Canadians pay an average of $220 each year in bank fees. And it’s only because the big banks can come together in an oligopoly and charge them. And their fees only seem to go up.
There are alternatives, of course, in the form of digital banks that don’t charge monthly maintenance fees and are super-easy to open online.
By researching dozens of mobile challenger banks from Canada and around the world, we have come up with a list of the best digital-only banks in Canada. We’ll start with the best banks for each category and move on to see what are the best digital banks in general.
Do yourself a favor and make the change today.
- Best Canadian digital bank for chequing accounts – Motusbank
- Best Canadian digital bank for savings accounts – EQ Bank
- Best Canadian digital bank for cashback – Tangerine
- Best Canadian digital bank for credit cards – Tangerine
- Best Canadian digital bank to get paid early – KOHO
- Best Canadian digital bank for GICs – Oaken Financial
- Best Canadian digital bank for metal cards- KOHO
- More Digital Banks in Canada
Best Canadian digital bank for chequing accounts
Motusbank has made waves on the market, although it only entered the space in 2019! It’s owned by the Meridian Credit Union and has no monthly fees, 43k+ fee-free ATMs, no daily banking fees, and no minimum balance, among other things.
Plus, you’ll even earn 0.15% on your balance. Apart from chequing account, motusbank also offers savings, GICs, mortgages, loans, and investment vehicles.
Best Canadian digital bank for savings accounts
We decided to go with EQ on this one, although KOHO is a solid alternative as well. EQ’s Savings Plus Account offers one of the highest savings rates in Canada. Its non-promotional savings rate is 1.25%.
There’s also no minimum balance (max is $200,000) and no monthly or annual fees. The interest rate is calculated daily on your closing balance and paid monthly.
There are two ways to withdraw funds from your EQ Bank account:
- via Interac e-Transfer
- via Electronic Funds Transfer (EFT) to your linked accounts
Best Canadian digital bank for cashback
Tangerine’s Money-Back Credit Card is the best for cashback as, unlike other cashback cards, there are no limits on how much cashback you can earn.
Every purchase you make using your Tangerine Credit Card earns you cash back. You earn 2% on all your purchases in the 2% Money-Back Categories of your choice and 0.50% on all other purchases.
You can choose two options for receiving your cashback:
- Apply it to the credit card
- Deposit it into your Tangerine savings account
The first option gives you two 2% categories, and with the second one, you can choose three 2% categories. You can change your 2% cash-back categories to suit your spending at any time through your online account.
Best Canadian digital bank for credit cards
In our opinion, Tangerine’s Money-Back Credit Card is the best on the market. Not only do you get cashback, as we covered above, but it’s free to get one. Plus, there’s no annual fee. There are a few requirements, though:
- A yearly gross income of $12,000 or more
- The age of majority in your province or territory
- A permanent resident of Canada
- Clear of bankruptcies over the past seven years
This credit card has other benefits, such as 90-day purchase protection and a one-year extended warranty. The interest rate is 19.95%. You can also get free cards for authorized users on your account.
Best Canadian digital bank to get paid early
This is another feature that KOHO offers that’s not traditionally available in Canada, even from digital-only banks; early payroll. There are two options here:
- Immediate access to $100 and a financial coach for 15 days for $5
- Access to $100 up to 3 days before your paycheque for free
To become eligible for early payroll, you’ll have to set up a direct deposit. You can put a portion or all of your paycheque through direct deposit. The $100 will be debited automatically the day your paycheque goes into your account.
Best Canadian digital bank for GICs
Oaken offers some of the highest interest rates in Canada, and therefore, they’re our choice for the best GIC offering. Their range of GICs are available in registered and non-registered plans and include:
- Non-registered GICs
- Tax-Free Savings Account (TFSA)
- Retirement Savings Plan (RSP)
- Retirement Income Fund (RIF)
- Commercial GICs
The terms range from 30 days to 5 years, so it’s easy to find one that matches your timeline. Guaranteed Investment Certificates (GIC) are a safe way to invest your money because your principal and interest rate are both guaranteed.
Long-term GICs see an annual rate of 2.20% for a 5-year term. Long-term GICs are non-redeemable and require a minimum deposit of $1,000. Registered GICs (RSP, TFSA, RIF) start at 1.40% for a 1-year term and up o 2.20% for a 5-year term.
Oaken’s savings account has a 1.15% interest rate, which is also one of the highest rates available, with no minimum balance and no fees.
Best Canadian digital bank for metal cards
KOHO is the only digital bank at the moment that offers a metal card to its customers. It’s a limited edition gilded cotton candy-colored (gold and pink). It’s a really unique design that won’t appeal to everyone, but it will undoubtedly make you stand out.
The exclusivity will set you back $159, or you can get it for $50 if you refer two people to KOHO. A referral to KOHO counts when the user signs up and makes a purchase within 30 days. See the most exciting metal cards from around the world.
