Canada’s Best Banks Online: A Closer Look for Students

Canada’s Big Five Banks: A Closer Look for Students

When it comes to banking in the True North, the Big Five banks—RBC, TD, Scotiabank, BMO, and CIBC—are as Canadian as maple syrup and hockey. These financial giants dominate the market, controlling a substantial share of the country’s banking assets. Thanks to their extensive branch networks, wide range of services, and decades-long presence, they’ve become the go-to choice for many Canadians seeking reliable banking solutions.
But how did they achieve such dominance? A mix of strategic mergers, government regulations favouring stability, and a focus on comprehensive financial services has allowed them to grow exponentially. They’ve built trust over generations, positioning themselves as one-stop shops for everything from everyday chequing accounts to complex investment portfolios.

Why Students Are Limited by Banking with Canada’s Big Banks

For students balancing tuition fees, rent, and the occasional splurge at Tim Hortons, every dollar counts. Unfortunately, banking with the Big Five can sometimes feel like trying to fit a square peg into a round hole. While they offer student accounts, these often come with limitations like capped free transactions or fewer perks compared to alternative options.

Moreover, the traditional banking model may not align with the digital-first lifestyle of today’s students. Limited app functionalities, fewer innovative features, and less personalized customer service can make managing finances more cumbersome than it needs to be. In a world where fintech and smaller banks are offering tailored, flexible solutions, sticking with the big players might mean missing out on better options. We created a detailed comparison of all Canadian banks so you can find the best match for your needs.

Student Banking Options at Canada’s Top 5 Banks

Canadian Online Banks

Over the past few years, we’ve seen a real shake-up in the Canadian banking scene. Around the mid-2010s, digital banks started popping up, changing the way we think about handling money. No longer tied down by traditional branch hours or sneaky fees, these online banks offer convenience and savings that are hard to ignore. Major players like Tangerine, Simplii Financial, EQ Bank, Neo Financial, and Motusbank have been making waves, attracting Canadians looking for a better banking experience.

According to a 2022 report, online-only banks in Canada have been growing at a clip of about 15% annually. It’s not hard to see why. With competitive interest rates, no monthly fees, and user-friendly apps, they’ve become especially appealing to students who are tech-savvy and budget-conscious.

So, what’s the scoop on these digital banks? Are they the best for students like MillionDollarJourney suggest?

Let’s dive into some mini-reviews, focusing on what they bring to the table for students.

Tangerine

Originally ING Direct before becoming part of Scotiabank, Tangerine offers a no-fee daily chequing account with unlimited transactions. For students, the high-interest savings account is a nice perk—you can actually watch your money grow (even if it’s just the leftovers from your ramen budget). Their mobile app is straightforward and easy to use, making it simple to keep track of your spending and savings goals. Plus, you get access to Scotiabank ATMs across Canada without any fees, so grabbing cash isn’t a hassle.

Simplii Financial

Backed by CIBC, Simplii Financial provides no-fee chequing with unlimited transactions and free Interac e-Transfers. The simplicity (no pun intended) of their services is perfect for students who don’t want to get bogged down in banking complexities. While they don’t have physical branches, their customer service is available 24/7 online and over the phone, which is handy when you’re pulling all-nighters and need assistance at odd hours.

EQ Bank

EQ Bank, a subsidiary of Equitable Bank, might catch your eye with their high-interest Savings Plus Account. There are no monthly fees, and you get unlimited free Interac e-Transfers—a big win if you’re constantly splitting bills with roommates or group project expenses. Their mobile app includes features like bill payments and budgeting tools, helping you stay on top of your finances without breaking a sweat.

Neo Financial

Neo Financial is one of the newcomers shaking things up. They offer a no-fee spending account with cash-back rewards on everyday purchases—a feature that’s music to any student’s ears. With unlimited free transactions and a sleek app that offers spending insights, it’s designed to make managing money feel less like a chore and more like a part of your digital lifestyle.

Motusbank

Operated by Meridian Credit Union, Motusbank brings no-fee chequing accounts with unlimited transactions to the table. Their competitive interest rates on savings can help stretch those hard-earned dollars a bit further. For students eyeing the future, they also offer low rates on personal loans and lines of credit, which could be a lifeline when tuition bills roll around. Their app is user-friendly, making it easy to check your balance between classes.

