What are the Best Online Banks in Canada?

While being able to bank online may have seemed like a foreign concept just a few years ago, online banking is normal for many Canadians, so many are choosing to leave their traditional financial institutions and switch to these online banks. 

Advantages of Online Banks

While banking online may seem strange, it’s actually quite popular and comes with many advantages. The first advantage is that you don’t have to go into a branch to complete your transactions, plus you can even get loans and lines of credit directly from your home. That’s just the beginning, though. When you use online banking, you have access to:

• 24/7 banking
• No or low banking fees
• Higher interest rates on savings accounts

The access to 24/7 banking isn’t just available to those who bank strictly online, though. Most financial institutions offer online banking even if they still have physical branches. That said, though, because they’re strictly online, they’re able to offer competitive rates on fees, and these are usually zero. The interest rates on their high-interest savings accounts tend to be higher as well. They usually range somewhere between 1% and 2%, while traditional banks tend to offer between 0.02% and 0.05%, sometimes a little higher. 

Disadvantages of Online Banks

While there are plenty of advantages to online banking in Canada, there are also a few disadvantages. Most of these disadvantages center around the fact that you aren’t dealing with a human. For day-to-day transactions, online banking is great. When complex situations arise, though, online banks aren’t as flexible as traditional financial institutions. They also don’t always offer business accounts; they mainly specialize in personal banking. 

Due to the fact there’s a lack of human interaction in online banking, there are also limited financial options available. Not all online banks offer a wide variety of financial options, but some do. A good majority of them stick to daily banking operations. This can lead to having to go to another financial institution for more lending options. 

Account Types Offered Through Virtual Banks

Before we take a look at all of the different bank accounts you can get through digital financial institutions, let’s take a look at some of the different account types and what they’re used for. Knowing what each account does and how it works can make a big difference in where you decide to put your money.

• Chequing Account: A chequing account is essentially your main bank account. It’s where you make all of your daily transactions, pay bills and deposit cheques. These accounts have no or low fees and allow you to spend your money however you like.
• Savings Account: Savings accounts are similar to chequing accounts except for the fact they have more limitations. There’s usually a monthly transaction limit and stipulations on what you can withdraw. These accounts are intended to limit spending and to help you save your money. 
• GIC: GICs, also known as Guaranteed Investment Certificates, are essentially accounts you lock money into for a certain amount of time to guarantee a return. These are low-risk investments that allow you to make money as long as you can lock your funds from spending. 
• TFSA:  A TaxFree Savings Account is essentially an account where you can save money with some tax benefits. There are limitations on how much you can invest yearly in these accounts without penalty. These amounts are adjusted yearly and can be carried over from year to year. 
• High-Interest Savings Account: These types of accounts are just how they sound. They’re savings accounts that allow you to save money while earning a higher interest rate. With these accounts, it’s best to leave your money in there as long as you can without touching it to earn the most interest. These savings account interest rates vary based on your financial institution. 
• RRSP: RRSPs, or Registered Retirement Savings Plans, are investment accounts that hold your money tax-free until you reach retirement. There are some programs associated with RRSPs where you can access your funds early with no penalty, but you do need to return the funds in an allotted time frame. 
• RRIF: RRIFs, or Registered Retirement Income Funds, are what you receive once you reach retirement age and start using your RRSPs. It’s often referred to as a tax-deferred retirement plan because even though you paid no taxes on that money during your earning years, you do have to pay taxes on any of the funds you receive from RRIFs. They essentially act as your income. 
• Lines of Credit: Lines of credit are a type of revolving credit that allows you to borrow money as long as you have room available. With most LOCs, you only have to make sure the interest payments are paid monthly, and you can pay off the principal amount whenever you want. They essentially work the same as credit cards, except you have a much lower interest rate. 
• HELOCs: HELOCs, or Home Equity Lines of Credit, are lines of credit that are given based on the value of your home. This is a secured line of credit, and it allows you to access up to 80% of the value of your home minus what you still owe. If you don’t have a mortgage, you can access up to 80% of the full value. 
• Non-Registered Investment Accounts: Non-registered investments are accounts that are tax-free and have no tax deferred. You can invest in these how you choose, but tax will have to be paid on any income you earn from these accounts. Some examples of Non-Registered Investments are mutual funds, ETFs, stocks and bonds. 

