If you’re looking for the best online banks in Canada, you’ve come to the right place.
Online banks have been one of the best alternatives to traditional banks in Canada since their inception in the late 90s.
In this article, I discuss the best online banks in Canada and the major factors to consider in narrowing your selection. We will look at things like savings interest rates, products offered and what they’re best for to help you decide which bank is right for you.
So whether you’re looking for a high-yield savings account or a no-fee chequing account, we have you covered!
But first, let’s start with an overview of what online banks are and their pros and cons.
What is an Online Bank?
Online banks, also known as virtual banks, are financial institutions that operate exclusively online. This means that they have no physical branches where you can do your banking in person.
Instead, all of their products and services are accessed through their website or mobile app. While this may seem like a drawback at first, there are actually a lot of advantages to banking with an online bank.
For starters, they often have lower overhead costs than traditional banks, which means they can pass those savings on to their customers in the form of higher interest rates and lower fees.
They also tend to offer more innovative products and services, such as budgeting tools and person-to-person payments. We’ll cover more benefits of online banks and their drawbacks in the next section.
With deposit protection from Canada Deposit Insurance Corporation (CDIC) and other provincial bodies, you will enjoy similar security on online banks as you would on a traditional bank.
However, as we continue to see an increase in online banks in Canada, it’s essential that you weigh your options and choose the perfect one for your needs.
Pros of Online Banks
The following are some of the top benefits of online banks that distinguish them from traditional banks.
- Easy access: You can open an online bank account and start banking within minutes using your smartphone or computer. This eliminates the stress of paperwork common to traditional brick and mortar banks.
- Zero minimum balance: Most Canadian online banks don’t require a minimum balance on banking and investment accounts, unlike traditional banks.
- Low fees: With the absence of overhead costs of managing physical branches, online banks are able to provide their services with no or lower fees.
- Competitive interests: Online banks typically offer competitive rates on registered and non-registered accounts, credit cards, and investment accounts among other products.
- Exclusive benefits: Besides low fees and competitive interest, online banks take a step further to offer extra perks that are not common with the bigger banks. This includes sign-up bonuses, rewards on purchases, and discounts among others.
Cons of Online Banks
The following are the two major cons of online banks you need to consider before signing up with one.
- No physical presence: Online banks operate entirely online making them less suitable for individuals looking for a one-on-one solution.
- Low limits: Unlike traditional banks, online banks have lower limits on personal and joint accounts making them less suitable for high net worth individuals.
Best Online Banks in Canada
So now that you know a little bit more about online banks, let’s take a look at some of the best options in Canada.
The thing is, there’s not a single best online bank in Canada as the best bank for you will depend on your specific financial needs and goals.
However, we’ve done our best to narrow down the field and come up with a list of the current best online banks in Canada showing what they are best for.
1. EQ Bank
- HISA Interest Rate: 2.50%
- Deposit Protection: CDIC
- Other Products: US Dollar account, prepaid cards, GICs, TFSA and RSP accounts
- Best For: Savings account, USD account & prepaid card
- Promotion: $150 sign up bonus + up to $500 for referrals
When you search for the best online bank for high-interest savings accounts in Canada, EQ Bank is one of the top options you will encounter.
Since its inception in 2016, EQ Bank has consistently remained at the top of most compilations of the best online banks in Canada.
This is obvious because its Savings Plus Account does not only offer high interest on savings (2.50%) but also has the features of chequing accounts such as bill payments and paycheck deposits.
As the online banking division of Equitable Bank, EQ Bank’s savings account doesn’t have a minimum balance, monthly fee, Interac e-Transfer fees, mobile cheque deposit and bill payment fees.
Besides high-interest savings accounts, the online bank also offers a US Dollar account, a no-fee prepaid Mastercard, GICs, TFSA and RSP accounts.
For a limited time, you can earn a $150 cash bonus when you take advantage of the EQ Bank Promotions plus up to $500 for referring friends.
Learn more:
2. Simplii Financial
- HISA Interest Rate: 5.25%
- Deposit Protection: CDIC
- Other Products: Chequing account, US Dollar savings account, credit cards, mortgages, loans and investing accounts
- Best For: Short-term savings
- Promotion: Up to $400 sign bonus
When it comes to competitive promotional interest on savings accounts in Canada and a full-suite of banking products, Simplii Financial is a leader.
Owned by the Canadian Imperial Bank of Commerce (CIBC), the online bank was founded in 2007 to offer Canadians a better banking experience.
Simplii Financial’s 5.25% promotional interest on savings is currently one of the highest savings rates in Canada. When you put aside the high promotional interest rate, you will also find the Simplii savings account ideal because it has no monthly fees and transaction fees.
