Online banking

All You Need to Know About Online Banking in Canada

Advertiser Disclosure This article/post contains references to products or services from one or more of our advertisers or partners. We may receive compensation when you click on links to those products or services.
Last updated on July 10, 2019 Views: 547 Comments: 19

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?

  1. 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.
  2. 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.
  3. 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.
  4. 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:

  1. Traditional brick-and-mortar banks that support online banking
  2. 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.

Savings

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 deposits faster and easier. Some online banks also offer kids’ and youth savings accounts, money market accounts, CDs and high-interest savings accounts.

High-Interest Savings

As the name suggests, high-interest savings accounts are accounts that pay a higher rate of interest than regular savings accounts. Interest rates for high-interest savings accounts vary widely, from little better than regular savings accounts at 0.5%, all the way up to 2.5%. Again, you’ll often find higher interest rates from online-only banks than those offered by brick and mortar banks.

Most online high-interest savings accounts don’t have any monthly fees, although you’ll find that some have minimum balance requirements. The cost for transfers differs between banks, as well. Generally, you’ll get free transfers to other accounts that you have within the same bank.

Chequing

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.

TFSA

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.

Hybrid

Hybrid accounts, like EQ Bank’s Savings Plus Account,  combine the features of a high

interest savings account and chequing account so that customers don’t need to have multiple accounts. The only downside is that they currently do not offer a debit card.

Youth Accounts

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.

Senior Accounts

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.

What You Don’t Get from Online Banks

No counter service – Since online banks don’t have any physical branches, you won’t be able to walk-in to get assistance from a person face-to-face. If you have a customer service issue, quite often dealing with someone in-person helps resolve your issue quicker.

Safety deposit boxes – Again, due to a lack of physical branches, you won’t be able to get a safety deposit box.

No access to in-person advice – Banks employ various financial experts with different areas of expertise including mortgage brokers and investment advisors. Although some online banks offer mortgages and investments, you won’t be able to speak to someone in person about those products, which can be oddly unsettling when you’re making major decisions about your money.

The Safety of Online Banks in Canada

All of the banks listed are credible financial institutions and are well established in Canada. The odds of them failing are extremely unlikely, but in the event that they do, you’re covered up to $100,000 thanks to the Canada Deposit Insurance Corporation (CDIC).

This insurance applies to eligible deposits in your own name, joint accounts, trust accounts, TFSAs, RRSPs, and more. However, it does not cover your investment products such as stocks, bonds and mutual funds.

As for the safety of your online account, security breaches are rare. Nonetheless you should take steps to protect your information, which includes ensuring your password and PIN are not easy to guess.

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.

 
Chequing Accounts
4 types1 types14 types5 types5 types
Savings Accounts
5 types5 types34 types5 types3 types
Student/Youth Accounts
2 typesNone03 typesNone1 type
Senior Accounts
1 typeNone0NoneNone1 type
Monthly Fees
$3.95-$15.95. Free for students, $4 discount for seniorsNoneNone$4-$30$4 - $30; special rates for youth, students, seniors, and ex-defense forces $5.99 to $25. Free for students
Min. Account Balance to Waive Monthly Fees
$3,000-$4,0000N/AN/A$2,000 to $6,000$100 to $2,500
Max Savings Interest Rate
1.8%1.15% (Special Offer: New Clients earn 2.75%* interest for the first for 6 months**.)2.50%0.9%1.4%0.7%
Brick and Mortar Branches
YesNoNoYesYesYes

Scotiabank Online

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

Tangerine offers a single chequing account and multiple savings accounts to its members, all of which bring excellent value. The Tangerine chequing account generates interest of:

  • 0.15% for $0-49.499.99
  • 0.55% 50,000.000-99,999.00
  • 0.65% 100,000+

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 1.15% interest (Special Offer: Become a new Client and earn 2.75%* interest on your first Tangerine Savings Account, TFSA or RSP Savings Account for 6 months**.), 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.

motusbank

*Please note this product is currently not available for residents of Quebec.

motusbank is a part of Meridian Credit Union, making this online-only bank a CDIC member that insures member deposits, but also offers easy connectivity to other institutions and a high-rate, low-fee model. motusbank customers with the popular High-Interest Savings account will earn 2.25% on their deposits without any monthly fees, transaction fees, or minimum balances. The motusbank TFSA offers 2.50% interest, and the digital bank also has GIC accounts, RRSPs and one chequing account with similarly appealing rates and features.

RBC Online

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.

