Motusbank Review: The New Player in Canada’s Virtual Banking Sector
There’s a new player hoping to inject some excitement into Canada’s virtual banking arena. motusbank (note the Millennial-targeting, lower case moniker) is the country’s newest, full-service, discount, online bank. It’s hoping to win over clients with a customer-focused ethos that touts high interest rates and low-to-no fees. As a subsidiary of Meridian, one of Canada’s largest and most popular credit unions, motusbank benefits from instant credibility when it comes to offering more customer-driven service than traditional banks, and its user-friendly website and bold, colourful branding make it stand out from Canada’s staid Big Five financial behemoths.
But the real question is: How does motusbank stack up to its direct competitors—discount, online banks like Tangerine, EQ Bank, and Simplii—in terms of its fees and interest rates, the two indices that matter most to virtual banking customers?
|Bank||Chequing Account||HISA||TFSA||GIC (1 year fixed)||Mortgage (5-year fixed)|
|Simplii||Varies, starts at .05%||1.2%||1.2%||2.40%||4.99%|
|Tangerine||Varies, starts at .15%||1.2%||1.2%||2.25%||3.09%|
Chequing accounts offered by traditional banks typically provide an almost unnoticeably negligible amount of interest on the account balance. In addition to these abysmally low rates, many chequing accounts with the big banks also charge fees for transactions, charges that can only be avoided by keeping a minimum deposit amount or paying a monthly service fee.
Not only does motusbank’s chequing account not charge a fee for most transactions, it also one-ups traditional accounts with its 0.50% interest rate. Sure, that interest rate isn’t a head-turner compared to what you’ll find with savings accounts (see below), but it’s certainly among the highest in the country within the chequing sector. Tangerine’s no-fee chequing account earns only 0.15% for deposits of up to $49,999.99, moving up to 0.65% if you keep $100,000 or more in your account (though you’d be ill-advised to keep that much money in a chequing account long term). Simplii’s no-fee chequing account starts at a meager 0.05% for deposits of $1000 and below, increasing to .50% only for balances of $25,000.01 or more.
High-Interest Savings Accounts
motusbank offers an impressive 2.25% interest rate for its HISA. It’s important to emphasize that this is a permanent rather than promotional rate, i.e. a higher-than-usual rate that some banks offer for a short period of time to hook new clients before reducing the rate significantly after the promo ends. motusbank’s HISA also includes no minimum balance or monthly fees for self-serve transactions, like transfers and withdrawals. On the other hand, Tangerine and Simplii’s savings accounts (which also charge no fees for a variety of services) offer comparatively ho-hum interest rates of 1.2%. EQ Bank, however, ekes ahead as the (no fees, no monthly balance) HISA winner with a rate of 2.3%.
Tax Free Savings Accounts
Canadians love their TFSAs. And why shouldn’t we? As a flexible account (TFSAs can be investment accounts, GIC accounts, etc.) it’s one of the best methods Canucks have of earning tax-free income. motusbank offers a no-fee, no minimum balance TFSA that earns 2.50%. Tangerine and Simplii offer the same rate on their TFSA account as they do on their HISA accounts, at 1.2%.
GICs are a popular way to save for those who favour a slowly-but-surely form of investment. Currently, motusbank is offering a 1-year fixed rate GIC at 2.70%; the bank also offers TFSA GICs, which start at 2.80% for one year. With Tangerine, you’ll get a 1-year GIC or a TFSA GIC at the same rate of 2.25%. Simplii offers a better deal than Tangerine for a one-year GIC at 2.40%, but that still falls behind motusbank’s GIC rate, and, as of yet, Simplii does not offer a TFSA GIC option. EQ Bank has a GIC one-year rate slightly below motusbank’s at 2.65%, and like Simplii does not offer a TFSA GIC option.
Buying a home is a significant financial milestone for many Canadians, and finding a reasonable mortgage rate is the first important step in any house-hunting expedition. Mortgage rates vary widely depending on whether you’re looking for a variable or a fixed rate, and according to the timeline you’re working with. Banks also occasionally offer special rates, so be sure to always check with individual financial institutions to get the most up-to-date mortgage rates.
Presently, motusbank features a very attractive 5-year fixed mortgage rate of 2.64% and a 5-year variable mortgage of 2.90%. Simplii’s five-year fixed is 4.99% with a five-year variable rate of 3.95%. Tangerine’s five-year fixed rate is at 3.09%.