“Canadians pay some of the highest banking fees in the world, however there are alternatives to the big banks that are readily available such as online banks that provide low cost banking."
You should use online Canadian banks.
Top online banks that operate in Canada include: Alterna Bank, Simplii Financial, Tangerine Bank and EQBank.
You can save big on fees and receive better rates.
By: Allan R Kirby
Canadians pay some of the highest banking fees in the world, yes that is correct, Canadians seem to have no issues paying the big banks money for the privilege of banking. Public outrage has been mild at best so the likelihood of any regulatory changes to the fee structures is nil.
Surprisingly there are many alternatives to help you reduce your costs of banking which includes online banks and even credit unions. Both of which provide better service, lower fees and higher interest rates than a major bank.
So why would you choose an online bank, well there are two very good reasons:
First you get much better rates than you would with major canadian banks. Not only for your GIC’s but for loans as well. In fact I have found you can get better rates online without having to negotiate like you would at a major branch.
Fees, you can get most of your banking done without paying hefty fees. Currently the only way to avoid paying fees at most major banks is having hefty daily balances. Additionally many banks will also limit the number of transactions per month on many of their accounts. This is designed to force you into buying one of their monthly fee plans to allow more than a few transactions. In fact the last major bank I used allowed me only one transaction per month before fees kicked in.
“I have paid No fees over the last 20 years with online banks, can you say that about a major bank!”
Convenience and Time Savings?
Arguments have been made that convenience and time saving are other reasons for switching to online banks. I however disagree as most banks today have digital platforms that meets the daily banking needs of their customers. The only difference is you pay substantially more to use a major bank for their online services as opposed to an online only bank which generally provides free banking services.
Canada currently has three great full service and one partial service online bank to choose from.
Alterna Bank - Subsidiary of Alterna Savings, an Ontario credit union
Alterna Bank is a full-service online bank. The twist with this bank is it’s a wholly owned subsidiary of Alterna Savings, an Ontario credit union. Although Alterna Bank is not a credit union it is still owned by a well respected credit union with over 100 years of experience.
“Is Alterna Bank legit? Yes, Alterna bank is a full service federally regulated schedule 1 CDIC insured financial institution.”
The bank offers chequing and high-interest savings accounts, mortgages and business banking. Their high interest savings account is an astounding 1.69%. This is an incredible rate when you compare this rate to a major banks which will likely give you maybe .10% which is basically nothing for your money and don't forget the bank will also charge you a monthly fee. Alterna however has no minimum balance or monthly fees.
“Is Alterna Bank a credit union? It’s an online bank (direct bank) that is federally regulated and a wholly owned subsidiary of Alterna Savings, an Ontario credit union.”
Simplii Financial - Owned by CIBC
Simpii is a full service online bank that provides free checking and savings accounts, investments such as GIC’s as well as lines of credit and mortgages. Additionally customers have access to all of CIBC's ATMS across canada. This is a great online bank to meet all of your banking needs without having to pay fees or be required to have minimum daily balances.
“Simplii Financial was originally called PC Financial and started operations 1998. In 2017 CIBC took over PC Financial banking business with two million customers and rebranded as Simplii Financial”
Tangerine - Owned by Scotia Bank
Tangerine used to be ING Direct but was acquired by Scotiabank in 2012 and it's name subsequently changed to Tangerine. Tangerine is an incredibly well run full service online bank that focuses on no-fee chequing and savings accounts as well as investing such as mutual funds and GICs as well as credit cards and mortgages. This is a great online bank to meet all of your banking needs without having to pay fees or have minimum daily balances. Tangerine also provides a US denominated banking account as well as youth bank accounts that provide great rates.
Equitable Bank or EQbank
EQBank provides basic banking only. This is a great online bank that can meet all of your basic banking needs without having to pay fees or have minimum daily balances. Additionally you can get up to 2.00% interest on your accounts as opposed to .10% from a major bank for some of their savings accounts. This is a massive difference plus EQbank does not have minimum balance requirements or limits with your transactions.
One interesting aspect with EQBank is their International Money Transfers service. They have partnered with TransferWise to make sending money abroad up to 8× cheaper. All you need to do is use TransferWise direct from your EQ Bank account. With no hidden fees and the real exchange rate.
What is the caveat?
One issue with online banks is the fact that you may still be required to have another account at a major financial institution so you can deposit money into your account conveniently. However there is a way around that. For example you can fund your Tangerine accounts using Simplii. Thus you can avoid opening an account at a major bank and leveraging the strengths of both online banks.
Why pay more for less
This is a perplexing question, why Canadians pay more for banking at major financial institutions when alternatives such as online banks and credit unions exist? One excuse is convenience, major banks are closer and they have more branches, but you pay dearly for such convenience. If you really take the time and see how you do your daily banking you will find online banks can provide the same level service as you would get at a major bank but for free.
Ultimately it's up to you to decide how you want to bank, however we have provided some top online canadian banks that provide low cost banking. We consider these banks as well as credit unions the best alternative to major canadian banks.
Disclosure: mysmallbank.com nor the author received any compensation from any organization mentioned in this article. The article is our opinion only and is written to help readers learn more about canadian online banks. Consider this as basic information only and utilize additional resources before making any decision.