The Complete Guide to Canada’s Best Online Banks

Canada online banksCanada’s online banks are growing not only in number of competitors, but also in services offered, and ease of use as well.  This is great news if you:

  • Hate driving to a bank branch.
  • Can’t stand waiting in lines.
  • Don’t enjoy paying ever-increasing fees to access your own money.
  • Would rather interact with a screen than a person who started last week and doesn’t know the difference between a birthday card and a credit card.

If you’ve dismissed Canada’s online banking options up to this point, while clinging to the traditional “warm embrace” of your local bank branch, let me give you a few good reasons to stick around:

  1. The world’s largest ride provider owns no cars (Uber).
  2. The most valuable retailer doesn’t own any inventory (Alibaba).
  3. Our biggest nightly accommodation service doesn’t own any real estate (Airbnb).

Banking Disruption in Canada – Right Here, Right Now

You think it might be time to consider changing a personal banking model that hasn’t really changed all that much since they wrote about money lenders in relation to Jesus?  When history looks back at the current decade, it’s likely to be remembered by a single world: Disruption.Canada online banks

Now don’t get me wrong, that tech-driven buzzword is getting a little oversaturated at this point.  When every new business claims to be disrupting something and that it will change the world as we know it, things can get a bit tiresome.  Taylor Swift and Kim Kardashian emojis are not shifting any paradigms ok?  Your app idea that explains how to tie your shoes is NOT, “A change agent that uses innovative disruption to become an empowering game changer.”

That being said, if ever there was an industry that could use a little considerable change, it’s the Canadian banking sector.  Look, I love bank dividends in my investment portfolio as much as the next guy, but I’m pretty sure that shaking things up has been – and will continue to be – a very good development for most Canadians.

While online banking has been around in Canada for a while, I think a solid argument can be made that branch-less financial services are about to enter a golden age.  With more and more people comfortable handling their banking needs on a screen as opposed to waiting in line, and new competitors entering the market every year, the world of mobile banking is ripe for innovation. 

This competition is leading to:Canada online banks

  • Decreasing fees
  • More varied forms of customer support
  • More online services
  • Higher interest rates on savings accounts
  • Lower interest rates on credit options
  • Easier to use and more aesthetically pleasing platforms on your computer, tablet, and phone

 

While the number of brick-and-mortar bank branches has already begun to ebb, I don’t think the traditional bank teller will be relegated the pages of a history ebook anytime soon.  That being said, if you’re looking to cut down on your monthly banking costs and enjoy the any-time-any-place freedom that comes with online banking, read on to see what option will fit you best.  Keep in mind, we’re not considering traditional banks that also have an online presence, (Big 6 banks, etc.) we’re looking at banks that are NOT tied down by any brick-and-mortar locations at all – and consequently are in a position to pass those savings on to you.

Comparing Tangerine and PC Financial – The Kings of the Online Mountain

Canada online banks

When former online superstar Ally Bank was purchased by RBC and then promptly erased from existence, there was some fear that fellow virtual banking brethren ING Direct and PC Financial might follow suit.  While Scotiabank’s purchase of ING has left more than a few customers feeling a bit nostalgic for the good old days, the re-named Tangerine is still a major contender for our Canadian online banking heavyweight title.  While Tangerine is the new orange, PC’s online-only bank keeps chugging along into its third decade of existence.  In case you thought that these online-only Canadian banks were a niche product with limited room to grow, each of our big fish are proving to be swimming in a very large pond as they boast over two million customers each.

Both Tangerine and PC Financial put their best foot forward with no-fee daily chequing account options.  These accounts essentially allow the average person to handle their normal banking needs for FREE!  While brick-and-mortar competitors might claim to give you great value for the monthly fee they charge you to use your chequing account, it’s tough to beat the value of free.  Tangerine will even pay you $100 to open one of these accounts with them.