Besides a high-interest savings account, the award-winning bank also offers a US Dollar account, chequing account, credit cards, mortgages, loans and investing accounts.
The major downside of Simplii lies in its low regular interest on a savings account which is 0.40% to 2.00%. This makes it more suitable for short-term savings rather than long-term savings.
New Simplii Clients can also earn up to a $400 cash bonus. Learn more in this post covering Simplii promotions.
Learn more:
3. Tangerine
- HISA Interest Rate: 5.00%
- Deposit Protection: CDIC or Provincial
- Other Products: Credit cards, a chequing account, lines of credit, mortgages, HELOC, registered savings accounts, personal accounts, business accounts and investment accounts.
- Best For: Mortgages
- Promotion: 4.00% interest & Up to $400 bonus
Tangerine (formerly ING Direct Canada) is one of the pioneer online banks in Canada having been established in 1997 and rebranded in 2014.
As a subsidiary and direct bank of Scotiabank, Tangerine is a one-stop-shop for everything banking.
Currently, the Tangerine savings account has a high promotional interest of 5.00%, which is 4x better than the standard rate of 1.00%. In addition, you will earn up to $400 cash bonus as a new Tangerine client.
Besides these competitive promotions, Tangerine also offers a wide range of banking and investment solutions including:
- Credit cards
- Chequing accounts
- Lines of credit
- Mortgages
- HELOC
- Registered savings accounts (TFSA, RSP, RRIF)
- Personal accounts
- Business accounts
- GICs
- Mutual funds
That said, Tangerine has some of the competitive fixed and variable mortgage rates in Canada you secure for up to 120 days.
Learn more:
4. Neo Financial
- HISA Interest Rate: 2.25%
- Deposit Protection: CDIC
- Other Products: Credit card, robo advisor, mortgage
- Best For: Spending
In September 2020, Neo Financial joined the league of the best online banks in Canada with competitive offers.
Besides offering a high interest of 2.25% on savings, Neo also offers one of the highest cashback rewards in Canada.
The Noe Mastercard offers an average cashback of 5% for every purchase at partner stores. Every purchase with the card will also earn you a 0.5% cashback.
With mortgage and investment solutions, Neo Financial is my overall best online bank for spending in Canada.
Learn more:
5. KOHO
- HISA Interest Rate: Up to 2.00%
- Deposit Protection: CDIC
- Other Products: Prepaid cards and credit builder
- Best For: Prepaid cards
KOHO is not a standard online bank but offers banking solutions backed by People Trust and Mastercard. As a fintech company, KOHO is also able to offer low-cost banking solutions because it operates entirely online.
KOHO offers a no-fee prepaid Mastercard card and a paid premium Mastercard prepaid card that offer 0.5% / 2% interest on balances. .
The interesting part is that your purchases with any of the prepaid cards are rounded up and saved to your high-interest savings account through the RoundUp feature.
That said, the major drawback of KOHO is that it has limited products and its prepaid Mastercards can’t directly improve your credit score.
Learn more:
6. Motusbank
- HISA Interest Rate: 2.50%
- Deposit Protection: CDIC
- Other Products: Chequing account, mortgages, lines of credit personal loans, GICs, TFSA and RRSP savings accounts
- Best For: No-fee chequing account
Motusbank is one of the best credit-union online banks in Canada founded in 2019. It is owned by Ontario’s largest credit union and Canada’s third-largest credit union, Meridian Credit Union.
Unlike other credit union-based online banks in Canada, Motusbank has robust banking products ranging from:
- High-interest savings account
- No-fee chequing account
- Mortgages
- Lines of credit
- Personal loans
- TFSA and RRSP savings accounts
- GICs
The Motusbank savings account offers a high interest of 2.50% which is one of the best in Canada.
While it doesn’t have credit cards, Motusbank offers free ATM access and your near-to-dollar debit purchases are automatically rounded and saved to your account.
That said, the bank is currently available in all parts of Canada except Québec.
Related: Motusbank Review
7. Alterna Bank
- HISA Interest Rate: 2.50%
- Deposit Protection: CDIC
- Other Products: Chequing account, TFSA and RRSP accounts, mortgages and investment products
- Best For: Small business
Alterna Bank (officially known as CS Alterna Bank) is another credit union-based online bank in Canada. It is a subsidiary and direct bank of Alterna Savings, one of the leading credit unions in Ontario.
Formerly known as CS Loan Corporation, Alterna Bank offers customized banking solutions for small businesses in Canada.
