Chime is a financial technology company founded in the USA in 2013. Established as an alternative to traditional banking, Chime is online-only and doesn’t have any physical branches. Initially located in the U.S alone, the company now extends its banking services to other countries such as Canada.
Let’s take a look at Chime Bank’s operations in Canada and what alternatives customers can sign up to.
Is Chime Bank in Canada?
Chime bank accounts are not available in Canada yet, but I’m expecting Chime to enter the Canadian market anytime soon. It is now incorporated in Canada under the name Chime Financial Canada, has an office in Vancouver, and repeatedly noted that Canada would be a natural fit for its operations.
Chime bank will face serious competition from homegrown Canadian digital banks. And while we are waiting for Chime to enter Canada, I’m recommending checking other digital banks available in Canada right now.
Chime opened its first non-US office in Vancouver and became legally incorporated in Canada in November 2020. Based on news reports, the Vancouver office has 20 employees, made up of mainly an engineering team.
However, the company plans to hire 100 people by the end of 2021 to work in the other departments.
As the neobank plans to fully launch its international presence in Canada, it would be up against established, homegrown, global Fintech firms. In Canada, Chime faces the U.S equivalent of Scotiabank-owned, Tangerine, Motusbank, KOHO, EQ Bank, and others. In addition, more than 99% of Canadians have a bank account, which means the non-account holders are a pretty small market.
Just like their services are provided by The Bancorp Bank or Stride Bank, N.A., Members FDIC, they may have to partner with some of Canada’s prominent banks who don’t have a digital-only bank such as BMO, RBC, and TD.
So who are these alternatives for Chime in Canada? Here’s a breakdown of the top digital banks.
Tangerine bank was launched as ING DIRECT Canada in 1997. In 2012, it got acquired by Scotiabank and changed its name to Tangerine in 2014. Like Chime, this financial institution is purely an online bank.
This bank offers its customers benefits such as high interest on the savings account, chequing account with no-fee on daily transactions, and credit cards that allow customers to earn cashback rewards. In addition, they also have business accounts, investment funds, credit lines, mortgages, RSPs, and tax-free savings accounts.
Compared to other credit cards, the Tangerine one is one of the best in the market. It allows customers to earn unlimited Money-Back Rewards on daily purchases and doesn’t have an annual fee.
With their cashback card, you can earn 2% cashback rewards in two 2% Money-Back Categories of your choice and 0.50% rewards on all your other everyday purchases.
Once you get your cashback, you can either deposit it into your savings account or apply it to your credit card. The 2% money-back applies in restaurants, gas stations, furniture stores, groceries, drug stores, public transportation, and recurring bill payments.
The Tangerine credit card doesn’t have any annual fees. It also has an interest in purchases at 19.95%. In addition, if you buy any item using the Tangerine Money-Back Credit Card, you could get insurance coverage of up to $60,000, purchase assurance cover for 90 days, and an extended warranty.
Since they don’t have any physical branches, all the banking services are transacted online and via the Tangerine mobile banking app, available on the App Store and Google Play.
On top of all these banking services, Tangerine is also good for investors who need to open business accounts and investment portfolios. With all these benefits, Tangerine is an alternative to Chime Bank.
Another alternative for Chime bank in Canada is KOHO. Established in 2017, this Fintech company is not necessarily a bank. KOHO partners with various banks and CDIC insured institutions to deliver financial products.
This company is known for its KOHO Visa, which is a free, pre-paid card integrated with an app to allow you to earn cashback. Peoples Trust Company offers these pre-paid cards. They have also partnered with established investors such as Drive Capital, Power Group, and Portag3.
Once customers sign up with KOHO, they get cash back, earn interest, and grow their savings at no fee.
Similar to Chime, this Fintech provides savings and a chequing account. When you make a direct cash deposit, you earn a 1.2% interest rate. If you are connected to the app, you can automate your saving, track your spending, and use features such as Goals and Roundups.
The key features that come with this account include a 0.5% cashback on all purchases, which increases to 2% with KOHO premium. They also have an early payroll benefit that’s prominent among digital banks in the U.S. To become eligible for the early paycheck, you’ll need to set up a direct deposit.
With this feature, you can access up to $100 up to 3 days before your paycheque for free or pay $5 to get immediate access to $100 plus a financial coach for 15 days.
KOHO is also suitable for credit building. Their credit building facility requires you to subscribe for $7/month on the app. As long as there’s $7 each month in your spending account, they’ll report your progress to major credit bureaus, which allows you to build your credit history within six months.
With a 4.8 App Store rating, their app is well functioning and attracts a lot of Canadian clients. If you have Apple Pay, you can link it to your KOHO account and use your iPhone to pay for purchases and services.
Motusbank is the latest entrant into the full-service online banking space in Canada. Launched in 2019, this bank is a subsidiary of Meridian, one of Canada’s largest and most popular credit unions. This bank is a member of the Canada Deposit Insurance Corporation (CDIC). Since they are entirely digital, they don’t have a physical location; hence, customers access all services online or via the app.
The bank has attracted clients with their customer-tailored benefits such as low-to-no fees and high interest rates.
Motusbank’s chequing account doesn’t have any monthly fees. It offers free and unlimited Interac e-Transfers, there’s no minimum balance required, and customers get to enjoy unlimited debit purchases, bill payments, and withdrawals.
They also offer no-fee access to over 43,000 surcharge-free ATMs in North America via THE EXCHANGE Network in Canada and Allpoint Network in the US. With this bank, your money is safe because CDIC insures the deposits up to $100,000.
