Online and digital financial institutions in Canada are gaining popularity daily, especially for their services, products, interest rates, and easy accessibility. Online banks tend to offer higher rates than regular brick and mortar banks.
A survey carried out by the Canadian Bankers Association (CBA) in 2019 revealed that 88 percent of Canadians use online banking while 76 percent of Canadians prefer digital banking (online and mobile) for their banking needs.
Due to technological innovations, the conveniences in banking have made possible unprecedented access to safe, secure, fast, and convenient methods to save, make payments, and perform other banking transactions.
Online banks in Canada now offer a wide range of financial products and services, including Savings Accounts that fit different customers’ needs. Some of these online-only banks compete favourably with regular brick and mortar banks and sometimes surpass them in terms of rates, customer relations, products and services, etc.
About Online Banks
Online banks, commonly called digital or branchless banks, are internet-based financial institutions that operate digitally via a website and/or mobile app. If you’ve not used online banks before, you would probably wonder why it’s so popular nowadays among Canadians. Unlike traditional banks that provide online banking channels via mobile app or web, online-only or branchless banks operate entirely online. They offer
- Convenience and easy account opening and accessibility
- High-interest competitive rates on savings accounts.
- Exceptional features and services, etc.
Best Online Savings Accounts
Disclaimer: Rates and product offerings are always changing so this article might not reflect the current market situation. Please contact your financial advisor before making any financial decisions.
EQ Bank Savings Account
EQ Bank is the online banking arm of Equitable Bank with no physical branch. The EQ Bank Savings Plus Account comes with no monthly fees and free transactions. Besides, EQ Bank offers TFSA Savings Account with a 2.30% interest rate and an RRSP savings account.
Key Features
- No minimum balance is required.
- A regular interest rate of 1.50%.
- Free transfer services, including Interac e-Transfers.
- Free and unlimited transactions per month.
- Canada Deposit Insurance Corporation (CDIC) protection on eligible deposits up to $100,000.
- Maximum balance of $200,000 per customer.
Tangerine Savings Account
Tangerine Bank stands tall among online and digital banking providers in Canada. Tangerine Bank is a subsidiary and digital banking arm of Scotiabank. Tangerine Bank offers exceptional online savings account for Canadians to earn more with their competitive rates. The Tangerine Savings Account is a high-interest savings account (HISA) with no service charges, no minimum balance requirement, and no monthly fees.
Additionally, Tangerine Bank offers other savings plans, including:
- Tangerine TFSA – A tax-free savings account to maximize your savings with tax-free interest and tax-free withdrawals.
- Tangerine RRSP savings account – A savings account for your retirement savings plan.
- Tangerine US Dollar savings account – A savings account that lets you save your US funds with a great interest rate and no service charges.
- Tangerine RIF Savings account – A savings account with the benefits of the regular savings account that lets you save for retirement.
Key Features of Tangerine Savings Account
- A regular interest rate of 0.10% on every dollar in your account balance.
- A promotional interest rate of 2.10% for 5 months of new account opening.
- No minimum balance requirement.
- No monthly fees.
- Free and unlimited transactions.
- Free Interac e-Transfers.
- Canada Deposit Insurance Corporation (CDIC) insurance up to $100,000 on eligible deposits in Canadian funds.
Motive Financial Savings Account
Motive Financial is an online bank that offers competitive rates and low service fees. Motive Financial is a direct subsidiary of the Canadian Western Bank (CWB) to offer Canadians digital services using online and mobile banking methods. Motive Financial offers two distinct savings accounts.
- Motive Financial Savings Account with a regular interest rate of 1.25% for $0-$5 million account balance and 0.50% for balances exceeding $5 million.
- Motive Financial Savvy Savings Account with a regular interest rate of 1.550% on an account balance of $0-$5 million, and 0.500% on account balance exceeding $5 million.
Key Features
- The Motive Financial Savvy Savings Account has the best regular interest rate among online banks in Canada.
- No minimum balance requirement.
- No monthly fees.
- Free and unlimited deposit and withdrawals.
- Free ATM withdrawal at THE EXCHANGE Network ATMs.
- $1 Interac e-Transfer fee.
- Free and unlimited transfers between motive accounts.
Simplii Financial High-Interest Savings Account
Simplii Financial is an online and digital bank, a subsidiary of CIBC. The Simplii Financial high-interest savings account lets you grow your savings, regardless of what you’re saving for. The account comes with no fees and no minimum balance.
Key Features
- A regular daily interest rate of 0.10% on every dollar in your closing balance.
- No minimum balance is required.
- No monthly or transaction fees.
- Allows for automatic deposit setup.
- CDIC insurance up to $100,000 on eligible deposits.