Alterna Bank

Alterna Bank offers a solid no-fee chequing account with unlimited transactions and free Interac e-Transfers. Their mobile app is intuitive, helping you manage your money on the go. For students interested in starting to invest, Alterna provides competitive rates on GICs, offering a safe place to park some savings while earning a bit of interest.

Canadian Bank Loans

Thinking about taking out a loan in Canada? Whether it’s for tuition, a new set of wheels, or just bridging the gap until payday, understanding how bank loans work north of the 49th can save you both time and money.

Current Interest Rates

First off, let’s talk interest rates—the cost of borrowing money. The Bank of Canada has been making some moves lately, adjusting the policy interest rate that influences what commercial banks charge folks like us. Here’s a quick rundown:

• September 4, 2024: Dropped to 4.25% (-0.25%)
• July 24, 2024: Down to 4.50% (-0.25%)
• June 5, 2024: Reduced to 4.75% (-0.25%)
• April 10, 2024: Held steady at 5.00%

These incremental decreases are a win for borrowers. Lower policy rates often trickle down to lower interest rates on personal loans, meaning you could snag a loan with an interest rate ranging anywhere from 5% to 10%, depending on your credit score and the bank’s offerings.

Repayment Schedules

When it comes to paying back that loan, Canadian banks generally offer flexible repayment schedules. Personal loans typically span from one to five years, giving you the option to choose a term that fits your budget. Monthly payments are usually fixed, so you’ll know exactly how much is coming out of your account each month—no surprises there.

For students, many banks offer grace periods or deferred repayment options, especially on student loans or lines of credit. This means you might not have to start repaying until after graduation, giving you some breathing room to focus on hitting the books.

How Much Can You Borrow and What Are Banks Looking For?

So, how deep are the banks’ pockets? The amount you can borrow varies, but here’s what they’re sizing up when you apply:

• Credit Score: Your credit history is king. A solid score can get you better interest rates and higher loan amounts. If your credit report is as thin as a maple leaf, you might face some limitations.
• Income and Employment: Banks want to see that you’ve got a steady stream of income. This could be from a part-time job, internships, or any other reliable source. Proof of income reassures them that you’ll make your payments on time.
• Debt-to-Income Ratio: If you’re already juggling other debts—like credit cards or existing loans—they’ll take that into account. A high ratio might make banks hesitant to lend more.
• Collateral: For secured loans, offering something valuable (like a car or other assets) as collateral can boost your chances and potentially lower your interest rate.
• Relationship with the Bank: Being an existing customer can sometimes tip the scales in your favor. If you’ve maintained a good standing with your bank, they might be more inclined to approve your loan.

Canadian Banks for Investments

Looking to grow your savings without the rollercoaster ride of the stock market? Guaranteed Investment Certificates (GICs) might be just the ticket. GICs offer a safe, no-nonsense way to earn interest on your money over a fixed term. With interest rates on the rise, now could be an excellent time to consider them as part of your investment strategy.

What’s the Deal with GICs?

GICs are straightforward: you deposit your money with a bank or financial institution for a set period—anywhere from 30 days to 10 years—and in return, you get your principal back plus guaranteed interest. Generally, the longer you lock in your money, the higher the interest rate you’ll receive. They’re especially handy if you have a short-term savings goal, like buying a car, planning a wedding, or setting aside tuition fees.

Current GIC Rates in Canada

Thanks to recent shifts in the Bank of Canada’s policy interest rate, GIC rates have become more attractive. Here’s a snapshot of some of the top GIC rates available right now:

Highest GIC Interest Rates (Non-Redeemable)

• Best 1-Year GIC:
  • Hubert Financial – 4.65% (Minimum investment: $1,000)
  • Achieva Financial – 4.60% (Minimum investment: $1,000)
• Best 2-Year GIC:
  • Achieva Financial – 4.50%
  • Hubert Financial – 4.55%
• Best 3-Year GIC:
  • Achieva Financial – 4.30%
  • Saven Financial – 4.20%
• Best 5-Year GIC:
  • Achieva Financial – 4.20%
  • Saven Financial – 4.10%

For comparison, here’s how some of Canada’s big banks stack up:

Rates are current as of September 20, 2024, and may change.