These are just some of the main accounts that many online banks offer. Many of them also offer mortgages, though, which are just loans used to purchase a home. For mortgages, you do need to have the required down payment, and it will be approved based on your financial situation and credit history.  financial situation and credit history. 

Top Rated Online Banks in Canada

With all of those things in mind, there are still plenty of online banks in Canada that offer a variety of options based on your needs. Some of these may be more familiar than others, but let’s take a look at some of the best online banks in Canada. 

EQ Bank

EQ Bank was named the #1 bank in Canada, according to Forbes, on their list of the world’s best banks. On top of that, this is their third year in a row. They’re actually a division of Equitable Bank that’s strictly online, and they offer:

• Everyday Banking
• High-interest Savings Accounts
• GICs
• US Dollar Accounts
• TFSAs (Tax-Free Savings Accounts)
• FHSAs (First Home Savings Accounts)
• RSPs
• International Banking Transfers
• Mortgages

As you can see, there is quite a variety of financial products available, so it’s no surprise it’s considered to be one of the best online bank accounts. Plus, you can earn 3% on funds in your everyday account, pay no everyday banking fees with the EQ bank personal account, and make unlimited transactions at no charge. You also earn cashback with every purchase; no minimum balance is required. All you have to do to sign up is join online. From there, you’ll then receive an EQ bank card in the mail.

Tangerine

Tangerine is another online bank in Canada that offers a variety of services. They’re actually a subsidiary of the Bank of Nova Scotia, more commonly known as Scotiabank. Actually, if you haven’t heard of Tangerine before, it’s probably because they used to be called ING DIRECT. The products they offer are:

• GICs
• Chequing and savings accounts
• Credit Cards
• TFSAs
• RSPs
• RIFs
• Non-Registered Investment Accounts
• Mortgages
• Lines of Credit
• HELOCs (Home Equity Lines of Credit)
• Student Bank Accounts

Some awesome things included with a Tangerine account are no daily banking and a 1% interest rate on your everyday savings account. The interest rates go higher when you sign up for a high-interest savings account. 

Simplii Financial

Simplii Financial is a division of CIBC (Canadian Imperial Bank of Commerce) that offers strictly online banking. They offer no-fee daily banking and are the 2022 Ipsos award winner in three different categories:

• Value for Money
• Mobile Banking Excellence
• Recommend to Friends or Family

They also offer a wide range of online banking services, including:

• Credit Cards 
• Mortgages
• Personal Loans
• Lines of Credit
• Registered Investment Accounts
• Non-Registered Investment Accounts
• Tax-Free Savings Accounts (TFSAs)

On their website, you have access to some awesome features, including:

• International money transfers
• Mobile payment
• Interac e-transfers
• Sending digital Visa gift cards

Motus Bank

Motus Bank is another online bank that’s branching out and offering more than just savings and chequing accounts. These include:

• Mortgages
• GICs
• Lines of credit
• Investment Accounts

The rates on their TFSAs are 1.10%, and they offer competitive rates on both mortgages and HELOCs. Plus, the chequing account has no monthly maintenance fees, and you get unlimited free e-transfers. 

KOHO

A good option for an online bank if you’re just looking for a spending account is KOHO. Unfortunately, they don’t offer lending options like traditional financial institutions; their online-only bank account can help you save money. You can also earn money on everyday purchases, and you have the option to register for credit building if you’re looking to improve your credit score.

Even though the KOHO account is a spending account, it’s also considered to be a reloadable Mastercard. Depending on which plan you choose, your monthly fee will range anywhere from $0 to $19.

Neo Financial

As an online institution that offers virtual bank accounts, Neo Financial doesn’t offer quite as many options as some of the other online banks. That said, the products that they offer do have some awesome, unique features. 

