Canadian Banks have done a great job keeping up with consumer demand when it comes to online banking. Brick and mortar banks now offer mobile banking, and there have been a number of completely online banks, with zero physical presence, that have cropped up throughout Canada.
Online banking offers many benefits, and there is a good chance that saving money is one of them! Read on to find out about the best online banks in Canada, including information about their services, interest rates, fees and promos.
Best Online Canadian Bank Comparison
Canada has a number of online-only banking options, however, these are my top recommendations. Each one is different not just in terms of the interest rates but also in terms of the accounts they offer and whether or not they offer credit and/or debit cards.
While reviewing this list, you need to keep your needs in mind. Are you just looking for a high interest savings account (HISA)? A free chequing account? Or, are you looking for the best bank in Canada for all your personal banking needs?
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1.35%, with special promo rate of up to 4.50%
1% - 3%
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0.40% (5% Teaser)
0.05% - 0.35%
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Now, keep in mind that while online banks are competing with the big big brick and mortar ones, they still vary quite a bit in their offerings. Some of the new online banks in Canada offer teaser rates (which I don’t love) while others have a lower, but consistent rate that hold steady over time.
Similarly, some are basic and only offer one or two account options while others are growing to add accounts other than chequing and savings including TFSAs and RRSPs.
So if you are looking for the best online bank in Canada when it comes to your personal wishlist, read on to see which boxes our leading competitors check off.
Why Use an Online Bank?
When was the last time you walked into a bank?
More and more Canadians are using online banking to conduct and take care of their financial needs. The best online banks have made our lives substantially easier.
I don’t know about you, but I definitely prefer being able to pay my bills from my couch while wearing sweatpants on a cold winter day rather than having to wait in line to see a teller.
Big banks have overhead costs that trickle down to you, the client, which means you have to pay more for your accounts and frequently are offered lower interest rates. In comparison, online banks don’t have those big overhead costs which means they can offer you higher rates and, depending on the online bank, even free bank accounts.
Another huge draw to online banking is the convenience. You can do everything from opening an account to paying a bill online anywhere; from the comfort of your home, to the gym, to the office. It doesn’t matter, your online banking is always available.
Online Banks are Time Savers
On top of being convenient, online banks actually save you time. No more waiting in line or worrying about bank hours. You can do whatever you need to with the push of a couple of buttons (or computer keys) at whatever time of day you want.
EQ Bank – Our Pick For The Best Online Bank Account in Canada
EQ Bank, which is the online banking arm of Equitable Bank, has pulled into the lead when it comes to the best online banks in Canada for 2022.
Well, unlike some of the other online banks on this list, EQ Bank does not offer high teaser rates. Instead, they have the best long-term high interest account in Canada: 2.5%.
Furthermore, despite not having a chequing account, EQ Bank recently added TFSAs and RSPs to their account options which I am pretty excited about.
There are no credit or debit cards associated with EQ Bank at this time, but at the rate they are expanding and growing, those could be coming down the line soon. Read our EQ Bank Review for our unique credit card hack to use in tandem with your EQ high interest savings accounts.
EQ Bank also added a very handy international currency partnership in 2021 that is another advantage over the field!
Tangerine, a subsidiary of Scotiabank, was considered Canada’s top online bank for quite the last few years. Personally, while I think they are still a solid choice, I believe that they have lost some of their momentum.
I do like that Tangerine offers a number of different products including credit cards. However, they feed into the idea of teaser rates for new customers which, as indicated above, I’m not a big fan of.
Currently, when you open a new account with Tangerine you can get an interest rate of 2.25% in their high interest savings account, which is great. However, after 5 months that drops to 1% which is not as enticing.
Take a look at my Tangerine Review here.
Motusbank is relatively new when it comes to the best online banks in Canada. It’s owned by Ontario-based Meridian Credit Union which makes it a favourite for online banking in Ontario. Like many of the other online banks on this list, Motus Bank offers several different products. Rates are a bit higher which I like; right now you will get 1.85% for a high interest savings account (this is the normal rate, not promotional).
Motus Bank has a leg up on the other online banks when it comes to travel to the USA. They offer access to over 40,000 ATMs, surcharge-free, in the USA through the Allpoint network. A handy benefit to have for anyone who travels frequently to the USA. Read my Motusbank Review here.
Motive Financial falls is considered to be one of the biggest online banks in Canada and is a division of the Canadian Western Bank. Motive Financial offers two different chequing and savings accounts, however, only one option for each category is available to new clients.
New clients opening a Motive Savvy Savings Account will see an interest rate of 3% – a really good rate compared to many other online banks. Problem is, their overall fees make this service much less enticing.
While the savings interest rate is decent, what I really like about Motive Financial is that you can earn interest on your chequing account too. Now, they aren’t the only online bank to offer this option but, to the best of my knowledge, they do have the best rates for chequing accounts. The Cha-Ching Chequing account will bring you 0.25% in interest.
Simplii Financial falls under the CIBC umbrella and used to be known as PC Financial. Again, I like that they offer a range of different products but the rates don’t get me very excited.