A KOHO account has no NSF fees, no e-Transfer fees, and no interest charges. You can get from 0.5%-2% cashback on all purchases, automated savings and budgeting, card security features, and virtual cards.
Best digital banks in Canada
About EQ Bank
- Founded: 2016
- Founders: Equitable Bank, Andrew Moor (CEO)
- Parent bank: Equitable Bank
- Personal accounts (spending, saving, joint, US Dollar, GICs…)
- Easy to open online
- No monthly fees
- Cheap international transfers
- US dollar account
- Joint account
- 1.25% interest rate
We love how easy it is to apply for an EQ account. Sign up in minutes for a great interest rate, joint, TFSA, and USD account, as well as Retirement Savings Plan. Although you won’t be able to withdraw physical cash, transfers are generally free to other EQ users and bank accounts.
What we liked the most is the 1,25% interest rate and cheap international money transfers that are done through Wise.
- Founded: 1997
- Founders: ING Direct, Gillian Riley (CEO)
- Parent Bank: Scotiabank
- Personal accounts (spending, saving, joint, US Dollar, GICs, RSP, RIF, credit cards, loans…), business accounts
- No maintenance fee
- Free ATM deposits and withdrawals
- 0.50% interest rate
- No minimum balance
- CA$ and US$ savings accounts
Tangerine Bank is a popular mobile bank in Canada that is very similar to big banks in terms of its financial products. But it’s very different in terms of fees that are low and far in between. Still, it’s one of the more established digital banks in Canada.
Opening an account is easy and done entirely online, and in return, you get unlimited free transactions and ATM withdrawals with no monthly fees. Their interest rates are very competitive when you need a credit card or a loan.
- Founded: 2018
- Founders: Meridian Credit Union, Gery Genik (CEO)
- Parent institution: Meridian Credit Union
- Personal accounts (spending, saving, GICs, mortgage, loans…)
- No minimum balance required
- Mobile cheque deposits
- 43k free ATMs
- 1% interest rate
- No daily banking fees
Founded by the Meridian Credit Union, motusbank offers a full service that includes saving and chequing accounts, investing, loans, and mortgages. Their chequing account has no monthly fees, free access to 43,000+ ATMs in North America, and CDIC insured deposits up to $100,000.
Their high-interest savings account blows the big banks out of the water and is only comparable to Tangerine and EQ Bank’s rates.
- Founded: 2017
- Founders: Canadian Imperial Bank of Commerce (CIBC), Kristian Kuhn (CEO)
- Parent bank: Canadian Imperial Bank of Commerce (CIBC)
- Personal accounts (spending, saving, GICs, mortgage, credit cards, loans…)
- No minimum deposits across the board
- No daily banking fees
- 1.50% interest for new customers
- Not available in Quebec
Simplii is an excellent addition to the Canadian mobile-only banking landscape. It’s the digital arm of CIBC that is the smallest of the big five banks. It has the best of both worlds – a full range of products coupled with little to no fees and competitive interest rates.
We love that you can easily apply for any of its products online, so it’s a shame that it’s not available to the people of Quebec as well.
- Founded: 2014
- Founders: Daniel Eberhard (CEO), Jonathan Bixby, Joshua Bixby, and Mike Benna
- E-money institution
- Partner bank: Peoples Trust
- Personal accounts (spending, saving, joint)
- Early payroll
- Budgeting tools
- A choice of different card designs
- Credit builder
- Free ATM withdrawals
KOHO is an exciting concept that offers its customers a reloadable Visa card and an app that provides spending insights and helps them manage their finances. It doesn’t offer anything groundbreaking, but cashback, budgeting tools, and distinct Visa cards are more than enough to lure in younger crowds that are adept at digital banking.
Earn 1.2% interest on your entire account – from your savings to your earnings and everything in between. This is an annual rate, which will be calculated daily and paid out monthly to maximize the gains that you can access at any time.
- Founded: 1992
- CEO: Robert Paterson, President & CEO
- Parent institution: Alterna Savings
- Personal accounts (spending, saving, mortgages, investing), business accounts & loans
- Open account in minutes
- 1.00% savings interest rate
- No-fee checking account
- No minimum balance
- Free unlimited transactions
- 3.300+ ATMs
Alterna is another digital-only bank that offers great value to the people of Canada. It’s a great alternative to the big five banks because it provides a full suite of financial products. You’ll love that there are no monthly fees and free unlimited transactions that include withdrawals, bill payments, transfers, cheques, and more.
Although they still don’t offer credit cards, they provide other things that we love to see—TFSAs, RRSPs, term deposits, and mortgages. Alterna also caters to small businesses with their chequing account and small business loans.
Benefits of digital banking
- Low to no fees
- Better interest rates
- Easy to apply
Digital banks or mobile banks offer many benefits to those willing to jump the ship from the big five of Canada. However, people are still reluctant to sign up for one of the challenger banks. Many of them are owned by one of the big banks or credit unions anyway.