• Neo Money: The Neo Money account and card allow you to spend and save at the same time. Not only do you earn cashback, but you also earn 2.25% cashback on every dollar in your online banking account. There are no monthly fees or unlimited transactions, and you can set up automatic payments. 
• Neo Credit: This particular Neo card is unsecured and offers some great perks as far as credit cards go. You can earn unlimited cashback of 5% on all purchases and 15% on your first purchases as a welcome bonus. You have full access online to freeze your cards when you need them, and you can get a virtual card for your mobile wallet, as well as a physical card. 
• Neo-Secured Credit: If you’re looking for a good credit card but need to build your credit score, then the secured card is the way to go. There are no monthly fees, and you can earn unlimited cashback. The minimum credit limit is $50, so you can choose an amount that best fits your budget. 

On top of these three amazing accounts, Neo also offers investing and mortgages. There are low fees on investments, and the mortgages are done fully online at competitive rates. 

PC Financial

PC Financial, also known as President's Choice Financial, offers digital banking and online accounts for daily banking and credit cards. Specifically, they offer the PC Money account and 3 different PC Mastercards.

With the PC Money Account, you get:

• No monthly transaction fees
• No minimum balance requirement
• Free e-transfers
• Unlimited free transactions

You also earn PC points you can use to buy groceries. 

Alternabank

Alternabank is a virtual bank as well. This online bank offers the same products as traditional brick-and-mortar banks. The products include:

• Online chequing accounts
• Online savings accounts
• High-Interest eSavings Accounts
• TFSAs
• RRSPs
• Mortgages
• Direct Investing
• Wealth and Investment Planning
• Eterm Deposits

One of the main differences between Alternabank and traditional banks is that Alternabank offers no-fee Chequing Accounts. You also get unlimited transactions, no minimum balance requirements, and a 0.05% annual interest rate. 

Outlook Financial

Outlook Financial is different from other virtual banks because it’s also a credit union. Outlook Financial's services are strictly online, but financial advisors can be reached via phone during their business hours. 

With Outlook, you have access to a variety of different financial products, including:

• High-Interest Savings Accounts
• GICs (Guaranteed Investment Certificates)
• TFSAs
• RRSPs
• RRIFs

In order to become a member of Outlook, all you need to do is fill out the form on their website. 

Achieva Financial

Acheiva is another top-rated virtual bank and prides itself on its high interest rates, which are some of the best in Canada. Plus, they don’t charge any monthly fees. Some of the products they offer include:

• GICs
• Higher Interest Savings Accounts
• Everyday Savings Accounts
• TFSAs
• RRSPs
• RRIFs

Another great thing about Acheiva is they offer multiple ways for you to contact customer service. You can do so through phone, email, secure message and chat. You can also save even faster with a Daily Savings Account rate of 3.35%. and chat. You can also save even faster with a Daily Savings Account rate of 3.60%. 

Motive Financial

With Motive, not only can you do your everyday banking, but you can also control your investments. When it comes to everyday banking, you can either get a Cha-Ching Chequing Account or a Motive Savvy Savings Account. You also have the option of getting both.

Included with the chequing account is:

• Free Interac e-transfers
• Unlimited transactions
• No monthly fees
• 50 personalized cheques
• Free access to the second-largest ATM Network in Canada (The Exchange Network)

There’s also an interest rate on this account of 0.25%, so you can still earn while you save. 

With the Motive Savvy Savings Account, you can get some of the same great features and more, including:

• No monthly fees
• Unlimited account transfers
• 2 free transactions
• Free deposits

The rates on this account are pretty good, too. Deposits on up to $5,000,000 earn 4.100% interest, and anything above that earns 0.05%. 

When it comes to investments, Motive Financial offers:

• TFSAs
• RRSPs
• GICs
• RRSP GICs

You can apply for most of these right online, or you can give them a call to get started.

MAXA Financial

MAXA is another virtual bank, but they only offer investment products. That said, though, these products all have great rates and are available to all of their members across Canada. In fact, MAXA Financial is a division of the Westoba Credit Union LTD. 

All of their investment accounts for savings, including TFSAs, RRSPs, RRIFs and High-Interest Savings Accounts, have a rate of 3.55%. You can also get GICs, TFSAs, RRSPs and RRIFs for set years at different rates. These rates are:

• 1 year - 5.10%
• 2 years - 4.95%
• 3 years - 4.70%
• 4 years - 4.50%
• 5 years - 4.45%

With MAXA, you have access to your account, just like any other bank, through online and mobile banking. You can make your bill payments, send e-transfers, transfer funds and schedule your payments. 