BMO Online

Transaction types permitted by BMOs accounts include online bill pay, Interac e-transfers, debits, cheques, contactless payments, mobile cheque deposit and online direct deposit. You can earn bonus interest with their Savings Builder Account with a competitive 1.45% rate.

TD Online

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 Online

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, and personal cheques. It permits unlimited transactions each month, and up to 5 free Interac transactions.

Simplii Financial

Simplii may appear new, but they’re actually the rebranded name from when PC Financial customers were transferred over to CIBC. Simplii offers a no-fee daily banking account which includes unlimited free Interac e-Transfers and a high interest savings account. Since Simplii is owned by CIBC, account holders can use their provided debit card to withdraw money for free from their network of 4,000 automated banking machines across Canada. You can access other ABMs, but one-time fees would apply.

Who Should Use an Online-Only Bank?

Since there are no fees to have an account with online-only banks in Canada, I believe that all Canadians should try them out, at least in combination with a traditional bank.

The higher interest rate offered from an online bank account makes it the perfect place to park your money for the short term. Another byproduct of having low overhead costs is that online banks invest a lot of money in regularly developing new products for their customers.

Despite the fact that online banks seem to be disrupting traditional banks, you won’t see brick-and-mortar locations disappearing anytime soon. Competition from online banks has actually forced the big traditional banks to adapt to customer needs and offer better services. Their branches now serve as showrooms of the products that they offer.

There have never been more banking options available in Canada. So instead of just settling for a banking brand that you’re familiar with, give it some thought/research and figure out if an alternative account type might help you save more money.

Article comments

19 comments
Chris says:

Hello there, I’m a fairly new immigrant to Canada (2 years this summer) and would like to start taking advantage of the best possible financial options available to me. Hence I’d like to get your financial input regarding 3 aspects: 1) Best account for investing in stocks/bonds (TFSA?) 2) Best long term savings account (I plan on setting aside a set amount of money on a bi-weekly basis), lastly 3) Best in class card (cash back or travel, you know? Keeping my options open). I’m currently making around 45K/Year and I currently do my banking with CIBC, I hold a Basic Dividend Visa Credit Card with them as well as a CIBC smart checking account. That said, CIBC has a partnership with PAYMI which I have activated and earns me ~1% cash back on certain purchases.

Thanks a lot in advance for your help and have a great summer ahead! ?

The GreedyRates Team says:

Hey Chris,

Thanks for posting to GreedyRates—and welcome to Canada, even if it’s a belated greeting. If you’d like to start taking control of your finances, then we’ll try to help suggest a mix of financial products that suit your status as a new immigrant. First, the idea of putting money into a TFSA is a good one, since you can save at a good rate and avoid taxes, but also invest in stocks and bonds when using a self-directed TFSA. Regular TFSAs will restrict you to the bank’s own GICs, mutual funds, etc. As for long-term savings, this is what an RRSP is for.

RRSPs allow you to put away a fixed sum each year, invest and hold it in different financial instruments, and use it to reduce your tax exposure on the returns you make. CIBC should have suitable options for both TFSA and RRSP so that’s where we’d start looking. As a new immigrant, having these accounts will help you seem more creditworthy to Canadian financial institutions and assist in the “maturing” of your credit profile.

The very best tool for building a healthy financial history in Canada is a credit card, however. While we’re fans of the Dividend Visa, you should be able to get a cash back card that earns better. Some relevant variables, of course, are your current credit score and also how much debt you carry (if any). Income is relevant but less so than credit, but you’ll likely be able to find a suitable card in the middle tier which offers something more than what you have.

Since you’re already looking to save money, and getting a card from a bank outside of CIBC would benefit your credit long-term, we suggest looking at the Tangerine Money-Back credit card. It offers 2.00% on two categories of your choice, but you can get a third 2.00% category by depositing the cash back you earn into a Tangerine savings account (which have great rates). Apply by July 31st and you’ll get 4.00% in your chosen categories for 3 months. Tangerine lets you swap cash back categories if you like, so you can get 2.00% on home improvement, entertainment, furniture, and other things.

GreedyRates

Joe says:

A benefit of online banking is you will never walk into a heist in progress or find yourself in the middle of one.

The GreedyRates Team says:

Hey Joe,

Interesting take on the benefits of online banks! We suppose you aren’t wrong, but you shouldn’t let the truly miniscule probability of a brick-and-mortar bank being robbed prevent you from using these banks’ financial products. Online banks have downsides as well (namely the more impersonal customer service), and it’s easily possible to use a credit card or account from the Big Five without going into the branch much anyway. Best of luck.