Here’s what else you get when you sign on to no-fee chequing with either PC or Tangerine:

  • Unlimited monthly transactions including interact purchases, and transfers between accounts.
  • Unlimited manual & automated bill payments.
  • Unlimited withdrawals from the ATM networks of their respective parent companies (CIBC and Scotiabank).
  • Mobile cheque deposit (use your phone to take a picture and deposit your cheque).
  • 24/7 customer support.
  • Account switch services to get you set up quickly and easily.
  • A relatively meagre interest rate on your balance (still better than the 0% rate that most big banks offer on chequing accounts).
  • View cheque images for free.

Canada online banks

Differences

  • PC allows you to collect points toward free groceries at Loblaws locations.
  • PC has an unlimited number of free cheques, whereas Tangerine gives you your first 50 cheques for free, but charges you $12.50 per 50 after that.
  • Tangerine offers slightly cheaper Interac e-Transfers at $1.00 vs PC’s $1.50.
  • Tangerine allows you to transfer money by email for FREE, whereas PC Financial currently has no such option.  This feature is separate and different from the Interac e-Transfer, even though it can be easy to confuse the two options.  (Essentially, Interac allows payments to be processed instantly, whereas email transfers can take 1-2 business days to process.)
  • Several online commenters have noted that Tangerine allows you to instantaneously shift money between accounts, whereas PC can take one business day to process these transactions.

Verdict on PC Financial vs Tangerine No-Fee Chequing AccountsCanada online banks

It makes sense that as the two time-tested options within the Canadian online banking space, PC and Tangerine would offer similarly great value in their no-fee packages.  While a couple of years ago I might have given Tangerine the unqualified nod due to the easy access of their turn-key investing portfolios, this advantage has been negated by the rise in robo advisor options available to all Canadians.  While the Tangerine portfolio options still exist, are still super easy to use, and are still much better than traditional mutual fund options, the robo advisor offerings are just better and are nearly as easy to access (plus they come with some degree of advising attached).

Both PC Financial and Tangerine also offer a bevy of other banking-related options that you can find with many other online-only entities.  If you want to apply for a mortgage, make us of a line of credit, or take advantage of a branded Tangerine credit card, either of these companies can do that for you as well.

For the time being, here are the difference makers for me when it comes to choosing between these two market leaders:

Go with PC Financial if you:

  • Prefer the CIBC ATM network to Scotiabank’s ATM network.
  • Like earning a few bucks in free groceries.
  • Use several cheques per month.

Go with Tangerine Financial if you:

  • Prefer the Scotiabank ATM network to CIBC ATM network.
  • Will make good use of the free email transfers.
  • Don’t use that many cheques.
  • Often have to transfer money between accounts immediately.
  • View full Tangerine Bank review here (written by us).

One popular strategy with folks that really want to maximize their chequing account benefits is to switch back and forth between Tangerine and PC Financial depending upon whoever is offering the best promotions or teaser rates.

2017 Update – PC Financial Becomes Simpii Financial

Simplii FinancialIn August 2017 President’s Choice Financial (aka PC Financial) let Canadians know that their 2 million-ish members will be spun off into a new online platform named Simplii Financial.  At the current time, it doesn’t appear that CIBC is abandoning the product or looking to put it on the backburner at all as they will continue to control the new spun off entity.

Many have speculated that this will be more than just a name change as the brand re-fresh could include an updated features list.  For example, as you can see from our above comparison, the old PC Financial had a real drawback when looking at eTransfer offerings.  More and more young consumers find themselves using apps or eTransfers far more often than cheques, so chances are that Simplii will look to remedy that comparison point specifically.

If you are a current PC Financial customer it appears that there is no need to panic (but opening a Tangerine Account in order to grab the free bonus and compare overall platforms couldn’t hurt).  It will be a gradual changeover and CIBC has stated that they will be sending out new debit cards to Simplii account holders

Customers will be able to continue to access CIBC’s 3,400 ATM locations across Canada for free – just as before said Mike Boluch, CIBC’s executive vice-president of direct banking, innovation and payments.

“The offer is very similar out of the gate to what they have today. That’s by design — certainly our intent,” Boluch said. “We want to minimize any impact of change on our clients.”

Users of the President’s Choice Mastercard (which allowed users to claim rewards at Loblaw’s PC Plus loyalty program) can use their previously accrued rewards points whenever they wish – but cannot earn any new points through Simplii after Oct. 31st.   The overall credit card will continue to operate as before.

