As we move further into the digital age, more services are becoming available on the web. You can buy whatever you need on a variety of websites and have them delivered to you directly. You can connect with anyone, anywhere instantly. You can also access and use your bank from any mobile phone or computer with online banking.
You’ve probably heard of online banking before. Even if you have, there’s probably plenty you don’t know. We’re going to take a deeper look into online banking and the best online banks in Canada in this guide. If you’re tired of traditional banking, keep reading to find out more about making the switch!
What is an Online Bank?
An online bank is a bank that can only be accessed from the internet. This could be from any computer or mobile device, either through the web or the bank’s mobile app, if they have one. You can access online banking, RBC, online banking with the other bigger banks too. They are not, however, solely online banks and you should beware of fees like NSF.
An online bank will allow users to do most, if not all, of the same things a traditional bank does. This includes transactions such as making Interac e-transfers, transferring funds between accounts, depositing cheques or receiving direct deposits and paying bills.
Online banks don’t have physical branches. So, you can’t visit a bank to open an account or make any of these transactions. But, they tend to have 24/7 customer service to support you whenever you need it.
How is it Different Than a Traditional Bank?
The main difference between an online bank and a traditional bank is the lack of a physical branch. This is typically how online banks are able to offer a higher interest rate. They don’t have the same overhead costs that a traditional bank does, so they can spend more money on giving back to their customers.
Another big difference between the two banks is the access online banks offer. As there is no physical branch to visit, there is often no ATM or physical debit card either, depending on the online bank. This can be a big drawback because it makes everyday banking much harder. But, you can use your online chequing account or savings account to transfer money to another account or to a credit card to use in a store.
Popular Online Banks in Canada
EQ Bank are owned by Equitable Bank, which has been around since 1970 and is the night largest domestic bank in Canada. So, you know EQ Bank is reliable
EQ Bank only offers one type of account, a Savings Account Plus. This is one of the best savings accounts in Canada in terms of the interest rate offered. You earn a rate of 1.70% on your balance, though it is always subject to change.
In addition to this great rate of interest, with EQ Bank’s savings account, almost every transaction is free. This includes free withdrawals, deposits, Interac e-transfers, and bill payments. You also don’t need a minimum balance to run the account.
You will not get a debit card with EQ Bank, but this is typical of most savings accounts. Simply connect a chequing account, and you can enjoy the great interest rates and free transactions with EQ Bank.
One of the best banks in Canada is Tangerine. It is owned by Scotiabank. Unlike Scotiabank, Tangerine doesn’t have typical branches. They instead have five cafes that customers can visit in either Toronto, Montreal, Vancouver, or Calgary.
The best thing about Tangerine is the no monthly fee or annual fee to open and use the account. There is also no minimum balance required. Depending on the account you get with Tangerine, almost every transaction is free, such as Interac e-transfers and debit purchases.
Tangerine also has a great interest rate, both with its chequing account and savings account. If you instead want a credit card, Tangerine also has you covered. All you need to learn is how to transfer money to Tangerine.
As Tangerine is owned by Scotiabank, you can access your account by using the Scotia ATMs to deposit or withdraw money. This means you get all the benefits of an online bank, with the reliability and some physical bank perks. How does Tangerine compare to other online banks? Read Tangerine vs Simplii.
Although Scotiabank is not an online bank per se, it does offer a great platform on the web. You can access your savings accounts, chequing accounts, credit cards, and more on their website or app once you register.
Once you register, you will be able to view the balance on all of your accounts. You will also be able to pay bills, transfer between your accounts, make an e-transfer, and more.
As Scotiabank has many physical branches across Canada, you will be able to visit and switch between web banking easily. You will also get all the benefits a physical branch offers, such as having a physical debit card or credit card.
That being said, since Scotiabank is a physical bank, and their rates of interest are lower than the last two banks we discussed.
We also recommend reading our Motusbank review to learn about yet another online solution.
How to Pick the Best Online Account For You?
When choosing an online banking account, you first need to think about what you need it for. If you want an account for daily banking, you will need one with a card. If you want accounts that can help you save, you need one with a higher rate of interest. If you want to link your accounts or credit cards, you need an account with free transfers.
Ultimately, all web chequing accounts and savings accounts have something to offer. Which one you choose comes down to which has the best offerings for your needs.
Why You Need an Online Account
Nobody enjoys paying to use their own account, yet this is often the case with traditional banks. With online accounts, you typically don’t have to pay anything to maintain or use them. If you do, it tends to be a much lower fee than what a traditional bank offers.
Similarly, you can earn more from the rates of interest with banks like Tangerine and EQ Bank. Why should you have your money sitting stagnant when you can be taking advantage of cheaper accounts with better-earning potential?
The Bottom Line
There are many great traditional banks in Canada. But, online banking has been growing, especially in recent years. They are often cheaper and easier to use. There are even no-fee chequing accounts available. They also tend to offer a higher rate of interest than traditional banks do, thanks to their low overhead cost.
You may still be hesitant to break free from a traditional bank. So, you can simply open an online account and connect it to your original one for the time being. As you get more comfortable, you could choose to close the traditional one or simply use both and transfer money between them.
Many web banks offer chequing and savings accounts, as well as credit cards. This means you won’t be missing out on anything by switching over. Stop paying to use your own money, switch to an online account with Tangerine, EQ Bank, or Scotiabank today. You can start taking advantage of the many benefits right away!