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Tangerine vs EQ Bank GIC Rates: Which is Better?

Gravatar for Baggio Ma

Written by Baggio Ma

Updated:

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Tangerine and EQ Bank are two of the most popular neobanks in Canada. What is a neobank? These are online-based fintech companies that offer a full range of financial products and services but with no brick-and-mortar presence. As of 2023, these two banks have a combined customer pool of nearly 2.5 million Canadians. 

Both Tangerine and EQ Bank offer a number of different banking and investment products. These include personal savings, mutual funds, GICs, credit cards, and even mortgages. 

Due to being mostly digital companies, Tangerine and EQ Bank are able to provide higher interest rates and lower fees for customers. 

In this Tangerine vs EQ Bank review article, we will discuss both companies’ offerings of GICs. As Canadians look to lock in safer investments at higher interest rates, GICs have become a popular investment asset in 2023. This article will compare each company’s GIC rates and how GICs can fit into your investment strategy.

Tangerine GICs and Rates

Tangerine offers a nice variety of different fixed-income investment assets. These can be purchased from Tangerine for anywhere from 90 days to 5 years in duration. 

Here is a list of available GICs and the Tangerine GIC rates for December 2023. 

Guaranteed Investment Certificate (GIC)

The standard GIC from Tangerine can be bought in any registered or non-registered account on the platform. Tangerine GICs provide a high guaranteed interest rate with no service fees or charges. 

Using the Tangerine GIC rates calculator, a $5,000 investment in a one-year GIC will return $262.50 in interest. Remember that with a GIC, you also receive back the initial principal of $5,000 at the end of the term. 

RSP Guaranteed Investment (RSP GIC)

Are you thinking about the long-term or nearing the age of retirement? Take advantage of Tangerine’s RSP GIC, which can be purchased directly in your Tangerine RSP account. 

These RSP GICs are tax-friendly because any contributions can be deducted from your taxable income for the year. On top of that, RSPs are tax-sheltered: any interest you earn on your RSP GIC is only taxed when you withdraw that investment from your RSP. 

Finally, with an RSP GIC, you can split your income with your spouse in a Spousal RSP. Contributing to a spousal RSP can help ensure that your future retirement income is divided more evenly, which can potentially lower your marginal tax rate in retirement. 

Tax-Free Guaranteed Investment (TFSA GIC)

For savvy Canadian investors, maximizing your annual contribution limit in your Tax-Free Savings Account or TFSA is a primary objective. At Tangerine, you can do so by buying Tax-Free GICs to hold in your account. 

When you purchase a GIC in your TFSA, any interest earned is completely tax-free, and you still receive back your initial principal at the end of the term. 

As of 2023, the lifetime contribution limit for the TFSA in Canada is $88,000. This year there was an annual contribution limit of $6,500, although you can carry over previous unused contributions to any future year. 

You must be a Canadian and 18 years of age to open a TFSA with Tangerine. 

RIF Guaranteed Investment (RIF GIC)

While an RSP GIC is for those preparing for retirement, a RIF or Retirement Income Fund GIC is for those who are retired and over the age of 71. 

In retirement, many Canadians choose to invest in safer, income-bearing assets. The Tangerine RIF GIC is a perfect investment asset for those who are looking to earn a steady income while protecting their wealth for when they need it the most. 

Tangerine GIC Rates: 

Here is a list of the interest rates for each of these Tangerine GICs as of April 29, 2024:

1 year5.15%
1.5 years4.30%
2 years3.60%
3 years4.50%
4 years4.50%
5 years4.50%

Tangerine US Dollar Guaranteed Investment ($US GIC)

Canadian investors are no strangers to investing in US assets, so Tangerine has a way to earn a guaranteed return on your US dollars. 

The Tangerine US Dollar GIC pays a guaranteed high-interest rate which will pay you interest directly to your Tangerine US Dollar account. The same rules apply: no service fees or charges and a guaranteed rate for your term. 

Here are the interest rates for the Tangerine US Dollar GIC as of January 3, 2024: 

Here is a list of the interest rates for each Tangerine GIC term:

1 year4.95%
1.5 years4.10%
2 years3.40%
3 years4.30%
4 years4.30%
5 years4.30%

Tangerine GIC Rates History 

Tangerine offers customers a look at its GIC rates history. What makes the GIC rates change so much from month to month and year to year? 

GIC rates are determined by the Bank of Canada’s overnight interest rate. Most of you will be aware that the hikes in 2023 have raised interest rates for things like loans, lines of credit, and of course, mortgages. Therefore, interest rates can suddenly change depending on the policies of the central bank. 

The current interest rates for Tangerine’s GICs are the highest since the products were introduced in May 2017. They hit an all-time low of just 0.60% in May 2021, shortly after the onset of the COVID-19 pandemic caused a crash of the global financial system. 

Related: Tangerine GIC Rates in Canada

EQ Bank GICs and Rates

Not to be outdone, EQ Bank offers its own variety of GICs for Canadian investors. Here is a quick list of the different GICs you can buy at EQ Bank. 

Non-Registered GICs

As their name suggests, Non-Registered GICs are available for purchase in any non-registered investment account at EQ Bank. These GICs are not nearly as tax-friendly as most registered GICs. 

At EQ Bank, you can purchase a non-registered GIC for a term of anywhere from 3 months to 10 years. 

EQ Bank RSP GIC

The RSP GIC at EQ Bank has the same tax-friendly benefits as Tangerine. Any contributions can be deducted from your taxable income for the year, and any earnings made are tax-free until they are withdrawn from your retirement account. 

