A recent study conducted by the Canadian Banks Association shows that 89% of Canadians use online banking. This underscores the impact of digital transformation in the Canadian banking industry.
The evolving banking preferences of Canadians have also impacted how traditional banks offer their services today. All the big banks now have online banking portals and mobile banking apps to meet the needs of their clients.
But even with such development, traditional banks lag behind online-only banks on various grounds ranging from monthly fees, transaction fees, account minimum, interest rates and accessibility.
So if you’re looking to maximize the impact of online banking, it’s essential to sign-up with an online-only bank.
Unfortunately, you may find it challenging which online-only bank to use due to the multiple options out there.
In this article, you will learn about the best online banks in Canada and how to choose the one that suits your needs.
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10 Best Online Banks in Canada
Since the inception of the first online bank in the 1990s, Canadians have seen a rapid increase in online-only banks as a positive response to the growing need for online banking in the country.
From competitive interest rates, low account fees, and low/zero account minimum to free transactions — there are many reasons why Canadians switch to online-only banks.
In this article, you will learn about the best online banks in Canada that operate entirely online. The only physical presence could be for ATMs or ABMs.
Considering the competitive nature of online-only banks, we selected only the top 10 based on the following factors:
- No monthly fees
- No account minimum
- Free transactions
- Competitive interest rates (on savings, GICs or mortgages)
It’s worth noting that not all the selected online-only banks qualify for all the above ranking factors. However, all the banks meet more than one ranking factor.
In addition, deposits in all the following online banks are covered up to $100,000 per insured category by the Canada Deposit Insurance Corporation (CDIC).
Let’s dive in!
Tangerine is a pioneer online-only bank in Canada that has been around since 1997 when it started as ING Direct Canada.
The bank was rebranded to Tangerine in 2014 following the acquisition of ING Direct Canada by Scotiabank. Since then, Tangerine has operated as the direct banking division of Scotiabank.
As a full-service online-only bank, Tangerine offers a wide range of banking and investing products ranging from:
- Chequing accounts
- Savings accounts (including TFSA, RRSP, RRIF, children and USD savings accounts)
- Credit cards
- Mutual funds
- Personal loans
- Lines of credit
The Tangerine savings account has a 1% regular interest and the GIC account has a 1-year interest of 4.70%. Some of the key features of the Tangerine savings account are highlighted below:
- No monthly fees
- No minimum balance
- Automatic Savings Program (ASP)
That being said, Tangerine is one of the top providers of the best mortgage rates in Canada with its 5.15% 5-year variable mortgage rate and 5.34% 5-year fixed mortgage rate.
As of the time of writing, Tangerine offers a high interest of 4.25% as a promotional offer and up to $400 cash back on eligible purchases.
Click here to learn about Tangerine credit card promotions.
The major drawback of Tangerine lies in its low regular interest rates on savings.
2. EQ Bank
EQ Bank, the 2021 and 2022 Forbes’ “Top Bank in Canada” is a household name in the online banking industry of Canada.
For a long time, EQ Bank earned a reputation as one of Canada’s providers of high-interest savings accounts.
However, inflation-induced policy interest rates increase by the Bank of Canada has influenced the increase of savings rates by so many banks in Canada (including the big banks).
With a low 2% interest on its Savings Plus Account, EQ Bank has lost its ranking as so many other online banks offer more than that rate on savings.
Notwithstanding, EQ Bank remains one of the best online banks in Canada due to its competitive interest in GICs and USD accounts.
As of the time of writing, EQ Bank offers a competitive 4.65% interest on 1-year GIC term and a 1.40% interest on its no-fee USD dollar savings account.
In addition to savings and GIC accounts, EQ Bank also offers TFSA and RSP accounts. The bank also offers access to international money transfers and mortgage markets.
On the downside, EQ Bank doesn’t offer debit cards or credit cards.