Why GICs Might Be Right for You

GICs can be a smart choice if:

• You Want Safety: Your initial investment is guaranteed. No ifs, ands, or buts.
• You Have Short-Term Goals: Ideal for saving up for something in the near future without risking your funds.
• You Prefer Predictability: Know exactly how much you’ll earn and when you’ll get it.
• You’re Looking to Avoid Market Risk: No need to fret about stock market volatility here.

Types of GICs to Consider

• Cashable GICs: Offer flexibility to withdraw your money early, usually after a short waiting period like 30 to 90 days. The trade-off is a slightly lower interest rate.
• Non-Redeemable GICs: Lock in your funds for the full term but come with higher interest rates. Great if you won’t need access to the money during that period.
• Registered vs. Non-Registered GICs:
  • Registered GICs are held within accounts like TFSAs or RRSPs, providing tax advantages.
  • Non-Registered GICs don’t have contribution limits, but the interest earned is taxable.

Maximizing Your GIC Strategy

Consider the GIC Laddering approach to get the best of both worlds—higher rates and access to your money:

1. Divide Your Investment: Split your total investment equally across multiple GICs with different terms (e.g., 1-year, 2-year, 3-year, etc.).
2. Reinvest Upon Maturity: As each GIC matures, reinvest it into a new long-term GIC.
3. Benefits: This strategy provides regular access to portions of your funds while taking advantage of higher interest rates on longer terms.

Things to Keep in Mind

• Minimum Investment Amounts: These can vary. Some institutions require as little as $100, while others might ask for $1,000 or more.
• Interest Payment Frequency: Some GICs pay interest annually, others at maturity. Choose what fits your cash flow needs.
• Insurance Protection: Most GICs are insured up to $100,000 by the Canada Deposit Insurance Corporation (CDIC), adding an extra layer of security.
• Inflation Considerations: Be mindful of inflation rates. If inflation outpaces your GIC’s interest rate, your real returns might be lower than expected.

Comparing Additional Banking Features

RBC

When it comes to branch accessibility, RBC tops the list with over 1,200 locations across Canada. Their mobile app scores a modest 3.8 on iOS and 3.9 on Android, suggesting there’s room for improvement. Account fees range from $4 to $30, but you can get those waived if you maintain a minimum balance. Depending on your account, you get 12 to unlimited free transactions. Plus, with access to RBC ATMs and over 3,000 others across Canada and the U.S., finding a spot to grab cash is a breeze.

“A strong, reliable bank with room for app improvement.” – Rob Carrick, The Globe and Mail

RBC offers the Avion Rewards program tied to their credit cards, perfect for those looking to rack up travel points. However, it’s worth noting they faced a data breach in 2022, which might make some folks a tad uneasy about security.

TD Bank

TD Bank isn’t far behind with over 1,100 branches and 4,000+ ATMs across North America. Their mobile app scores slightly higher than RBC’s, but users have mentioned it could use some polish. Account fees range from $3.95 to $29.95, but like most big banks, fees can be waived under certain conditions. You get 25 to unlimited free transactions, which is generous for most banking needs.

“Great rewards, but app is lacking some polish.” – Barry Choi, MoneySense

TD’s TD Rewards program is tied to their credit cards, offering points redeemable for travel and other perks. On the flip side, they faced a lawsuit over overdraft fees in 2021, which might give budget-conscious customers pause.

Scotiabank

With about 950 branches, Scotiabank provides decent accessibility. Their mobile app fares well with users, scoring 4.2 on iOS and 3.8 on Android. They offer unlimited free transactions on most accounts, and fees range from $3.95 to $30. One standout feature is their access to over 44,000 ATMs globally through the Global ATM Alliance—great news for frequent travelers.

“Scotiabank continues to improve but customer service is still hit or miss.” – Ellen Roseman, Toronto Star

Their SCENE+ Rewards program is a hit, especially if you’re a movie enthusiast or love earning points for travel. However, a 2023 money laundering probe did put them under scrutiny, which is something to keep in mind.

BMO

BMO offers around 900 branches and access to 2,800+ ATMs across Canada. Their mobile app ratings are a bit lower at 3.6 on iOS and 3.5 on Android, indicating some users aren’t entirely satisfied. Account fees range from $4 to $30, with 12 to unlimited free transactions based on your account type.