The biggest immediate change for most account holders is the dissolving of the partnership with Loblaw’s locations.  For example, Simplii users will no longer be allowed to withdrawn money for free from Loblaw’s ATMs.  We await other changes eagerly.

Personally, I’m hoping that CIBC takes the opportunity to come with a really well polished product that is easy to use across all platforms, offers us some great introductory and long-term rates, and includes an updated features list that raises the bar for all of Canada’s online banks!

**It’s also interesting to note that as 2017 progresses, EQ bank has been making real noise about branching out in terms of services offered and challenging our current market leaders when it comes to all-around-account offers.  They have aggressively marketed their high-interest savings accounts, and continue to be extremely competitive in that area.

EQ Bank and Zag Bank: New Guys on The Block

Canada online banks

While Tangerine and PC Financial look to be the dominant online players for some time to come, a couple of young guns have made a big splash in 2016.  EQ Bank is the online-only arm of Equitable Bank (an established bank with over $14 billion in assets under administration).  Zag Bank represents an attempt by the Desjardins Group to garner a share of the online pie.

Both EQ and Zag caught a lot of eyeballs earlier this year when they offered incredible interest rate opportunities in order to grab some initial momentum.  EQ was shelling out 3% (roughly four times what PF and Tangerine were offering at the time), and despite claiming that this was not a teaser rate, have since lowered their rate to a still-impressive 2.25%. (Did anyone not see this coming?)  Zag wasn’t far behind at an initial rate of 2.5%, before dropping down to their “long-term rate” of 1.65% in June.  While these rates certainly accomplished their goals of putting these young upstarts on the map, they might have set an unreasonably high bar for themselves in this low interest rate environment.  Time will tell if they are able to pay this much more interest than the chequing account/high-interest savings account options offered by other financial institutions.

To be honest, while EQ and Zag are marketing themselves as competitors to Tangerine and PCF I just don’t see this as a reality.  At this point, both banks are ideally positioned as high-interest saving account companions to one of Canada’s two full-service online banks or a traditional banking option.  They are committed to offering excellent savings rates, but are missing some key features such as:

  • The ability to write cheques.
  • No ATM withdrawal capability.
  • No debit card or credit card options.

Now, they do have some pretty cool stuff:

Canada online banks

Clearly EQ and Zag have some catching up to do if they hope to compete with the full utility of Tangerine and PC Financial.  I have heard rumours about possible debit card options becoming available soon, but at this point, the services offered are not really comparable.  I am thankful for the two new entries into the market however, because they bring some great rates to the table and are forcing our two big fish to give some good promotions in order to stay competitive.

The Credit Unions and Other Canadian Online High-Interest Savings Accounts

Once you get past the two giants and new blood, you enter into some interesting options that not many Canadians are particularly familiar with.  These financial services companies have some unique aspects and there are certainly differences between them, but what they have in common is that they exist in purely online format, come with no monthly fees, and compete to offer these best high-interest savings account rates in Canada.  If the interest rate on a high interest savings account is the only thing that is important to you, comparison updates are posted regularly here. 

In addition to being absolutely free in terms of having no monthly fees and access to high interest savings accounts, all of these financial institutions offer easy TFSA options, and free transfers in and out to other bank accounts.  While Canadian Direct Financial, Outlook Financial, and Implicitly Financial offer a somewhat broader range of services, the Manitoba-based credit union options have their fans as well. (*Note: even though these Manitoba options are affiliated with brick-and-mortar credit unions they are ran completely separately and almost none of the services “crossover” from what I’ve read.)  None of these other options have the range of products that the two market leaders do; however, they often pay higher rates of interest (likely due to the fact they don’t have as many expenses as PC and Tangerine, because they offer so many fewer services).