If you operate a small business, you can benefit from the following solutions on the bank:
- Small Business eChequing Account
- Small Business Lines of Credit
- Payment Processing
Besides small business products, the bank also offers personal accounts ranging from chequing accounts, TFSA savings accounts, RSP savings accounts, mortgages and investment products.
8. Manulife Bank
- HISA Interest Rate: 2.85%
- Deposit Protection: CDIC
- Other Products: USD account, mortgages, loan, credit card, investments personal and business accounts
- Best For: All-in-one package
Manulife Bank is a pioneer online bank in Canada that has been around since 1993.
The Bank is owned by Manulife, one of the leading multinational insurance companies and financial institutions in Canada.
Despite offers a competitive interest of 1.25%, it has more banking products than many other online banks in Canada.
Another downside of this bank is that it charges a $10 monthly fee for a savings account which is rebatable if you have a $100 minimum balance.
Unlike other online banks, you need to have a minimum of $1,000 balance in your Manulife Bank savings account to enjoy free unlimited everyday banking transactions.
9. Achieva Financial
- HISA Interest Rate: 3.40%
- Deposit Protection: Deposit Guarantee Corporation of Manitoba (DGCM)
- Other Products: GIGS, TFSA, RRSP, RRIF savings accounts
- Best For: GIC savings
Achieva Financial is one of the oldest online banks in Canada having been founded in 1998. It is the direct bank and a division of Cambrian Credit Union, one of the full-service credit unions in Canada.
The bank offers a high interest of 3.40% on savings accounts which also applies to its TFSA, RRSP and RRIF savings account.
Achieva also offers some of the best GIC rates on non-registered, TFSA, RRSP, and RRIF accounts. Currently, it offers a 4.85% GIC rate on a 2-year term which is among the best in Canada.
That said, deposits in the bank are covered 100% by the Deposit Guarantee Corporation of Manitoba (DGCM).
10. AcceleRate Financial
- HISA Interest Rate: 3.40%
- Deposit Protection: Deposit Guarantee Corporation of Manitoba (DGCM)
- Other Products: GICs, TFSA, RRSP
- Best For: GIC and savings account
AcceleRate Financial is the online bank branch of Crosstown Civic Credit Union that was founded in 2010 to offer low-cost banking solutions.
With a high interest of 3.40% on regular savings accounts and registered savings accounts, AcceleRate Financial sets itself apart from other online banks in Canada.
Like Achieva Financial, AcceleRate Financial also offers competitive GIC terms with 100% deposit protection by the Deposit Guarantee Corporation of Manitoba.
The major downside of AcceleRate Financial lies in its limited banking products, common to other credit union-based online banks in Canada.
Learn more: Accelerate Financial Review
11. Saven Financial
- HISA Interest Rate: 3.75%
- Deposit Protection: Financial Services Regulatory Authority of Ontario (FSRA)
- Other Products: GICs
- Best For: Savings and GICs
Saven Financial is another credit union-based fintech company that was launched recently (January 2021).
The credit union is owned by FirstOntario Credit Union and is only available for Ontario residents at the moment. If you live in Ontario, you can enjoy the 3.75% high-interest savings account of Saven Financial and competitive interest rates on 1-5 year GIC terms.
The interesting part is that the credit union doesn’t have monthly fees, deposit and withdrawal fees. However, as a credit union, you need a $25 membership fee to join Saven Financial which will make you an automatic shareholder of FirstOntario Credit Union.
That said, the Financial Services Regulatory Authority of Ontario (FSRA) covers your deposit on Saven Financial up to $250,000.
Learn more: Saven Financial Review
12. Motive Financial
- HISA Interest Rate: 3.80%
- Deposit Protection: CDIC
- Other Products: Chequing accounts, GICs, TFSA and RRSP savings accounts
- Best For: Savings and GICs
Motive Financial (formerly Canadian Direct Financial) is the Canadian Western Bank online-only bank.
The bank has been around since 2008 when it started as Canadian Direct Financial but in 2017, it was rebranded to Motive Financial.
Motive Financial offers no-fee savings chequing accounts in addition to 1 to 10-year GIC terms. Its savings and GIC interest rates apply to both registered (TFSA and RSP) and non-registered accounts.
With 3.80% interest on savings accounts, some of the highest GIC rates, free deposits and ATM withdrawals, Motive Financial has positioned itself as one of the best online banks in Canada.
Learn more: Motive Financial Review
13. Oaken Financial
- HISA Interest Rate: 3.40%
- Deposit Protection: CDIC
- Other Products: TFSA, RSP and RRIF GICs
- Best For: Savings and GICs
Oaken Financial is Home Trust’s online bank division operating as the trademark of Home Bank.