MAXA Financial High-Interest Savings Account
MAXA Financial is the digital arm of Westoba Credit Union Ltd, a Manitoba-based financial institution, and a member of the Deposit Guarantee Corporation of Manitoba. The MAXA high-interest savings account offers an exceptional rate with the flexibility and convenience of meeting your financial goals.
Key Features
- No minimum balance is required.
- No monthly maintenance fees.
- A high-interest rate of 1.30% is calculated on the daily closing balance and paid monthly.
- MAXA MemberCard for ATM and POS transactions.
- Deposit Guarantee Corporation of Manitoba insurance on deposits.
- $2 domestic Interac e-Transfer fee, and $5 international Interac e-Transfer fee.
Alterna Bank High-Interest Savings Account
Alterna Bank is an online and digital bank, a subsidiary of Ontario-based Alterna Savings Credit Union. Alterna Bank’s high-interest eSavings account lets you grow your money and earn interest on every dollar, with other great perks.
Key Features
- No minimum balance is required.
- High-interest eSavings rate of 1.20% on every dollar.
- Unlimited and free transactions per month.
- Free Interac e-Transfers.
- Free and unlimited bill payments.
- CDIC insurance of up to $100,000 on eligible deposits.
- Safe and secure access to your savings account.
Achieva Financial Daily Interest Savings Account
Achieva Financial is the digital arm of Cambrian Credit Union. It was launched in 1998 to help Canadians grow their savings with confidence. Achieva Financial Daily Interest Savings Account lets you earn a high interest of 1.20% on your savings with no promo rates.
Key Features
- No monthly account fees.
- No minimum balance is required.
- Automatic savings plan.
- Free deposit and one free cheque for direct transfer or pre-authorized monthly payments.
- $1 monthly earning when you choose to receive your documents electronically.
- A regular interest rate of 1.20% is calculated daily on your closing balance and paid monthly.
- Deposit Guarantee Corporation of Manitoba 100% deposit guarantee.
Oaken Financial Savings Account
Oaken Financial is a subsidiary of Home Bank and has one of Canada’s best interest rates among online savings accounts. The Oaken savings account keeps your hard-earned money safe and rewards you with high interest in your balance.
Key Features
- No minimum balance is required.
- No monthly fees.
- A regular interest rate of 1.25%.
- Unlimited and free transactions.
- CDIC insurance of up to $100,000 on eligible deposits.
Implicity Financial High-Interest Savings Account
Implicity Financial is an online and digital bank, a subsidiary of Entegra Credit Union. The Implicity Financial high-interest savings account lets you keep your money while also earning high interest.
Key Features
- No minimum balance required.no monthly fees.
- A regular interest rate of 1.35% is calculated daily on account closing balance and paid monthly.
- Debit card for ATM and POS access.
- Deposit Guarantee Corporation of Manitoba 100% guarantee of all deposits.
Outlook Financial High-Interest Savings Account
Outlook Financial is the digital arm of Assiniboine Credit Union. The Outlook Financial high-interest savings account lets you save and enjoy a competitive interest rate of 1.20% on every dollar, regardless of your account balance.
Key Features
- A regular interest of 1.20% on every dollar in your closing account balance. Interest is calculated daily and paid monthly.
- Quick and easy access to your savings account.
- No monthly package fee.
- No minimum balance is required.
- Deposit Guarantee Corporation of Manitoba 100% guarantee on deposits.
Note: These rates are subject to change at the discretion of the providers. Check for the current rates with the provider.
FAQs
How do online savings accounts work?
Online savings accounts link to traditional or online checking accounts. To establish a link to your checking account, you enter your bank’s routing number and account number in the online application form. Once your savings account is open, you can transfer money between the linked accounts.
Why do online banks pay more interest?
In some cases, the biggest banks still pay their customers with savings accounts less than 0.08 percent APY. Online banks typically don’t have physical branches and have fewer expenses to cover, allowing them to pay customers with more interest deposits.
Is money safe in an online savings account?
The money in your online savings account is safe. Most Canadian online banks are subsidiaries of traditional banking institutions and credit unions. As a result, your deposits are insured by the Canada Deposit Insurance Corporation (CDIC) or the Deposit Guarantee Corporation of Manitoba.
Do I have to pay taxes on my savings account?
Generally, any interest you earn on a savings account is considered taxable income. Hence, you’re expected to include the earned interest on your tax return.
Final Thought
Most online banks offer higher savings rates and charge fewer fees, while some don’t even charge you for banking with them, compared to traditional banks. Before settling for any online bank, it is essential to consider your individual financial needs and goals. For instance, depending on your unique financial situation, having access to bank branches might be worth it.
In choosing an online bank to transact with, you should consider your funds’ safety, the charges levied on savings accounts and the ease of accessibility of your account.