Canadas Best Online Banks

3 Steps to Getting the Most from Canada’s No-Fee Online BanksCanada online banks

Many Canadians will always prefer the face-to-face nature of traditional branch banking, but there is no denying the fact that no-fee online banks are providing big time competition by saving customers hundreds of dollars per year – and providing a ton of convenience at the same time. (2017 Update: Online lenders are now moving into the world of quick, non-collateral loans as well – see our Borrowell Review for more information)   With new participants putting pressure on the two behemoths of Canada’s online world, things are only going to get better going forward.  For the time being, here is how to get the most out of the current banking scene without too much hassle:

1) Compare Tangerine’s and PC Financial’s offerings to those of your usual bank.  Ask your bank if they will price match the no-fee structure or give you a deal you can live with.  Sometimes banks will give you a sweet deal to keep you around.

2) If you are ready to “cut the cord” when it comes to your traditional bank and want an online banking account that is quite versatile in what it can offer, then scroll up to our Tangerine vs PC Financial comparison.  Keep an eye on EQ Bank as it grows as well, I believe they may continue to aggressively improve their platform.

3) Use everyone else as a simple high interest savings account.  In researching for this article I found a lot of people that have accounts set up at several of the options we listed.  They use a Tangerine or PF Financial as their “home base” and then – because shifting money in and out of all of these accounts is relatively easy and completely free – they simply jump their savings from bank to bank depending on who is having a promotion at the time and/or who has the best high interest savings account option.  Be careful when doing this with TFSAs however, because your withdrawal and re-depositing actions can have tax consequences.

40 Comments

  1. Kate on June 27, 2016 at 5:25 am

    Thanks for breaking this down – it’s great to know how many options we have!



  2. KC on June 27, 2016 at 8:53 am

    Nice set-up! I showed this to my somewhat computer illiterate mother and she understood perfectly and is willing to try working on the online option now.

    Now, I’ve never heard of Zag until just now and do have to agree that they still have a ways to go but we have to remember that PCF started off the same way. I expect that we’ll see the same of them as PCF and Tangerine in about 5 years as their client base gets bigger.



  3. Kornel on June 27, 2016 at 7:05 pm

    Great Report Kyle! I’ve been with PC for a while so it’s good to see a comparison of what others are offering.

    I tried EQ Bank recently and have been happy so far. The free Interac transfers (a certain amount of free ones per month) made it pretty appealing.

    Their high interest rate made it pretty attractive too as a place keep your emergency fund so I gave them a shot for those 2 reasons.



  4. Kyle on June 27, 2016 at 8:39 pm

    Thanks for stopping by Kornel! Always good to get a first hand review.



  5. Kyle on June 27, 2016 at 8:40 pm

    That’s great to hear KC! I hope for the sake of competition that EQ and Zag are able to keep pushing the envelope.



  6. Stephen Weyman on June 28, 2016 at 7:55 am

    You really blew me away with this guide guys – love the graphics and analysis. VERY well done.



  7. Kyle on June 29, 2016 at 2:28 pm

    Thanks Stephen, really appreciate that!



  8. Janine on June 29, 2016 at 2:41 pm

    This is great! Can’t wait to share it with my readers!



  9. Ronaldo Argamino on July 2, 2016 at 7:20 am

    Thanks for the info…still some great things out there besides doom n gloom of banking…



  10. Barry Kaufman on July 2, 2016 at 7:26 pm

    Great article and I use two of the online banks mentioned. However, the big 5 banks also provide useful services, especially to seniors. Almost every time I go into a regular bank, I usually see an elderly senior seated in a special area getting help from a bank teller. And, the teller often spends 15 minutes or more helping a confused senior. So, let’s not always knock the banks for the service charges they charge to non-seniors.



  11. Sean Cooper, Financial Journalist on July 2, 2016 at 9:59 pm

    Amazing guide! It’s a toss up between Tangerine and PC Financial. I learned something new. I thought email transfer from Tangerine could only be to other Tangerine customers. Let’s just say I’ll never pay for another e-transfer again!



  12. Elizabeth on July 3, 2016 at 11:30 am

    Great information! Any of these available in the province of QC? To my knowledge, only Tangerine… 🙁



  13. Kyle on July 3, 2016 at 1:13 pm

    I can’t say I’m totally certain Elizabeth. I bet Zag is an option for sure since it is ran by Desjardins.



  14. Kyle on July 3, 2016 at 1:14 pm

    Thanks Sean! I actually learned a bunch of new stuff putting this stuff together. I think the field is going to evolve pretty quickly over the next couple of years.



