Canadian Bank Reviews (Where to stash cash!)
Is your bank kind of treating you like garbage? Poor customer service, low interest rates, and high fees?
I hear it a lot. AND, it’s where I was a few years ago. I didn’t really even think about getting a new bank until I started actually understanding personal finance. So today, I’m going to help you out! We’re going to go over all the major Canadian banks. I’m going to tell you what you should actually be looking for, what today’s banks are actually offering and how to choose a bank that fits best with your needs.
How did you choose your current bank? WHEN did you get your bank account?
If you’re anything like me, you basically just banked where your parents did. They brought you in for your first account at 11, and you never really paid attention to any ‘bank stats’ like, the fees they were charging, the types of accounts they offered, or the customer service they provided.
This can lead to some pretty big frustration. It did for me at least, I had NO idea that there were better options out there, I just kind of assumed all banks were crap from the stories I heard from other people. That is, until I actually started learning about banks! So, today we’re going to talk about that.
Banks vs. Credit Unions
Before we get into the real meat, I first want to talk about what banks actually are. That is, what a BANK is versus a CREDIT UNION. Because sometimes this can get confused. They kind of seem like the same type of company, since they’re both ‘places you keep your money’ But the major difference between a bank and a credit union is that banks are FOR PROFIT companies: they’re in it for the money.
Whereas Credit Unions are Nonprofit, it doesn’t matter to them if they make anything! Credit unions typically have lower fees and better customer service. But banks have lower interest rates on credit, since they’re ‘big’ they’re able to take larger risks and offer you loans at lower rates. They also can offer more branches or ATM locations, and better technology which, in the era of mobile banking is increasingly more important!
I’m not going to spend too much time on the differences or advantages for each, (if you want a better video explaining this let me know in the comments) but I did want to mention that they WERE different, just in case you had that question!
Today, we’re going to assume that you’ve already made that decision between bank and credit union, and we’ll focus just on banks!
Major Bank Types:
There are 2 Major types of Banking institutions: There are ‘Brick and Mortar’ banks, ie. banks that have a physical location, and there are ‘Internet only banks’.
Brick and mortar banks typically have higher fees, but more offerings, and the advantage of going in-person to talk to someone about your banking needs.
Internet only banks are, well basically what they say: they’re on the internet. They don’t have any physical locations, which means they’re able to offer lower fees, and better incentives like joining offers and higher interest rates for savings accounts. Internet only banks also, in my experience, have better customer service. I’ve actually heard this across the board from almost everyone.
It seems that large brick and mortar banks are a lot more corporate which sometimes means you’re a bit of a ‘number’ to them, whereas internet only banks take the time to recognize you as an actual human (but maybe that’s just my personal bias creeping in! so take that with a grain of salt.)
I’ve decided to review both brick and mortar banks, as well as internet only banks. Which will give you a broader idea of where you want to store your money.
I’ve decided to judge each bank based on the following features:
We’re just going to be looking at the personal chequing/savings accounts today, not additional offerings like loans or credit.
(You can store your money at a different place than you have these things, and I think there are too many factors to consider if you add those into the mix!)
Let’s start with the Brick and Mortar banks. In Canada, we have what’s called ‘The Big 5’.
The Big 5 Banks:
That is: RBC, TD, Scotiabank, BMO, and CIBC.
As of when this is posted, here’s what they offer:
Royal Bank of Canada (RBC)
RBC, or the Royal Bank of Canada has:
4 Types of Chequing Accounts. All have monthly fees, with the smallest fee being $4 that includes 12 transactions a month. They also have 4 Types of Savings Accounts, all with no account fees and Interest Rates between 0.01% - 1%
Toronto Dominion Bank (TD):
TD, or Toronto Dominion Bank has:
5 Types of Chequing Accounts. All have monthly fees, with the smallest fee $3.95 that includes 12 transactions a month. They also have 3 Types of Savings Accounts, with no account fees and Interest Rates between 0.05% - 0.5% or 1% if you can match a $10,000 minimum.
Scotiabank (Bank of Nova Scotia):
Scotiabank or Bank of Nova Scotia has 3 Types of Chequing Accounts. All have monthly fees, with the smallest fee being $3.95 that includes 12 transactions a month. They also have 4 Types of Savings Accounts, all with no account fees and Interest Rates ranging from 0.5% 1.0%
(it’s all starting to sound pretty familiar isn’t it?)
Canadian Imperial Bank of Commerce (CIBC):
CIBC or, Canadian Imperial Bank of Commerce (has anyone ever called it that?!) has:
3 chequing accounts, again, all with fees, the smallest being $3.90 including 12 transactions a month. They also have 4 savings accounts, all with no monthly fee, and interest rates ranging from 0.25% to 1.0%
Bank of Montreal (BMO):
BMO or Bank of Montreal, is a little bit different, it has 6 chequing accounts. Their lowest fee is $4 and includes 12 transactions per month. They also have 3 Types of Savings Accounts with no account fees but the interest rates are a little higher at 0.5% 1.6% (but to get that 1.6 you have to increase your account by $200 each month)
All in all. These banks pretty much suck.
