
- Automated savings feature that allows you to round up your purchases and save your spare change
3. Motusbank No-Fee Chequing Account
Similar to Tangerine, motusbank offers a chequing account that has no monthly fees. Its features are:
- $0 monthly account fees
- No minimum balance requirement
- Free and unlimited Interac e-Transfers
- 0.50% interest earned on your account balance
- Unlimited debit purchases, bill payments, and withdrawals
- Access to over 3,700 free ATMs across Canada
- Mobile cheque deposits
- Your first order of 25 cheques is free
- Deposit insurance up to $100,000 by CDIC
4. Motusbank GICs
motusbank has GICs you can use inside a registered (RRSP, TFSA, or RRIF) or non-registered accounts. GIC rates as of today (June 24, 2019) are:
- 1-year GIC: 2.80%
- 2-year GIC: 3.10%
- 3-year GIC: 3.10%
- 4-year GIC: 3.10%
- 5-year GIC: 3.25%
For their long-term non-redeemable GICs that are eligible for non-registered accounts, the rates are 1-year GIC: 2.70%, 2-year GIC: 3.00%, 3-year GIC: 3.00%, 4-year GIC: 3.00%, and 5-year GIC: 3.15%.
The bank also has escalator GICs which have varying and increasing interest rates depending on their terms, as well as short-term 30 to 270-day GICs.
5. Motusbank Personal Loans
They offer various credit facilities, including:
- Personal Loans: Up to $35,000 loans starting at 5.15% interest.
- Personal Line of Credit: Interest as low as 5.65%
- Secured Line of Credit (HELOC): 3.75% interest rate
As you can imagine, some transactions you conduct with motusbank attract fees. Some of them are:
You can also find other applicable fees e.g. NSF, wire transfers, overdraft, stop payments, inactive account fees, etc. on their website.
Pros and Cons of Digital Banks (Motusbank)
Online-only banks have their advantages and disadvantages when compared to the big banks.
Lower Fees: You can save the $14.95 or more in fees charged on the basic unlimited transaction chequing accounts available at your traditional brick-and-mortar bank.
High-Interest Savings: The funds you keep in your savings can earn an interest rate that potentially exceeds inflation and thus gives you ‘real’ returns. motusbank currently offers 2.25% on their general savings account (and 2.50% on TFSAs). EQ Bank has one of the highest non-promotional general savings rates at 2.30%.
Earn on Chequing: Some digital banks pay you interest on your chequing account balance. Motusbank pays 0.50% and Tangerine Bank pays up to 0.65%.
CDIC Insurance: Similar o the Big 5 banks, Motusbank is a member of CDIC which means that your eligible deposits (TFSA, Savings, RRSP, Chequing, etc.) are protected up to $100,000 per category.
Mobile App: Their innovative mobile app allows you to conduct transactions easily, including cheque deposits. The app is available on Android and iOS (iPhones).
Customer Support: Phone support is available from 8:00 am to 12:00 am (EST) Monday to Sunday at 1-833-696-6887. You can also email [email protected]
The main challenge you will face when you bank with an online-only bank is the lack of a physical branch that you can easily walk into if you prefer face-to-face banking.
Digital banks provide bank customers with lower-fee options for their everyday banking. Whether it is savings, chequing, mortgages, or investments, there are options to pay less and earn better returns.
The jury is still out on what impact digital banks will have on the outrageous bank fees charged by the Big 5. Perhaps another entrant into this banking space will increase competitiveness and lead to an overall decrease in monthly bank fees? We can only hope!