They also have a savings account just like Chime. With the high-interest savings account, you can earn 1% regardless of your balance. In addition, they also have tax-free and retirement savings accounts.
Away from these banking services, Motusbank also offers mortgages, GICs, loans, and investment plans.
EQ bank has one of the best interest rates in Canada. Launched in 2016, EQ was Canada’s first digital bank.
It’s powered by Equitable Bank, Canada’s Challenger Bank, founded over 50 years ago. EQ is prominent in Canada and has more than $6 billion in deposits, and provides banking services to millions of Canadians.
The Savings Plus Account makes this bank the best when it comes to offering interest rates in Canada. It has a non-promotional savings rate of 1.25%. With this account, customers enjoy free Interac e-Transfers, free bill payments, and no monthly fees. The rate is also the same for a joint and TFSA savings account.
EQ manages to keep the interest so high because they have a maximum balance of $200,000 with no monthly or annual fees. The interest rate is calculated every day and is based on your closing balance and paid monthly.
You can withdraw funds from your EQ bank account either via an Electronic Fund Transfer (EFT) connected to your account or via Interac e-Transfer
The bank also has a U.S dollar account that earns an interest of 1% on every dollar. On top of that, there are no monthly fees, and it’s a cheaper way to send dollars abroad.
Oaken is also a good alternative if you would like to save money. They have very competitive interest rates that are an alternative to what Chime Bank offers.
Oaken was launched in 2013 as a financial platform to help Canadians manage their savings. It’s backed by Home Bank and powered by Home Trust Company, Canada’s largest independent trust company that’s been in existence since 1987.
With a primary focus on savings, their savings account has a high interest rate of 1.15%. These high rates also come with benefits such as no minimum balance and no monthly fees. Your money is safe with Oaken Financial because the accounts are eligible for CDIC coverage up to all applicable limits.
The biggest benefit from Oaken is the 2.2% interest rate on Guaranteed Investment Certificates (GIC). This is the best GIC offering in Canada.
The terms range from 30 days to 5 years; therefore, you can find a plan that suits your needs and timelines. GICs are a safe investment because your principal and interest rate are both guaranteed.
Once you sign up for this financial plan, you can either use Home Bank or Home Trust Company as insurers for your deposit. They are both members of the CDIC.
Simplii Financial is a division of CIBC, which is a CDIC member. Established in 2017, it is backed by CIBC, which has more than 150 years of experience in the business. As a prominent challenger bank, it’s one of the alternatives for Chime in Canada.
This bank gives its customers no-fees chequing accounts and high-interest savings accounts. Just like other digital banks in Canada, Simplii enables customers to send money for free with Interac e-Transfer.
The chequing account does not have a monthly fee or minimum balance. If you want to withdraw your cash, you can access over 3,400 CIBC ATMs across Canada for free.
The savings account also attracts customers because of the 1.5 interest rate. This is relatively high and also comes with no monthly or transaction fees.
As a digital bank, Simplii is also encouraging account holders to recommend their friends. They deposit $50 into your account if a friend opens an account via your referral link. In addition, your friend also gets a $50 welcome bonus.
Customers can talk to customer support through the phone or via their email for any financial assistance. This service is essential in the world of digital banking.
Alterna Bank is backed by Alterna Savings. It provides customers with a spending and savings account, loans, mortgages, and business accounts.
This bank doesn’t have any monthly fees and offers free unlimited transactions on withdrawals, bill payments, transfers, and cheques. It also provides a wide range of financial products for every type of customer. On their savings account, they offer a 1% interest rate.
If you want to withdraw cash, you can access your money from their network of ATMs across Canada. In addition, you can access your account at any time via the app. This way, you can track your spending, investments, and savings.
Key Features of Canadian Digital Banks
What advantage do these digital banks have over traditional banks? Let’s take a look.
Just like Chime Bank, these financial institutions offer low to no fees on most of their products. In addition, they also don’t have hidden fees on chequing and savings accounts. Unlike traditional banks, they don’t have a minimum account balance or account maintenance fee.
- Quick and Easy Application
Since everything is digital, signing up is pretty easy via a computer or smartphone. These banks save a lot of time, and you don’t have to queue at the bank for services. If you need any help, you can contact customer care via phone or email.
Most of these banks have a vast network of ATMs across North America. Therefore, you can withdrawal money in several locations. In addition, with the app, you can track your account from anywhere without walking to a bank.
- High-Interest Savings Account
Online banks don’t have a lot of overhead costs. Therefore, the extra cash is redirected to the customer, with most banks offering high interest on savings accounts. Their rates are mostly from 1%, which is much higher than in the U.S.
- Customer Service
Since there are no physical locations, customer service is very critical. All the banks have customer help staff to deal with issues in real-time.
- Versatile Financial Products
Apart from savings and chequing accounts, these banks also offer investment portfolios, mortgages, loans, and business accounts that customers can sign up for. With this, a customer can select which products best meet their needs.
Canadian digital banks are on the rise. Just like Chime Bank, they offer their customers a lot of benefits. They have built a focus around customer satisfaction by having no fees on most of their products, free unlimited transactions, cashback, and no ATM withdrawal fees.
These Canadian banks are also offering high interest rates that are not available in other banks. As more people switch to these convenient alternatives, the challenger banks have found a way to attract customers with benefits and financial products.
These banks are an alternative for Chime, which is establishing its presence beyond the U.S borders.