Much like Tangerine, they often have teaser rates for a few months, before dropping to a super low 0.40% long term interest rate.
I guess if you want to play the constant money-shifting paperwork game to gain a few hundredths of a percentage point, they might be worth your consideration. In our experience though, most Canadians just want to keep things simple with their online banking.
Learn more about Simplii Financial here.
Alterna Bank falls under Alterna Savings Credit Union which is also based in Ontario. They offer everyday banking accounts, mortgages, and investing options. Their HISA interest rate is higher than some of the others on this list, 0.05% – 0.35% as regular rates, but what makes Alterna Bank stand out is their partnership with Qtrade Investor.
If you are familiar with my content, you will know I am a huge fan of Qtrade and believe that they are Canada’s best broker for 2022. Learn more in my Qtrade review.
Oaken Financial, whose parent company is Home Trust, only has one savings account option and some GIC options. However, what it lacks in product offerings it makes up for in terms of having a decent standard interest rate.
The current standard interest rate with Oaken Financial is 3%. What makes Oaken Financial a standout is that Quebec residents are able to open an account with them which is not the case for many other online banks in Canada.
Canadians are Turning to Online Banking
As I mentioned above, online banking has taken off these past few years. According to recent research by the Canadian Bankers Association (CBA) 76% of Canadians do most of their online banking digitally (via online and mobile banking).
No doubt part of that is due to the global pandemic, however, online banking is also just a lot easier and more convenient for most of us.
Of course, direct banking in Canada isn’t the only way to bank online. The big banks, the brick-and-mortar ones, are going digital too.
Types of Online Bank Accounts
Each online bank is different. Unlike traditional banks, each one offers something a bit different. Not every bank will offer all of the types of bank accounts listed below. We’ll get into which banks offer which accounts next. For now, here are the main types of online bank accounts available in Canada.
- Savings Accounts that you can park your money in and earn a bit of interest at the same time.
- Chequing Accounts that allow for easy access to your money for monthly bills and daily expenses.
- High Interest Savings Accounts offer a higher interest rate than regular savings accounts. Online banks are known for having the highest interest rates in Canada.
- TFSA Accounts are Canadian government sponsored accounts that allow you to invest, save and grow your money tax free when you withdraw it up to a certain amount.
- Hybrid Savings and Chequing Accounts act like a savings account in terms of earning interest, but lets you spend like a chequing account.
- Investment Accounts allow you to easily invest your savings to help you plan for the future.
- Student Accounts work the same as regular chequing and savings accounts, and are a great way to help younger people become more financially savvy.
- Senior Accounts offer more discounts and freebies to help those in retirement save more money.
Advantages and Disadvantages of Online Banking
As with any financial decision, it’s important to have a balanced view of the pros and cons of online banking. First, let’s get to the good stuff.
Advantages of Online Banking
- Convenient and time saving, as everything can be done online or through a mobile app.
- Higher interest rates than most brick and mortar banks.
- Saves money because you’re not paying fees so the banks can pay rent.
- Easy connectivity to other accounts, such as your investment account.
- High levels of security, similar to credit unions, so you know your money is safe.
Now, we’ll have a look at the areas online banks might not be up to par with brick and mortar banks.
Disadvantages of Online Banking
- Lacking in personal touch as you likely won’t be communicating with an actual person most of the time.
- Fewer ATMs available, which means you could end up spending more on ATM fees.
- Lacking in all-in-one packages that the bigger banks can offer.
- Limitations in terms of types of services offered.
Are Online Banks Safe?
Yes, online banks are safe! Many online banks are insured by the Canada Deposit Insurance Corporation (CDIC), which means that your deposits up to $100,000 are protected.
In addition to the peace of mind you get from knowing your money is insured, you can also breathe easy knowing that online banks use the most up-to-date data encryption and other security measures to keep your accounts safe.
Furthermore, features like two-step authentication and automatic alters can help you make sure your account access stays in your hands only.
Online Banking in Canada: FAQ
To choose the online bank that is right for you, use the Canadian online bank comparison chart we compiled above and compare interest rates and find what else you want from your online banking.
But if you are still asking yourself the question: which online bank to choose in Canada? In our opinion, due to their constant innovation and consistently offering a high interest rate, EQ Bank is the clear number one choice.
One bank that has consistently innovated and delivered solid interest rates is EQ Bank. While they don’t currently offer a debit card, I wouldn’t be surprised if they do soon given that they are growing and expanding quickly. (See their excellent GIC rates that you can stick in your new EQ TFSA as you save up for a home or new vehicle.) I will definitely be watching them. If you are interested in learning more, take a look at my EQ Bank review.
Right now, your best bet is to use the Canadian online bank comparison chart we compiled above and compare interest rates and what else you want from your online banking.
If, on the other hand, you are looking for a big complete package under one umbrella, then again, if you prefer to keep everything in one place, and want to max out your credit card rewards, you may be better sticking to a product like Scotiabank’s premier package.
For more in-depth information, take a look at my thoughts on the best chequing accounts in Canada.
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