“BMO offers decent digital banking options, but branch access is becoming limited.” – Melissa Leong, Financial Post

BMO’s rewards are linked to AIR MILES, which is fantastic if you’re collecting for travel or shopping. They faced a high-fee investigation in 2021, which might make customers cautious about potential hidden costs.

CIBC

Boasting over 1,000 branches and 3,800+ ATMs nationwide, CIBC ensures you’re never too far from in-person banking. Their mobile app shines with ratings of 4.5 on iOS and 4.2 on Android, making it one of the better options among traditional banks. They offer unlimited free transactions, and account fees range from $3.90 to $29.95.

“CIBC’s mobile app stands out among big banks, offering smooth functionality.” – Adam Mayers, Toronto Star

CIBC’s rewards programs include Aeroplan and Cash Back options tied to their credit cards, offering flexibility based on your preferences. While they experienced a mobile banking outage in 2020, they’ve taken steps to enhance reliability.

Tangerine

If you’re comfortable with digital banking, Tangerine is a solid choice. As an online-only bank with no physical branches, they focus on delivering a seamless digital experience—reflected in their high app ratings of 4.5 on iOS and 4.3 on Android. They offer no-fee banking with unlimited transactions, and you can access over 3,500 Scotiabank ATMs for free.

“Tangerine keeps fees low and usability high—ideal for digital-first users.” – Rob Carrick, The Globe and Mail

Their Cash Back credit card offers rewards without the annual fees, a perk for budget-savvy customers. They faced some cybersecurity issues in 2022 but have since bolstered their security measures.

Simplii Financial

Another strong digital contender, Simplii Financial offers no-fee banking and unlimited transactions. Their mobile app scores an impressive 4.4 on iOS and 4.3 on Android. While they lack physical branches, customers can access CIBC ATMs for free, bridging some of the gap between digital and traditional banking.

“Simplii’s simplicity and zero fees are appealing, but lack of physical branches might be a drawback for some.” – Barry Choi, MoneySense

Simplii doesn’t offer a rewards program, which might be a downside if you’re keen on earning points or cash back. They experienced a data leak in 2021, so it’s worth considering how much you value digital security.

EQ Bank

If high-interest savings are your main goal, EQ Bank is worth a look. Operating entirely online with no branches or ATM access, they focus on maximizing your savings potential. Their mobile app holds its own with ratings of 4.3 on iOS and 4.2 on Android.

“Best for savings rates, but not the right choice if you need ATM access.” – Melissa Leong, Financial Post

They offer no-fee banking with no transaction limits, but remember—you won’t have physical access to your funds via ATMs. EQ Bank doesn’t have a rewards program, but their competitive savings rates might make up for that.

Neo Financial

A newcomer shaking up the scene, Neo Financial offers a fresh, digital-first approach. With high app ratings of 4.5 on iOS and 4.4 on Android, users seem to appreciate their platform. They have no branches or ATM network, focusing instead on a lucrative rewards program.

“Neo Financial brings something fresh with a unique cashback system that students and young professionals will love.” – Ellen Roseman, Toronto Star

Neo offers no-fee banking with unlimited transactions and up to 5% cash back through their credit card on everyday purchases—a compelling offer for those looking to maximize rewards.

Motusbank

Operated by Meridian Credit Union, Motusbank provides no-fee banking with unlimited transactions. While they don’t have physical branches, customers can access THE EXCHANGE Network ATMs across Canada. Their mobile app scores 4.3 on iOS and 4.1 on Android, indicating a generally positive user experience.

“Motusbank offers competitive rates, but limited access to physical services.” – Adam Mayers, Toronto Star

Motusbank doesn’t offer a rewards program, but they do provide competitive mortgage rates, which could be attractive if home ownership is on your horizon.

By digging into these details, you can see how each bank offers something a little different. Whether it’s extensive branch networks, top-notch mobile apps, no-fee banking, or enticing rewards programs, there’s a fit out there for everyone’s unique needs. Taking the time to compare these features can help you find the bank that not only keeps your money safe but also makes your financial life a bit easier—and maybe even a little more rewarding.