Easiest Bank Account Online to Open

Essentially, all of these bank accounts are simple to open, but the easiest is EQ Bank. You can apply directly online and open your account within minutes. Once you’ve received your bank card in the mail, then you can start using your account. It’s easy to transfer your money over and transfer your direct deposits into your new bank account. 

Best Online Bank Account

It’s really difficult to determine which of the digital bank accounts is the best one overall. This is because each one has different features and the one that works best for you, may not be the one that works best for everyone. 

That said, there is one online bank account that sticks out a little more than the rest of them making it the best online bank account in Canada. This is the Simplii no-fee chequing account. They also offer many other types of financial products that are available through the website or the app. They have no account fees and there’s no minimum balances or account balances required.

Online Only Banks and Debit Cards

Just like with a traditional bank, you can use the funds that are in a traditional bank account from your debit card. While many credit cards from virtual banks will issue you a digital card before you receive your physical card, it isn’t the same with debit cards. While you won’t receive a temporary card like you would if you went to a branch, you’ll still receive your card quite quickly since it’s issued immediately. 

Is Online Banking Safe?

Just like with anything, online banking comes with some risks. That said, it can be perfectly safe as long as you’re mindful. Most online banks also offer two-factor authentication and other security measures to help keep your account safe. 

When it comes to online banking, it’s important to be careful when choosing your password and not share that password with anyone. You should also avoid logging into your accounts on public wifi and make sure your two-factor authentication is enabled. It’s also a good idea to sign up for banking alerts so that if anything happens, you can check your account immediately to verify you made the transaction. 

What’s the CDIC, and Does It Cover the Virtual Banks?

The CDIC, also known as the Canada Deposit Insurance Corporation, is there to protect your money. They’re a Canadian federal Crown Corporation that was created in 1967 to protect the funds of those who’ve deposited their money in Canadian commercial banks, which include Canadian online banks.

How the CDIC works is they hold your funds in a trust, and will insure up to $100,000 in the case of a bank failure. It’s important to have this if you’re investing your money in an institution and all of the digital banks that we have mentioned above. 

Choosing Your Online Bank

While all of the virtual banks are great, which one you choose will depend on what you’re looking for. Each one comes with its own special perks, so it’s important to discern which of these are most important to you. The key things you may want to consider are:

• Fees
• Interest on Savings
• ATM Access
• Customer Support

With most virtual banks, there are no daily banking fees. This is actually one of the main draws to online banks. That said, along with no fees, some virtual banks also offer interest or cashback on your daily purchases and savings. Each bank will also have its own different ATM Network as well. However, the feature that might vary the most when it comes to online banks is customer support. 

Many virtual banks offer online and phone support. The hours of these support options do vary, though. What’s available through these support features varies as well, so it’s important to make sure you’ll be able to get the assistance you need when you need it. 

Ultimately, though, you want to verify that the bank you choose will depend on whether they can offer the options and products you’re looking for. Not all of these banks will offer mortgages or even loans, and that may be something that you’re looking for and want all of your products to be at the same financial institution. 

Banks That Are Going Digital

While the big banks allow you to do your banking personally and online, there are many smaller banks that are just digital. Fun fact, though a lot of these small digital banks are actually owned by the Big 5 banks. This gives consumers the option to bank with smaller, low-fee banks or large banks. 

If you’re considering going with a credit union like Canadian Western Bank, you have to keep in mind that there are still in person banks as well as online banks. However most of these credit unions have no fee accounts and offer many different financial products and competitive interest rates. 

Final Thoughts

When it comes to choosing the right bank account, there’s a lot to consider. What features are you looking for in an account? How often do you use it? Are you looking to invest? Do you need to improve your credit score? Are you looking for a mortgage? For a lot of people, this can be a really overwhelming decision. 

No matter which account you decide on, they all have some great features. The great thing, too, is that you don’t just have to decide on one. You may choose to have different products with different financial institutions, or you may change your mind at a later date. You can do any of these things, which is important because where you are now financially may not be the same in 5 years. Plus, by then, there may be even more options for digital financial institutions.ncial institutions.