All You Need to Know About Online Banking in Canada
As we increasingly live our lives online, it’s not too surprising that fully 68% of Canadians use online banking each week, compared to only 16% that step into a branch. Online banking in Canada is for consumers of all ages who enjoy the convenience of being able to carry out banking tasks whenever they’d like, 24/7.
Why Online Banking?
- Convenience: Online accounts are open all the time. There’s no need to wait in line or hurry to get there before the branch closes, and you can carry out most banking transactions in your pyjamas.
- Customer Service: When visiting a traditional bank, you might have to wait in line for a long time before you’re able to talk with a personal banker. Online banks frequently offer a dedicated personal banker who is available for much longer hours through live chat, email, or telephone support. On top of this, you can access non-personalized banking support around the clock for general questions and assistance.
- Features: Online banks support new finance tech tools that brick and mortar banks do not. Features like mobile cheque deposit, free online bill payments, and person-to-person payments are made possible via online banking.
- Pricing: As always, the bottom line is a major incentive. Although it is possible to find a no-fee chequing account with a credit union, many consumers who are fed up with paying for banking transactions on top of monthly fees are switching to online banks. Most everyday banking customers can get all of the same services they need from an online bank, but without the fees, and enjoy higher interest rates as well. The average Canadian pays $200 a year in banking fees, a large portion of which can be saved by choosing the right online bank account, or by moving to an online-only bank.
Online-Only Banks vs. Brick and Mortar Banks with Online Banking
Online banking can be divided into two categories:
- Traditional brick-and-mortar banks that support online banking
- Online-only banks without brick-and-mortar branches
Virtually all traditional brick and mortar banks offer some form of online banking today, though the scope of online banking capabilities varies from one bank to the next. Traditional banks like Scotia do offer low-fee chequing accounts, which enable you to make transfers, check your account balance, and pay bills online, just like with online-only banks.
The biggest difference between online-only and traditional banks is that online-only banks frequently charge no monthly fee at all and have minimal transaction fees for their chequing accounts, while offering high interest rates for savings accounts. This is because online-only banks save on the overhead of running physical branches and can pass those savings on to the customer.
On the flip side, you can’t chat face to face with a personal banker through an online-only bank. This lack of personalized interaction may be off-putting to some Canadians, and if you feel that you might fall into this category we advise you to explore the online banking platform of a traditional brick-and-mortar bank.
Types of Online Bank Accounts
You can access as many types of bank accounts online as you can in a traditional brick-and-mortar bank, from savings to daily chequing accounts.
Basic savings accounts are widespread – you’ll just need to link your online savings account with either an online or brick-and-mortar deposit account so as to manage deposits and withdrawals. Many online savings accounts offer mobile cheque deposit to make it faster and easier. Savings accounts with online-only banks tend to offer higher interest rates, and many online-only banks also offer kids’ and youth savings accounts, money market accounts, and CDs.
You can get all of the same basic features when you open an online chequing account including a debit card, use of ATMs, and paper cheques as well as extended options for making transfers and paying bills online, mobile cheque deposit, and better rates for international transactions. Online-only chequing accounts don’t usually charge any monthly fees and charge only minimal or zero transaction fees.
Online-only banks also offer high-yield chequing accounts with higher interest rates than equivalent accounts with a traditional bank. Like at traditional banks, you’ll be restricted about how often you write a cheque or use a debit card if you take out a high-yield chequing account.
Tax-Free Savings Accounts (TFSAs) can be managed online as easily as in a brick and mortar bank, as long as you use your TFSA for approved investments. Online TFSAs can be used to invest in the same range of investments like those in a traditional bank, and deposits can be made through Interac e-transfer, mobile cheque deposit, or transfer from a linked bank account.
Online youth accounts include both savings and chequing accounts, and are designated for Canadians up to the age of 19. Many youth chequing accounts come with unlimited free transactions and no monthly fee. Free Interac e-transfers are usually included too, and many online youth chequing accounts pay interest on the balance in the account.
Online student accounts tend to have some restrictions on the number of free transactions, but far fewer than for adult chequing accounts and without any minimum balance requirements. You’ll usually find valuable rewards for online student accounts such as earning points for movie tickets. Youth online accounts generally offer contactless payments through Apple Pay or proprietary digital wallets.
Online banking can be a great solution for seniors, especially those who are mobility-challenged. Online senior accounts cover all of the chequing and savings needs of older customers. Seniors can access low or no-fee chequing accounts that provide a debit card and chequebook, online transfers, online statements, online bill payments, and more.
Like senior accounts in brick and mortar banks, most online senior chequing accounts offer unlimited transactions and discounted fees on actions that are charged, such as Interac e-transfers. Senior savings accounts usually don’t charge any monthly fees and offer higher interest rates than the equivalent accounts in brick and mortar banks.