3. Simplii Financial
Simplii Financial came into existence in 2017 following the termination of CIBC’s partnership with Loblaw Companies. Since then, Simplii has operated as the online banking division of the Canadian Imperial Bank of Commerce.
Unlike other online-only banks, Simplii offers the following multiple products and services:
- Savings account (including TFSA, RRSP, and USD savings accounts)
- Chequing accounts
- Credit cards
- Mutual funds
- Personal loans
- Line of credit
- Creditor insurance
In terms of regular interest on savings, Simplii doesn’t beat even some of the big banks because it offers an extremely low rate of 0.40%.
On the other hand, Simplii outshines most online-only banks with its 4.75% promotional savings rate. In addition, the bank offers a $350 welcome bonus on its no-fee chequing account.
Besides competitive promotional offers, Simplii also has high GIC rates with the current rate of 4.41% on a 1-year term.
4. Neo Financial
In 2020, Neo Financial was launched to reinvent the way Canadians save, spend, and improve their money. This was not to be one of those fairy tales as Neo Financial held firm to its mission by offering attractive banking products and services.
From inception, Neo Financial started by offering cashback Mastercards that were later merged into a single no-fee cashback credit card.
In addition to the cashback Mastercard, Neo also introduced itself with a competitive high-interest savings account which shares some of the characteristics of the existing best HISAs in Canada. That’s high interest on savings with no monthly fees, minimum balance or transaction fees.
Today, Neo has evolved to offer mortgages and managed investment solutions to Canadians. The bank currently has a 5-year variable mortgage with a low 4.35% closed rate.
The Neo savings account offers 2.25% interest on savings and the Neo no-fee cashback Mastercard offers an average of 5% cashback at partner stores and 1% cashback for every other purchase. This explains why the card ranks among the best credit cards in Canada.
As Neo grows, it will likely continue to outshine most of the existing online-only banks in Canada.
Even though KOHO is not a full-fledged online bank, it qualifies for this compilation because of its unique products and services.
The available solutions on KOHO include saving accounts, prepaid cards and a credit-building service.
With a KOHO savings account, you will earn 1.20% interest on your savings with no monthly fees, minimum balances and e-Transfer fees.
The KOHO prepaid Mastercards function like other prepaid cards only that they offer cash back on purchases.
How much cashback you get depends on the prepaid card you use. Below is the breakdown of the KOHO prepaid cards and their key features:
|KOHO Prepaid Mastercard
|KOHO Premium Mastercard
|No monthly fees
|$9 monthly fee
Since the KOHO prepaid cards can’t directly improve your credit score, KOHO offers a dedicated credit building service to cover the gap. However, a credit builder costs $10/per month. This is a drawback as you don’t have to pay a fee to improve your credit score in Canada.
6. Motive Financial
Motive Financial is the online banking division of the Canadian Western Bank. The bank has distinguished itself from many online banks in Canada with its competitive savings and GIC rates.
As of the time of writing, Motive offers a high regular savings rate of 3.00% on its Motive Savvy Savings Account. This competitive rate also applies to the Motive TFSA savings account. The Motive RRSP savings account offers 2.60% interest on $2,500.01 savings and over.
In addition, Motives offers a 4.60% interest on its 1-year GIC term and 0.25% interest on its Motive Cha-Ching Chequing Account.
Like most of the online banks that don’t operate in French, Motive is not also available to Québec residents.
On the downside, Motive ranks below other online-only banks in Canada by conducting a hard credit check when reviewing account applications.
7. Oaken Financial
Oaken Financial operates as the online banking division of Home Trust Company. The award-winning bank was founded in 2013 and has since then remained one of the best online banks in Canada due to its competitive interest in savings and GIC accounts.
Like Motive Financial, Oaken Financial also offers up to 3% interest on savings. However, Oaken has a relatively low 1-year GIC rate of 4.40%.
But despite having a competitive savings rate, the Oaken savings account doesn’t have monthly fees, minimum balances or transaction fees.