GreedyRates

Jerome says:

You should add Alterna Bank and Motusbank, two other great no-fee online banks.

Will says:

Hello, I have seen Tourist (eTA) and wish to stay in Canada for 6 months. I want to open an account to make money transfer from my bank in Brazil, what would be the best option among the aforementioned banks?

The GreedyRates Team says:

Hi Will,

If you’re only in Canada for a short time, your best bet is likely to get ahold of a prepaid credit card. Since you won’t be able to get approved for any unsecured credit, or even secured credit from Canadian banks, using cash to fill a prepaid card will give you the most financial flexibility possible. You’ll just have to determine which is most suitable for your individual needs. We like the CIBC AC Conversion card, if you’re planning on taking a trip to the US during your stay, as you can load up to 10 currencies on it at once (up to $20,000 worth) and purchase them at any time from CIBC to lock in your rate. For online shopping this also works well.

A simpler option might be Scotia’s Prepaid Reloadable Visa card. It has a $10 annual fee and free reloads, offering you the ability to shop online, pay bills and handle other necessary expenses. For you, remember that it isn’t possible to avoid fees at some point when you use your money from abroad. Unless your bank back home gave you a foreign transaction fee-less card, you’ll take a slight hit when you exchange money to deposit for a prepaid card—just as you would if you used your home country’s credit card in Canada.

GreedyRates

Jane says:

If I want to move from a traditional bank to avoid monthly fees, but still require cash (i.e. using the envelope method to budget) it sounds like I can’t really move to an online only bank. If my mortgage or investment accounts are with a traditional bank don’t I have to have a chequings account in that bank to pay the mortgage or access my investment accounts? I feel the shackles of the brick n mortar banks tying me to them and I can’t imagine how to get away. I have a Tangerine account otherwise.

The GreedyRates Team says:

Hi Jane

Thanks for the questions! We’ll try to address everything in order and help you make sense of the modern banking system. The first thing to realize is that all banks are connected, both online and offline, and so you ultimately have a ton of choices when it comes to which bank you prefer or which account. If you want to move from a traditional bank just to avoid fees, you should know that even online banks and accounts still carry a monthly fee (most of the time), and those without a fee offer limited benefits (lower interest rates on savings accounts or higher fees for example). That said, we can still help you find a good low-or-no-fee chequing or savings account, depending on what you want. The Scotia One Account, and the Tangerine Daily No-Fee Chequing Account are both solid options.

Also, if your mortgage and investment accounts are with a specific bank, that doesn’t mean you need to have a chequing account at the bank also (unless that was part of the original requirement for the loan—which isn’t often the case). You can transfer money in many ways to make payments on the mortgage or do deposits or withdrawals with your investment account—over the phone or online takes mere seconds in this day and age, and costs virtually nothing. If you move your chequing to an online-only bank then these options will be even more accessible, and you can access cash by making withdrawals at an ATM via your new card.

If one of the concepts we described here doesn’t make sense, let us know and we can elaborate. It might also help to take your concerns to the bank, and work with a banker who can help you more personally. Just remember that the Canadian banking system is very open, and so even if all your accounts are with different institutions, the comprehensive nature of the modern financial system makes it easy to manage.

GreedyRates

Max says:

Hi, is there any financial institution offering a chequing account with provision for inter-bank transfers without charging a fee for the service? I would like to open a chequing account with one institution(online bank/credit union) and maintain a high interest savings bank account with another and would want to move funds around between the two. Thanks.

The GreedyRates Team says:

Hey Max!

That’s an interesting question, and one that we’ve thought about ourselves lately. It’s common knowledge that even between Canadian banks and accounts owned by the same person, it’s not free to transfer money and can sometimes be quite expensive, to the dismay of everyone. For this reason, chequing accounts like the No-Fee Chequing Account from Tangerine are prized for their inclusion of Interac e-Transfers in the no-fee deal. Interac e-Transfers are probably your best bet when it comes to inexpensively transferring money between accounts, as they cost as little as $0.50 for amounts under $100.00 and just $1.00 for amounts over $100.00. This is something like a quarter of what you’d pay elsewhere. Keep in mind, though, that Tangerine doesn’t have face-to-face customer service and you’ll therefore need to be comfortable banking online.

