Online-only banks like Tangerine and Simplii offer a streamlined suite of banking services and financial products and have become increasingly popular due to a lack of the monthly account fees charged by traditional banks.
Choosing an online bank is easily a savings of over $200 per year on fees!
The accounts offered by the main digital banks are similar to what you get with big banks and include:
- Chequing account
- Savings account
- Investment accounts e.g. TFSA, RRSP, RRIF, GICs
- Credit cards
While their offerings are similar, it is important to note why one may choose an online-only bank over their brick and mortar counterparts.
Chequing accounts offered by digital banks like Simplii Financial and Tangerine Bank have no fixed monthly fees – they are free! Not only that, but they also pay you interest on your chequing balance.
Their savings account is often referred to as ‘high-interest savings accounts’ because they offer a savings interest rate that is significantly higher than what the big banks offer.
You may also be able to obtain a more competitive mortgage rate with online banks.
Tangerine and Simplii are actually owned by much bigger banks – Scotiabank and CIBC respectively. These digital banks are able to offer better deals than their parent banks because they have less overhead to account for.
Tangerine Bank vs. Simplii Financial: Online Banks in Canada
I have banked with both Tangerine and Simplii and this comparison/review is based on my personal experiences with them over the years and information that is publicly available on their websites.
Tangerine Bank is a subsidiary of Scotiabank and was formerly known as ING Direct Canada. It was originally founded in 1997.
Ways to Bank
Tangerine is an online bank with some physical presence in the form of cafes, pop-up locations, and kiosks in major cities across the country. You can conduct your day-to-day banking via their website or by using their mobile app.
Customers have free access to over 3,000 ATMs that operate on the Scotiabank network, and if you need to talk to someone, they have customer service representatives who are available 24/7 via phone (1-888-826-4374).
There is no shortage in the types of accounts offered by Tangerine. Their financial products include:
1. Savings Account: They have multiple savings accounts depending on your needs. Their high-interest savings account is the most popular as it offers one of the most competitive rates available in Canada. Currently, it earns a promotional 2.75% rate for 6 months and 1.10% after.
There are no monthly fees and no minimum balance. This account also allows you to save money stress-free using their Automatic Savings Program. Other available savings accounts are:
- Tax-Free Savings Account
- RRSP Savings Account
- US$ Savings Account
- RIF Savings Account
To take advantage of the 2.75% savings rate offer, click here.
2. Chequing Account: Tired of paying monthly fees on your chequing? Try the Tangerine No-Fee Daily Chequing Account and earn up to $200 in cash bonuses. Features of this account include:
- Zero monthly fees
- Unlimited free debits, bill payments, email money transfers, and pre-authorized payments
- Interest is paid on your account balance (up to 0.65%)
- Free access to 3,500 ATMs in Canada and 44,000 worldwide
- Free first cheque book (50 cheques)
- Mobile deposit deposits
3. Credit Card: The Tangerine Money-Back Credit Card is a no-fee card that rewards you with 2% cash back (currently 4% cash back) on up to 3 categories of spending.
5. Investment Funds: They offer several low-fee index funds that can be used to design a TFSA, RRSP, RRIF, or other non-registered investment portfolios. Read my review of the Tangerine Investment Funds here.
7. Home Equity Line of Credit (HELOC)
8. RRSP Loan
Tangerine offers a promotional bonus when you sign up for their savings or chequing accounts. For example:
Savings account: Earn $50 when you open a new account here and deposit at least $100 in your account.
Chequing account: Earn up to a $200 cash bonus when you open a new account and follow the instructions on their website.
Read my full review of Tangerine Bank here.
Simplii Financial is a subsidiary of CIBC and was formerly referred to as PC Financial.
Ways to Bank
Unlike Tangerine, Simplii has no physical presence. Customers can conduct their online banking through their website or by using the Simplii mobile app. You also have free access to thousands of CIBC ATMs nationwide and can speak to a customer service representative 24/7 at 1-888-723-8881.
Similar to Tangerine, Simplii offers a host of financial products that meet the needs of an average bank client.
1. High-Interest Savings Account (HISA): The HISA at Simplii earns 1.10% and they have the occasional promotional offer that pays a bonus rate for a limited time. There are no monthly fees, no minimum balance, and you can set up automatic deposits. They also offer RRSP and TFSA savings accounts.
2. Chequing Account: The Simplii No-Fee Chequing account has a lot of attractive features like:
- Zero monthly fees
- Unlimited free debit purchases, bill payments, and withdrawals
- Earn interest on your account balance, up to 0.50%
- Free Interac e-Transfer
- Free access to over 3,400 ATMs in Canada
3. Credit Card: The Simplii Financial Cash Back Visa card has no annual fees and is worth checking out.
5. Personal loans and line of credit
6. Investments: GICs and index mutual funds
Simplii Financial occasionally advertises a promotional bonus offer to new clients, although not as often as Tangerine. Currently, they are giving new clients $200 when they open a new chequing account. To be eligible for the bonus, you need to take some actions like adding payroll deposit and bill payments to your account.
Read my full Simplii Financial review here.
Simplii vs. Tangerine: Drilling Down
These two online banks are very similar in their product offerings. A few things to note:
A. Savings Interest: The basic non-promotional savings rate offered by Tangerine and Simplii on their HISA accounts is 1.10%. While promotional bonus offers are available for new customers (e.g. 2.75% for 6 months by Tangerine), they are short-lived and the base rate is what is most important.
B. Chequing Interest: You can earn up to 0.65% on your Tangerine chequing balance while the maximum rate paid by Simplii on chequing is 0.50%.
C. Convenience: Tangerine is owned by Scotiabank and Simplii by CIBC. Both CIBC and Scotiabank have ATMs all over Canada, so finding a free ATM should not be a problem. They both offer 24/7 phone support.
That being said, I find it to be more convenient that Tangerine has a few cafes and kiosks I can walk into if I want to speak to someone face-to-face.
D. Bonuses/Referral Program: Tangerine is well known for their sign-up bonuses. It has ranged from $25 to as much as $200 over the years. There is always some sort of a cash bonus available. This also ties in with their referral program (aka Orange Key) which offers $2,000 up for grabs when you refer friends and family.
Simplii occasionally also offers sign-up bonuses like the $200 they were giving recently for new chequing accounts. However, they do not have a referral rewards program.
Are They Safe? Both banks are insured by Canada Deposit Insurance Corporation (CDIC) which means that your deposits are insured up to $100,000 per account type.
I have accounts with both Tangerine and Simplii. If you are looking at paying less banking fees, online-only banks are an excellent option. Even if you want to keep your current account or rue missing the face to face transactions they provide, you can still take advantage of the high-interest savings offered by digital banks.
A higher savings interest, interest earnings on chequing, and $0 monthly chequing fees, all equate to more money in your pocket.
Open a no-fee high-interest savings account with Tangerine and receive a $50 cash bonus!
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