The major downside of Oaken is that it has limited products. You can only access savings and GIC accounts on the bank at the moment.
8. Wyth Financial
Wyth Financial operates as the online banking division of Concentra Bank. While Wyth was established in 2017, it has a root back to the 1950s.
The bank is determined to address societal and environmental challenges while providing banking and investing solutions to individuals and businesses.
Even though Wyth only offers savings accounts, GIC accounts and mortgages, it has some of the most competitive interest rates out there.
The bank currently offers 2.25% interest on its savings account, a 4.55% 1-year non-redeemable GIC rate and a 5-year variable rate of 4.84%.
In addition, you can make a mobile deposit to your Wyth savings account which is rare among many online banks.
On the downside, Wyth has withdrawal fees and the 2.25% interest is applicable only on $150,000 savings.
9. WealthONE Bank of Canada
WealthONE Bank of Canada is an online-only bank for Chinese and Canadians. It was founded in 2016 to offer multiple financial solutions in Canada.
The bank offers high-interest savings accounts, GIC accounts, residential mortgages and lines of credit. It offers a 3% rate on its savings account which is also applicable to TFSA and RRSP savings accounts.
Besides having no minimum balance, the savings account has no minimum balance, monthly fees and transaction fees.
In addition, WealthONE offers a high interest of 4.68% rate on a 1-year GIC term. However, the mortgage rates are beyond the average as of the time of writing.
Motusbank is the last but not the least best online bank in Canada on this compilation. This is the online banking division of Meridian Credit Union, Canada’s second-largest credit union by assets.
Founded in 2019, Motusbank offers access to a wide range of financial products ranging from savings accounts, chequing accounts, registered accounts, personal loans, lines of credit, mortgages, loans and GICs.
The Motusbank savings account has a 2.10% interest rate which applies to TFSA, RRSP, and RRIF savings accounts.
Like other online banks, Motusbank is not available for Québec residents because it doesn’t operate in French.
Which Online Bank is Best in Canada?
What’s obvious from the above review is that there’s not a single best online bank in Canada. As bank users have different needs, so online banks differ.
Since not a single online bank has it all, we can categorize the best online banks in Canada based on their areas of specialization. Accordingly, the following are the overall online banks in Canada:
- Tangerine – Best for mortgages
- EQ Bank – Best for GICs and USD savings accounts
- Simplii Financial – Best for promotional savings rates
- Oaken Financial – Best for regular interest rates
- Neo Financial – Best for a cashback credit card
- KOHO – Best for a prepaid cashback card
With this categorization, you can easily decide which online bank to choose. Based on your needs, you can sign-up with more than one online bank at a time.
But if you’re still not sure which online bank is right for you, it’s essential to consider the following factors to make an informed decision.
- Know your needs: Since online banks vary by category, you need to identify the one that suits your needs. You can only succeed by knowing your needs. It could be for savings, spending, investing, borrowing and so on.
- Bank products: The more products an online bank has, the better it will accommodate your future needs. When choosing an online bank, don’t limit your consideration to your present needs. Consider your future needs to identify with the bank that supports them.
- Interest rates: The higher the interest on savings and investment products, the better. The lower the interest on loans and credit-related products, the better.
- Fees: Even though most online banks don’t charge monthly fees, some of them are costly to operate. When choosing an online bank, consider monthly fees, transaction fees and any other applicable fees.
Over to You
You are now familiar with the best online banks in Canada across different categories. You’ve also learnt how to choose the best online bank that suits your needs.
What next? It’s time to sign-up with your favourite online bank (s). This could mean bidding farewell to the traditional banks or having a combo of online and physical banks.
Whatever could be the case, it’s time to join millions of Canadians who are already benefiting from the alternative solutions of online-only banks.
Kindly let us know which online bank(s) you’re going with in the comment section. And if you have a worthy recommendation, please let us know as well.