I know it’s just my opinion, but once we look into what the internet banks offer, you’ll start to see how CRAP each of these packages are. They seem to gauge out everything they can from you, all of them have monthly fees, all of them offer less than 1% interest rates on their savings accounts, and they limit monthly transactions (and of course, charge if you go over that limit!)
Let’s see what the Internet banks offer instead.
Internet Only Banks:
The internet only banks in Canada are:
Simplii Financial (This used to be called PC Financial, it was a joint venture between CIBC and PC but now it’s just CIBC subsidiary), Tangerine (Which was formerly ING Direct), Equitable Bank or EQ and a new one: Motus Bank (Founded October 2018, owned by Meridian)
Now, you’ll notice that I mentioned the word ‘subsidiary’ or ‘owned by’ in that section. That’s because these companies are actually a part of the larger banks. It’s kind of like the relationship between the phone companies.
Koodo is the budget version of Telus, and Fido is the budget version of Rogers. They use the same towers and signals, it’s just a cheaper phone plan. Same thing with these banks. A lot of the time they’ll use the same infrastructure.
For example, if you bank with Tangerine you can use Scotiabank ATM locations for free. Tangerine doesn’t actually have any physical locations (except I think maybe that one place in Toronto?) So they have a partnership with their parent company Scotiabank so their customers can take out physical cash if they need to.
There are a few exceptions to this, which are interesting cases, but I’ll get into that in a second, for now, let’s start with what Simplii Financial Offers.
Simplii Financial offers a chequing, and a savings account. That’s right, no fancy multiple account tiers. Because they don’t need them! They offer no monthly account fees (for a minimum balance of nothing) Unlimited transactions and withdrawals, and free interac E-transfers. Because it’s a CIBC subsidiary, you can take out cash for free at CIBC ATM locations!
Their chequing account (yes, CHEQUING Account!) has an interest rate that ranges from 0.5% - 0.15% and their savings account interest rate is 1.15%
Again, Tangerine has one chequing account, and one savings account. It’s chequing account has no fees and unlimited transactions and as I mentioned earlier, you can take cash out from all Scotiabank ATM’s. Their chequing account has an interest rate of ‘up to 0.65%’ but basically it’s 0.15% because no one is going to be over the $100,000 limit earning 0.65%. Their savings account has an interest fee of 1.15% as well, unless you’re a new customer and get the introductory offer of 2.75% interest for the first 6 months.
Motus bank is pretty new on the scene. It opened in October of 2018 and is fairly on-par with the other internet banks. This one is owned by Meridian, and allows withdrawals from Exchange ATM’s. Again, has a chequing account with no fees and a 0.5% interest rate and it’s savings account interest is 2.25%.
The next bank is EQ Bank or Equitable Bank. This one is super interesting. Because it’s kind of… ‘the next level’ of internet bank. They just literally don’t have anything physical. They actually don’t even have chequing accounts, because there’s nothing really to do with them. They don’t print cheques for you, they don’t have ATM’s, they don’t even give you a debit card!
It’s a little weird to think about, but really, you COULD just keep all your savings in a digital only space. I can’t remember the last time I wrote a cheque, I barely even use cash anymore! The advantage of keeping your savings over here, is that this account, is that the interest rate is 2.3%
Yep. The HIGHEST of all!
They also, of course, don’t have any other fees or charges on anything else they offer either.
So, knowing all of this information how do you choose YOUR bank?
How to Choose Your Bank:
You’ll want to make sure you’re minimizing any fees or charges that the bank has. For me, that cuts out any account that charges any account fees, transfers fees, or has a minimum balance. That basically takes the Brick and mortar banks out of the running. And you also want to make sure you have the best interest rates.
Of the Internet banks, EQ and Motus have the best interest rates. With Motus, it’s SO new, and I don’t know how I feel about this bank. It seems pretty legit, it’s got CDIC backing (Canada Deposit Insurance Corporation) which is a pretty good indicator of it’s authenticity, I think it COULD be a really great choice when it grows older but it’s been less than a year so I’d want to watch it a little bit more before I decided on switching to it.
With EQ, we have that disadvantage of not being able to use cash, or cheques. While I almost never use these items, I don’t know if that makes it a replacement for a ‘full-service’ bank, and that makes me wary of it being my sole bank provider.
So that leaves Simplii and Tangerine. Both of which are pretty equally matched in terms of offerings and rates. I personally chose Tangerine. Mostly because there was a killer sign up bonus when I was looking for a new bank - so definitely look into sign up bonuses for whatever bank you choose!
What bank do YOU bank with? and What’s your opinion on the total digital banks? Do you think the world will ever be ready to switch to that type of system?
Let me know in the comments down below!
Ps. Interested in switching to Tangerine? Check out the Tangerine Review I posted last week!