All EQ Bank registered GICs have the same interest rates that are slightly lower than its non-registered GICs.

EQ Bank TFSA GIC

Like Tangerine, EQ Bank also offers a GIC that can be purchased in your TFSA. This means that any interest earned on your GIC is completely tax-free. 

You will need to sign up for a TFSA with EQ Bank to take advantage of these rates. Note that if you have TFSAs open with other institutions, the total lifetime contribution limit applies to all of your accounts in aggregate and not individually. 

EQ Bank FHSA GIC

Brand-new to EQ Bank’s lineup of registered GICs is the FHSA or First Home Savings Account. This new registered account was introduced by the Federal Government in April 2023 and helps Canadians save for their first home. 

The lifetime contribution limit for the FHSA is $40,000, and contributions are tax-deductible like with an RRSP. 

EQ Bank GIC Rates

Here are the interest rates for EQ Bank’s GICs as of April 29, 2024:

1 year5.15%
15 months5.10%
2 years4.95%
27 months4.90%
3 years4.75%
4 years4.55%
5 years4.60%
6 years3.80%
7 years3.80%
10 years3.80%

EQ Bank Rates History

EQ Bank’s GIC rates are also impacted by the Bank of Canada’s overnight rate. If you look back at the rate history for GICs in Canada, you will notice the same pattern. 

Just as with Tangerine, EQ Bank’s GIC rates are at an all-time high due to the Bank of Canada’s current rate-hike cycle to lower Canadian inflation. This is one reason why you will notice that longer GIC terms have a lower interest rate than the 1-year GIC. 

Interest rates are expected to fall over the next few years as inflation comes back under control to the Bank of Canada’s target range. 

What is Tangerine Bank?

You might know Tangerine by its original name: ING Direct. It was established in April 1997 by the ING Group which is a Dutch multinational banking corporation. It first made headlines in the Canadian financial industry with its higher-than-normal interest rates for personal savings accounts. 

In 2012, ING Direct was acquired by Scotiabank and the name was changed to Tangerine in 2013, although it did keep its orange motif. Being Canada’s oldest neobank, Tangerine has over 2 million Canadian clients. 

Tangerine Bank Features

As we mentioned, Tangerine’s first claim to fame was its 3.0% interest rates for personal savings accounts. Back in 1997, much of the banking was done by telephone, but today it is a completely online bank. 

Tangerine customers have access to savings accounts, HISAs, investment funds, TFSAs, US Dollar accounts, loans, credit cards, GICs, and even mortgages. Tangerine users also have free access to Scotiabank ATMs and full access to the site via desktop and mobile apps. 

What is EQ Bank?

EQ Bank is the digital arm of the Toronto-based Equitable Bank. While the parent company has been around since 1970, EQ Bank has only been in operation since 2016. Despite its young age, EQ Bank was named the #1 Bank in Canada by Forbes for 2023. 

In 2019, EQ Bank moved its core banking services onto the Microsoft Azure Cloud making it the first Canadian bank to have cloud-hosted banking. As of the start of 2023, EQ Bank had more than 300,000 users across Canada. 

EQ Bank Features 

EQ Bank customers have access to personal savings accounts, HISAs, GICs, debit cards, and mortgages through its Mortgage Marketplace. 

This bank prides itself on higher-interest rates and lower fees and has no brick-and-mortar locations anywhere in Canada. EQ Bank is CDIC insured in Canada under Equitable Bank. 

Which Bank Has Better GIC Rates?

The results are in for this EQ Bank vs Tangerine GIC review article. If we are comparing the 1-year interest rates for GICs, EQ Bank has a slight edge at 5.60%. Interestingly if you opt to go for the 1.5-year GIC from Tangerine, you get a 5.60% compared to just 5.45% for EQ Bank’s GICs with a term of 15 months to 27 months. 

Overall, EQ Bank has slightly higher interest rates for GICs and offers much longer terms for up to 10 years. If you are a Tangerine customer, it probably isn’t worth switching banks for, but for new clients, EQ Bank offers modestly better rates for any of their GICs. 

Visit EQ Bank

Visit Tangerine

FAQs

Are EQ Bank GICs safe? 

Yes, EQ Bank GICs are completely safe, and the rates are guaranteed. EQ Bank is CDIC insured through its parent company Equitable Bank. This means accounts with EQ Bank are covered for balances up to $100,000. 

Is Tangerine better than EQ? 

In terms of products and services, the two banks are pretty even. EQ Bank does offer marginally higher rates, but Tangerine has a long reputation for outstanding financial service in Canada. Tangerine is owned by Scotiabank, so you could argue it is a safer company to bank with in terms of potential bankruptcy. 

What is the biggest advantage of Tangerine? 

The advantages of using Tangerine are clear: a wide range of banking and investment products with high rates and next to no fees. Tangerine has a completely online platform but still has very highly-rated customer service. 

What’s the best GIC rate in Canada?

As of July 2023, the highest GIC rates in Canada are offered by EQ Bank, LBCDigital, Saven Financial, Motive Financial, and a few other online banks.

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Author

Gravatar for Baggio Ma
Baggio Ma

Baggio Ma has written extensively on financial topics over the past several years. His work experience in the private, public, and not-for-profit sectors has led to a special interest in personal finance-related topics. Baggio has written for several Canadian finance sites such as PiggyBank and Tech Daily. Baggio holds a Bachelor of Arts degree from the University of British Columbia and a Master of Public Administration Degree from the University of Victoria.

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