  15. Kyle on July 3, 2016 at 1:15 pm

    There is no doubt that if you’re able to maintain a fairly high balance in your account, or if you qualify for a senior/student discount, the big banks are probably the way to go in terms of value and functionality. If you don’t fall into those categories however, those fees can be a real PITB!



  16. Kyle on July 3, 2016 at 1:16 pm

    Thanks for stopping by Ronaldo. The good news is that banks are going to have to compete with these guys going forward. As more and more people get comfortable with online models, fees will almost certainly come down!



  17. Kyle on July 3, 2016 at 1:22 pm

    Thanks Janine, appreciate it!



  18. Achieva Financial on July 4, 2016 at 5:09 pm

    Elizabeth – we’re available to Quebec residents at Achieva.



  19. Tom on July 6, 2016 at 8:29 am

    What about Manulife Bank?



  20. Daniel Trezub on July 6, 2016 at 11:01 am

    Wow, this is a GREAT post! I am sending it to all my friends and clients that ask me about online banks!
    Thanks and congratulations!



  21. Kyle on July 6, 2016 at 5:37 pm

    Thanks Dan! Appreciate the support.



  22. Kyle on July 6, 2016 at 5:41 pm

    You’re completely right Tom. Hadn’t come across them, but upon taking a further look they should be added. When I update the article in a few months I’ll certainly adjust that.



  23. Chrissy on November 26, 2016 at 10:08 am

    Thank you Kyle. I’ve been reading your articles for a couple of years now, and always find then super helpful. This one is no different. Thank you SO MUCH for the time and effort you put into articles like this. Such a helpful way to analyze my decision to break off from Scotiabank. I was just charged a $9.99 monthly fee because my account dipped below the $2,500 minimum (for one day by a few dollars). How frustrating. I’m a very conscious, careful saver/spender and even I can’t keep such a close eye on my accounts! I’m sick of it and glad I have such good options to move to. Again, thanks for this article. It was extremely helpful.



  24. Kyle on November 26, 2016 at 12:42 pm

    Glad to hear you’re going to make use of it Chrissy! If more Canadians take the steps you are perhaps our big banks will wake up and get competitive – but I wouldn’t hold my breath 😉



  25. Cindy on August 16, 2017 at 10:37 am

    Problem with this is: as a happy PC customer for 18 years I was just notified by email today that as of November 1, 2017 all my accounts will be transferred to CIBC. PC Financial is pulling out of banking. Looks like I’m going to be pulling all my investments out of PC and maybe considering Tangerine.



  26. Mark on August 16, 2017 at 11:42 am

    Today PCF informed me that they are shutting down. I don’t know what my accounts are going to look like after Nov.2017, so I’m starting to look for options. Thanks for the awesome breakdown of [current] options we have! I didn’t know CdnDirect, Zag, and EQ existed! Hopefully one of them will begin offering a debit-interac card because I don’t like the “new orange”.



  27. Doug on August 24, 2017 at 4:36 pm

    Good article, but I didn’t see a date that it was published. Is it still current (Aug. 2017)? Also, can you tell me if U.S. citizens/residents can open online accounts at these banks? Thanks much.



  28. Kyle on August 25, 2017 at 12:29 pm

    We are about to re-publish/update the article in a few days here Dough (good timing). At the current time I can’t tell if US residents can open an account, but US citizens living in Canada shouldn’t have a problem.



  29. Owen @ PlanEasy on August 28, 2017 at 8:27 am

    Nice summary. We bank with both Tangerine and PC Financial and we like them both. Service wise we dont see a big difference between the two. The biggest factor for us is having Scotiabank and/or CIBC bank machines close by. Depending on what you have close to you either one will work.

    The only “difficulty” we ever had was buying our home and getting a certified cheque. We had to order it in advance and it was mailed to us. Not really a big deal but if you didn’t plan ahead it makes things difficult.

    We even bought a $15,000 used car with our debit cards! My wife and I could each do up to a $9,999 transaction on our debit cards. We just had to call ahead to set up an increased limit with the bank. They gave us two hours to make the transaction. Pretty easy.