The bank has been in existence since 2013 and is popular for its award-winning high-interest savings and GIC accounts.
In addition to 3.40% high-interest on savings accounts, Oaken Financial also offers some of the highest GIC rates on its GIC investments.
Unlike other online banks, Oaken Financial has a physical presence in Toronto, Vancouver, Halifax and Calgary.
The major drawback of Oaken lies in its limited financial products. However, you can’t make the wrong choice with its savings and GIC accounts.
Read more: Oaken Financial Review
14. LBC Digital
- HISA Interest Rate: 3.00%
- Deposit Protection: CDIC
- Other Products: Chequing accounts and GICs
- Best For: Savings and GICs
LBC Digital is Laurentian Bank’s online bank division that has been around since 2019.
The bank offers high-interest savings accounts, no-fee chequing accounts and 1 to 5-year GIC terms with competitive interest rates
However, the LBC Digital savings interest varies per deposit. You will get the 3.00% high interest on up to $500,000 deposits and above.
In addition, you will get competitive GIC rates on the LBC Digital GIC terms which requires a $100 minimum deposit.
Finally, LBC Digital’s high-interest savings account doesn’t have a minimum balance, monthly fees and transaction fees.
Learn more: LBC Digital Bank Review
15. Wyth Financial (Closed)
- HISA Interest Rate: 2.25%
- Deposit Protection: CDIC
- Other Products: GICs, mortgages, TFSA, RDSP, RRSP, RRIF, and RESP
- Best For: Savings, GICs and Mortgages
Wyth Financial is the last but not the least best online bank on this list. Formerly Concentra, Wyth Financial is one of the oldest online banks in Canada that caters to individuals, corporate entities, credit unions and Fintech companies.
With robust financial products ranging from GICs, mortgages, TFSA, RDSP, RRSP, RRIF, and RESP accounts – Wyth Financial offers Canadians a unique banking experience.
Wyth Financial’s 2.25% interest on savings account, and competitive rates on its GIC term and mortgage are among the best in Canada.
While Wyth Financial doesn’t have chequing accounts, it allows you to make free mobile deposits and free Interac e-Transfers.
Update: Wyth Financial has been acquired by Equitable Bank and the bank is no longer receiving new applications.
Learn more: Wyth Financial Review
5 Tips For Choosing the Best Online Bank in Canada
It’s one thing to know about the best online banks in Canada, it’s another thing to choose the perfect one for your needs.
From the above review, you can see how the banks differ in their products, fees, and interest rates among others.
Unfortunately, you may still be wondering which of the banks is perfect for you. Below are five practical tips to help you make an informed decision.
1. Determine your banking needs
As you can see from the above review, different online banks specialize in different aspects. This makes it essential to first determine your banking needs before making a selection.
Fortunately, whether you’re looking for the best online bank for savings, chequing, mortgage, GIC or an all-in-one package, there’s a perfect online bank for you in Canada.
2. Consider the products
If you’re looking for an online bank that will support your present and future banking needs, you need to consider the supported products.
Consider a bank with a mix of savings, chequing, registered, mortgages, loans, investment accounts and other products. This will prevent you from opening a new bank account each time your situation changes.
3. Evaluate the interest rates
One of the advantages of online banks over traditional banks is that they have competitive interest on chequing accounts, savings accounts, credit cards, mortgages, loans and investment products.
However, interest rates among online banks vary as some have higher interest than others. This makes it essential to evaluate the interest rates of a bank before making a final decision.
4. Know the fees involved
Some online banks are more costly than others in terms of monthly fees, transaction fees, inactivity fees, FX fees and other banking fees.
The thing is, most online banks don’t require account opening fees. However, some credit union-based online banks will require you to pay a membership fee before signing up.
5. Remember coverage and security
Lastly, you want to choose an online bank with enough deposit protection by the CDIC or a provincial body like DGCM to cover your funds. This will give you peace of mind should the bank go out of business.
In addition, you should consider the security features of the bank to ensure that your personal information is protected against Internet fraudsters.
RELATED: Best High-Interest Savings Accounts in Canada
Final Thoughts
Online banks are the way to go if you’re looking to save costs and make the most of your money in Canada.
But in choosing an online bank, you want to make the perfect selection out of the multiple options out there. Most importantly, you want to choose an online bank that cost-effectively suits your banking needs.
Regardless of your banking needs, one of the above best online banks in Canada may be your perfect option. Have any experience with any of these banks? Kindly let me know in the comment below.
If you like this review, please read our existing blog posts for more information about the best banking products and services in Canada.