BMO also offers free Interac e-Transfers on all its chequing accounts, such as the BMO Practical Plan account which has a monthly fee of just $3.00. So, for $3.00 monthly and then between $0.50 and $1.00 per transfer, you can do as many interbank shuffles as your heart desires. If you prefer face-to-face and plan on transferring several times per month, then you’d probably love the RBC No Limit chequing account, which offers unlimited teller-assisted bank transfers for just $10.95 per month. Check our article on the best chequing accounts in 2019 for more information and to discover other great plans that make sense for you. Good luck!

GreedyRates

Matteo says:

hi, i’m Matteo, from Italy. if i wont to open an on-line account to deposit some funds from my country to an online canadian bank, can i join the same offeres even if i’m not canadian?

The GreedyRates Team says:

Hi Matteo,

From the nature of your question, we’re assuming that you’re either a new resident of Canada who doesn’t yet have a Canadian bank, or you’re trying to send money from home to a Canadian relative abroad. However, if you’re interested in promotions like the ones we cover on our site, such as the low 0.00% interest balance transfer deal offered by MBNA, or the bonus Air Miles provided to new cardholders of the BMO Air Miles World Elite card, you’re likely the former. In this case, it’s important that you do some research into Canadian banks and go into a physical branch location to open an account. We’re particularly fond of Scotiabank’s cards for new immigrants.

As a new resident, you won’t be eligible for these top-tier rewards credit cards right away. Even with exemplary credit in Italy, Canadian banks require you to start from scratch. We’ve written a handy article on the matter for prospective new immigrants like yourself, and if you need any help understanding it, just let us know. The first step is always to get your hands on a secured credit card (try the Refresh Financial Secured Visa), which gives you access to payments online, virtual banking, credit to pay bills with, and financial flexibility. You don’t need a credit score or credit history to get this card and using it will help you improve your score over time. Eventually, you’ll work your way up to an unsecured card that you don’t need to deposit cash for.

Try to accomplish the first steps outlined here and come back when your credit has been built up a bit. Additionally, if we haven’t properly understood the situation, feel free to let us know and we’ll revise our answer. Best of luck, and welcome to Canada!

GreedyRates

Rick says:

Your table shows that CIBC’s online max savings interest rate is 2.3%. Not true. How valid is the rest of the information in this table?

The GreedyRates Team says:

Hey Rick,

Thanks for catching that typo in our chart. We’ve gone ahead and made the appropriate changes based on our double-checked information. The maximum interest rate that you’ll receive with a CIBC Savings Account is 1.05% through the CIBC eAdvantage Savings Account, not 2.30%. We were likely thinking of the CIBC GIC Investment account, which offers an increased rate of interest when you lock in your investment without withdrawals for at least 1 year.

We also checked the other information in the chart and can confirm its accuracy. Let us know if you encounter any other issues or questions and we’ll address them as soon as possible.

GreedyRates

Kp says:

If I want to invest money, are staff knowledgeable about these things at online banks? I’m with Simpli.

The GreedyRates Team says:

Hey Kp!

Interesting question. Are you interested in investing in the sense that you’d like to be better about saving money and earning passive income from things like interest? If so, many online banks that offer comprehensive financial services (chequing accounts, savings accounts, investment accounts, credit cards etc.) will be able to help. However, before calling a representative and asking for advice about what accounts to open, know that they’ll only recommend their own bank’s products. This is why you’ll need to do your own research. If you find a bank with an investment department and options that look enticing, then you can call and ask about them specifically.

If you’re more interested in investing in equity markets, bonds and other assets such as commodities, many banks won’t be a big assistance. For this, you’ll be better off hiring an investment advisor or simply a money manager who can help you get access to a broker. Your bank, Simplii Financial, is a relatively basic online service provider that only offers mobile banking. In Canada, if you want a bank that offers investment plans, services, and products, we’d recommend Scotiabank. It’s as easy as going into your local branch (or giving them a call) and asking what their investment plans entail. Best of luck!

GreedyRates

Nish says:

If I want an account for a corporation recently registered in Canada, would I need to visit a branch to open the online account or could I manage everything remotely.

The GreedyRates Team says:

Hi Nish,

Thanks for the interesting question! If you’re looking to open a business credit card account to go along with a corporation recently registered in Canada, then there’s no reason why you can’t do it online. Business account applications usually come with a bit more scrutiny and require more documentation than a personal credit card, but you can find a bank that will gladly accept scans or emailed copies of your balance sheets, letters of incorporation, personal financial reports and other required paperwork. Call around to some of the biggest Canadian banks like RBC, Scotiabank, or MBNA to inquire. Good luck!

GreedyRates