The only downside to taking out a senior chequing or savings account online is that there is no one to speak with face to face about your options and you need to be reasonably technologically savvy to set up a senior account online. Some older customers might prefer to stick to a traditional senior account in exchange for the familiarity of dealing with a known banking system, or they might opt to go for the online-only senior account if they enjoy technology or have a close friend, family member or caretaker that can assist them in their use of the online-only account.
Best Online Banks in Canada
To get a sense of how the online banking options in Canada stack up against each other, we looked at the platforms of the Big Five banks, plus one newer online-only bank and one credit union. We compared the account types each bank offers, their interest rates for savings accounts, monthly fees, minimum account balance required to negate those fees, and other important features.
You can find more details about each bank beneath this table.
|Scotiabank Online||Tangerine||EQ Bank||RBC Online||BMO Online||TD Online||CIBC Online||First Ontario Online|
|Chequing Accounts||4 types||1||None||4 types||5 types||5 types||7 types||4 types|
|Savings Accounts||5 types||5||1 type||4 types||5 types||3 types||5 types||4 types|
|Student/Youth Accounts||2 types||None||None||3 types||None||1 type||2 types||None|
|Senior Accounts||1 type||None||None||None||None||1 type||4 types||2 types|
|Monthly Fees||$3.95-$15.95. Free for students, $4 discount for seniors||None||None||$4-$30||$4 - $30; special rates for youth, students, seniors, and ex-defense forces||$5.99 to $25. Free for students||$3.90 to $14.95. Free for students and discounted for seniors.||None|
|Min. Account Balance to Waive Monthly Fees||$3,000-$4,000||0||0||N/A||$2,000 to $6,000||$100 to $2,500||$3,000||0|
|Max Savings Interest Rate||1.8%||1.1%||2.3%||0.9%||1.4%||0.7%||2.3%||1.7%|
|Brick and Mortar Branches||Yes||No||No||Yes||Yes||Yes||Yes||Yes|
Scotia chequing and savings accounts offers competitive monthly fees compared to its Big 5 brethren, and offers a wide variety of transaction types, including online bill pay, Interac e-transfers, Western Union international transfers, pre-authorized payments, debit transactions, and cheques.
Tangerine offers a single chequing account and multiple savings accounts to its members, all of which bring excellent value. Tangerine chequing account generates interest of 0.15% on up to $50,000 balances, as well as unlimited online and offline debits without any fees. With 24/7 phone support, access via smartphones and tablets, and Apple Pay, it’s one of the most convenient ways to access your money.
Tangerine’s savings accounts fit multiple consumer profiles, including accountholders who are saving for retirement, frequently in the US, or want to defray their taxes. The standard Tangerine Savings account provides members with 1.10% interest, no fees or minimum balance, and the ability to link a Tangerine credit card and accelerate savings further. There are also tax-free savings accounts, retirement savings plans, US dollar accounts, and more available.
EQ is an online-only bank, so it has no branches and you can only access it via its website and mobile app. But being branchless trickles down into high savings interest rates and no monthly fees (no minimum balance necessary).
Downside? It only offers one account, the Savings Plus. But said account at least permits mobile cheque deposits, online bill pay, Interac e-transfers and online bank transfers.
RBC’s ‘high interest’ savings accounts are not particularly high interest when compared to its competition. There might not seem like a bit difference between 0.9 and 2.3% interest, but it’s quite significant when compounded over time. RBC offers online bill pay, bank transfers, Interac e-transfers, debit cards, cheques, and US bank account transfers.
Though RBC does not waive monthly fees for customers that keep a minimum account balance, it does offer reduced monthly fees for those that ‘package’ their bank accounts with an RBC credit card, investment and/or mortgage.
Transaction types permitted by BMOs accounts include online bill pay, Interac e-transfers, debits, cheques, contactless payments, mobile cheque deposit and online direct deposit.
Like BMO, TD’s savings account interest rates are relatively unimpressive, but its account balance thresholds for waiving monthly fees are relatively low. TD supports online bill pay, bank transfers, debits, cheques and mobile cheque deposit.
CIBC offers a wide variety of account types, high interest rates for savings accounts, and low monthly fees. They support online bill pay, Interac e-transfers, mobile cheque deposits, debits, contactless payments, money orders and cheques.
First Ontario Online
First Ontario is a credit union, and its accountholders pay no monthly fees while enjoying relatively high interest rates on savings. First Ontario supports online bill pay, debits, bank transfers, Interac e-transfer, personal cheques. It permits unlimited transactions each month, and up to 5 free Interac transactions.
Pay Less, Save More
Whatever your age, level of tech savvy, and banking needs, online banking is likely to be able to meet your standards at a lower cost and with higher interest rates than can be offered by an equivalent traditional account. Join the trend and digitize your banking.