  30. Kyle on September 1, 2017 at 12:10 pm

    That you managed to buy your car in cash with two debit card transactions is pretty cool Owen! Thanks for the firsthand feedback on the service of both companies.



  31. Nadine on September 16, 2017 at 9:39 am

    Thank you for the break down, really appreciate it. I reread what you wrote with respect to PC’s credit card (no points after Nov 1st) but that is not the case. It’s their bank accounts that will no longer accrue points.



  32. Nadine on September 16, 2017 at 9:42 am

    Forgot to ask, what are your thought with respect to Meridian? Current offer is 2.75% for 90 day non redeemable GIC or TFSA



  33. Megan on September 27, 2017 at 12:03 pm

    I actually just recently switched all of my direct deposit and automatic payments to come out of my new EQ bank, so that I can take extra advantage of that interest rate! I just use one of the free email xfers to skim the spending money for the month into my new Tangerine account (they’ll hold your money if you don’t email it).

    I’m not super impressed with Tangerine since also opening that account. I find they don’t really give you a heads up about how some features of theirs function.

    Their “free” email transfer option is actually an electronic transfer, rather than an interac transfer, meaning your recipient has to enter all of their account info to receive (rather than depositing directly into their account the way others function).

    So far, I’m not finding it any better than PC. I’m still using it because I figure I’ll give it a fair try… but I’m just not finding their customer service or communications to be as high quality as PC.

    LOVING EQ, as a bill hub, though. I’d recommend them 🙂



  34. d bee on September 29, 2017 at 2:18 pm

    Tangerine has, as of September 23rd changed their website. Enough change to make the simple things awkward and the complicated almost impossible. My suggestion is that Tangerine be withdrawn from the rank of serious contenders to that of a minor league maybe. It appears that they purchased the use of web technology that appears to be quite similar to that of a local credit union’s (sorry but I can’t really prove stuff that I one get peaks of!) app. If you only bank from a smart phone you might like it but as of September 29th over 99% of Facebook comments are negative and Tangerine is trying to convince its customers how good the change is and isn’t listening.



  35. Kyle on October 2, 2017 at 2:05 pm

    We’ll pass along your message DB. The problem with demoting Tangerine is who do you go to instead? Until Simplii Financial is unveiled I’m not quite sure who takes the Big Orange Machine’s spot.



  36. Mario on October 4, 2017 at 12:52 pm

    I have a CIBC chequing account in Mississauga, Ontario. The problem is that CIBC get my money from the government because I’m retired from Ford Motor C°. but I have been getting many problems with them.
    I’ve tried to get my money, because I’m living in sudamerica now, but they canceled my Advantage Debit Card without any explanation.
    Now I’m complaining to my Union in Toronto, because I need my money. Can I open a Scotian Bank chequing account from my country.
    My balance is $ 21.196,00



  37. john on October 6, 2017 at 11:01 am

    EQ Savings Plus Account does not offer joint accounts. So, if either my wife or myself die or have a stroke, the healthy spouse cannot get hands on the money without going into court.



  38. Barbara on October 8, 2017 at 11:13 am

    Can’t do pc financial because as you said its over and simplii is not open for biz yet. Researched Tangerine over on their facebook page and people are very angry about the new website and how hard it is to navigate, as well as their site being down for all of Friday. Not good. So, now I’m thinking i might go for the manitoba credit union achieva…as of today, Oct 8 2017, the rate is 1.85 for savings, plus they have it linked with acculink to my credit union atms here just in case, and its completely insured 100% of total funds, not just 100 grand. So far so good. Will keep researching. I like EQ too, but its scary cause no chequing and no TMS.



  39. Kyle on October 12, 2017 at 2:07 pm

    If you have a will that should be pretty straight forward John…



  40. Kyle on October 12, 2017 at 2:07 pm

    Depends on your residency status Mario.



  41. Gerard on November 10, 2017 at 7:16 pm

    1. Is there any published rating available or exists for internet banking institutions similar to that provided by bankrate.com in the USA?
    2. how do those lucky enough tackle deposit insurance for funds above the CDIC max?



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