That means that your deposits will still be protected by CDIC for up to $100,000, while provincial deposit guarantee corporations may guarantee up to 100% of your deposits regardless of the amount. Let’s see what else do digital-only banks bring to the table.
Low to no fees
If you’re sick of paying through your nose every month for banking services that you mostly don’t use or even need, you’ll be glad to know that challenger banks from Canada but also international ones such as Revolut or Wise charge little to no fees for their financial products and services. They still make money, don’t get me wrong, but their business model doesn’t include ripping off their customers with exorbitant fees.
Better interest rates
It’s a well-known fact that big banks will give you abysmal interest rates, if any. Does 0.05% sound worthwhile to you? Digital banks can provide their customers higher interest rates on savings accounts because they save on overhead costs like retail space and bank tellers.
You can even get an interest rate on your chequing account balance in some instances.
Easy to apply
Is there anything worse than when you have to go to the bank? I put it up there with visiting the dentist. Luckily, you get to open your account online without visiting the branch and paying for fuel and parking with mobile banks.
Simply fill out the online form, upload your ID, take a selfie, and you can start banking.
The ability to apply for a bank account online is not the only convenient thing. Pretty much everything else that involves your finances can be done from your sofa as well, including applying for a mortgage. Open your banking app, find the menu, and you’re halfway there.
Many digital banking apps have a more or less advanced budgeting and analytics system and even reports that give you a complete overview of your spending and saving. See which categories are siphoning money out of your account and make a change in your spending habits.
If you turn on the autosaving feature in the app, your transactions will round up to the nearest dollar, and the change will go into a savings account.
You don’t need a credit card anymore as some mobile-only banks offer cashback on everyday purchases. It was about time you got something back!
Drawbacks of digital banking
- Customer service
- Fewer financial products
- Fewer options for depositing
Digital banking isn’t perfect, and most of the independent fintech companies were only founded less than 10 years ago (some only a couple of years ago). Most of the mobile banks in Canada are merely extensions of long-established institutions.
Nevertheless, let’s look at some of the drawbacks to digital banks in Canada.
This is arguably the most significant disadvantage over big banks. Because there are no physical branches, you have to do all your troubleshooting online. This can be a less than perfect solution, especially if you have a time-sensitive and costly problem to deal with.
Although all the apps have a chat function, sometimes there might be a substantial waiting period, or there’s only a chatbot available to answer your questions. Granted, some big banks are offenders of this as well.
Fewer financial products
Perhaps not such a big deal in Canada, but some online-only banks offer substantially fewer financial products than their high street counterparts. Canadian neobanks are good in this field as they provide a fair amount of products and services.
Fewer options for depositing
This one comes down to the lack of physical branches. If you have cash on your hands that you want to deposit into your account, you might find yourself at a dead end. The same goes for cheques, as all neobanks can’t scan a cheque with your phone.
How safe is digital banking?
Security is predominant when it comes to banking, and some may be concerned about how secure digital banks are. However, digital banks are at the cutting edge of innovation, and this includes security.
Fintech companies continue to develop new hi-tech methods of security and privacy, including identity authentication. Signing up for mobile banking app involves your identity being authenticated by rigorous techniques, such as voice recognition, facial recognition, and fingerprint scanning.
In many cases, the traditional banks are taking a leaf out of the digital bank book regarding security, which should put your mind at ease.
What features do Canadian mobile-only banks offer that traditional banks don’t?
- Quick and easy online application
- Approval within minutes
- No paperwork required
- Advanced budgeting features
- No hidden fees
- Fewer to no fees for transactions and ATM withdrawals abroad
- Savings accounts or non-savings accounts with interest
- Monthly reports and forecasting
- Responsive in-app customer service
- Bill splitting
How to get started with digital banking
This is the best thing about being a part of the digital banking revolution. You can apply for most online accounts in 5-10 minutes or even less. Visit your mobile bank’s website and click or tap get started. The alternative is to download the banking app from Google Play or Apple’s App store yourself.
The bottom line
Although it might seem that digital banks resemble each other like an egg to an egg, that is actually a good thing because the things that make them alike are the most beneficial to their customers. I’m talking about no monthly fees, free unlimited transactions, no ATM withdrawal fees, and other cool things.
In our opinion, the Canadian market is blessed with some of the best digital banks in the world. From a range of financial products and services to CDIC insurance of up to $100,000, the world should pay attention.
There are few, if any, reasons to stay with one of the big five at this point. Yes, I’m aware that they have digital branches as well, but at least you aren’t paying them excessive and unnecessary fees by joining them. And you are sending a message.
The process of closing a dinosaur bank account and opening a modern one with a slick app isn’t tedious at all, and the exodus would be even more significant if mobile banks offered a swapping service.