Battle of the (Online) Banks: EQ Bank vs. Tangerine

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by Ratehub.ca January 9, 2020 / No Comments

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As online banks increase in availability, so do their comparisons. EQ Bank vs. Tangerine has become a common one among financially savvy Canadians seeking the best savings and investment options, but which of the two digital banks is better for your financial growth?

The short answer is: both are great—but for different reasons.

On the one hand, EQ Bank provides incredible rates and flexibility for its savings accounts and Guaranteed Investment Certificates (GICs). On the other, Tangerine offers plenty of banking options. Below is a comparison of the two digital banks’ High-Interest Savings Accounts (HISAs) and Guaranteed Investment Certificates (GICs), as offered by EQ Bank and Tangerine.

A comparative review: EQ Bank vs. Tangerine

EQ Bank and Tangerine are two titans of Canada’s direct banking industry. Both digital banks rightfully earned the attention of Canadians for their exceptional interest rates.

EQ Bank’s simplicity and flexibility as a savings account is highly favoured among financially savvy Canadians. The bank’s GIC rates are also a hit among Canadians that want to beat inflation as well as flexibility when it comes to rigid GICs.

Tangerine’s no-fee banking products have also earned respect and patronage from an impressive majority of Canadians.

This EQ Bank vs. Tangerine review will take a look at two products that the banks mutually share: High-Interest Savings Accounts and Guaranteed Investment Certificates.

EQ Bank vs. Tangerine: High-Interest Savings Accounts

High-interest savings accounts (HISAs) are savings accounts with an interest rate higher than 1.05%. A high-interest savings account is an excellent financial tool that keeps your money’s value in-pace with inflation. If a HISA is below Canada’s current inflation rate, that money’s value slowly decreases.

Since high-Interest savings accounts are non-registered accounts, they do not have contribution limits. However, interest earned in a HISA is subject to taxation.

Interest earned on savings is treated as income, and therefore, taxable. Interest on savings are taxable according to your income tax bracket. If you don’t like the idea of the interest you earn is taxed, a Tax-Free Savings Account (TFSA) might be a more suitable option.

EQ Bank and Tangerine Bank both offer a mobile app that provides seamless money transfer between accounts.

This chart provides a brief overview of the features of an EQ Bank and Tangerine HISA.

Feature EQ Bank HISA Tangerine HISA
Interest Rate 2.00% 2.80%, 0.4% after six months.
Free Interac e-Transfers Free Free
International Money Transfers Yes No
Account Linking Yes Yes
Minimum Balance Requirement None None
Monthly Fees None None
Non-Sufficient Funds Fee None $40
Mobile App Yes Yes
Overdraft Protection No Yes
CDIC Insurance Yes Yes
1st Year Return on $5,000 $115* $70**

*At the end of the first year of investing $5,000 at an interest rate of 2.00%, an EQ Bank high-interest savings account can provide a return of $115.

**At the end of the first year of investing $5,000, Tangerine customers can earn $70 with a Tangerine High-Interest Savings Account.

The EQ Bank Savings Plus Account

EQ Bank is a digital bank account owned and operated by Equitable Bank, Canada’s 9th Largest Schedule 1 Bank. It works entirely online, meaning there are no physical branches.

An EQ Bank Savings Plus Account acts like a chequing account, though the online bank does not offer one. It does not provide a debit card or chequebooks.

However, the bank account offers an interest rate of 2.00%, direct and mobile cheque deposit, and unlimited Interac e-Transfers and account linking, allowing for seamless fund transfers. For more information about EQ Bank, read our EQ Bank review.

While only a minor disadvantage, an EQ Bank Savings Plus Account has a contribution limit of $200,000.

EQ Bank also offers international money transfers through TransferWise. Now, EQ Bank customers can send money to India, the Philippines, the United States, and Europe, among many other countries, for a price approximately eight times cheaper than major banks or competing money transfer services.

The Tangerine Saving Plus Account

Tangerine offers every financial product offered by major banks—without the major bank fees. As the direct-to-consumer division of Scotiabank, Tangerine Bank products include Chequing Accounts, Savings Accounts, GICs, and various other products. Recently, Tangerine introduced free Interac e-Transfers.

The Tangerine Savings Plus Account offers an interest rate of 1.05%. The digital bank also offers a US bank account with an interest rate of 0.45%.

Tangerine also offers credit cards, lines of credit, and mortgages, to name a few additional products.

Want to see how your savings account compares to the rest? Compare Best Savings Accounts

 

EQ Bank vs. Tangerine: Guaranteed Investment Certificates (GICs)

Guaranteed Investment Certificates (GICs) are investments that come with insurance in their principal investment and the interest that they earn. Depending on the type of GIC, interest is guaranteed.

GICs are investments that differ by the term’s deposit length. Terms on GICs can be as brief at a month and as long as ten years. On that note, funds deposited into a GIC are not accessible until the term reaches its end date, also know as the GIC reaching maturity.

Unlike HISAs, there are quite a few different types of GICs. GICs can avoid taxes on interest by being placed in a registered GIC, such as a TFSA GIC or an RRSP GIC. Non-registered GICs are regular GICs that are taxed once they’ve reached maturity.

GIC Term EQ Bank GIC Rate* Tangerine GIC Rate*
3 Month 2.33% 0.50%
6 Month 2.35% 2.00%
9 Month 2.38% 2.15%
1 Year 2.40% 2.15%
15 Month 2.41% N/A
1.5 Year N/A 2.20%
2 Year 2.45% 2.20%
27 Month 2.46% 2.20%
3 Year 2.50% 2.20%
4 Year 2.55% 2.20%
5 Year 2.65% 2.20%

*Rates current as of January 9, 2020

EQ Bank Guaranteed Investment Certificates (GICs)

EQ Bank places itself among Canada’s best GIC rates, as well as having some of the most flexible options for such a conservative investment.

EQ Bank offers non-registered GICs with terms as short three months and as long as five years. All terms require a minimum investment of $100. Investors have the option of reviewing the interest they receive on GICs annually or at maturity.

Rates start at 2.33% and go as high as 2.65%. If you are interested in purchasing GICs through EQ Bank, a High-Interest Savings Account with EQ Bank must as well. Both accounts are free to open.

Tangerine Guaranteed Investment Certificates (GICs)

Among many Tangerine products are GICs. GICs comes with some of the best options and interest rates currently available in Canada.

Tangerine offers GIC terms ranging from 3 months to 5 years in length, with rates ranging from 0.50% to 2.20%. Minimum deposits to purchase Tangerine GICs cost as little as $1.00.

Tangerine GICs come with various investment options, such as Retirement Savings Plan, Registered Income Plan, Tax-Free, and US Account Guaranteed Investment Certificates.

Since Tangerine offers many types of GICs, it’s a suitable option for people who want to diversify their GIC investments.

One downside to Tangerine’s GICs is that terms are not as flexible as the ones provided by EQ Bank.

Compare the Best GIC Rates in Canada Compare GIC Rates

 

Bringing It All Together: EQ Bank vs. Tangerine

Using an EQ Bank account in union with a Tangerine account can make an excellent banking experience for Canadians looking to save on banking fees without having to sacrifice high-interest rates.

EQ Bank offers an overall higher interest rate on its high-interest savings account than Tangerine. The same goes for its GICs, which currently hold some of the best GIC rates on the market.

That why using a Tangerine chequing account with an EQ Bank account allows you to have the advantages of a free chequing account with a savings account, along with EQ Bank’s incredible GIC rates and terms.

If a higher interest rate on your hard-earned money is what you’re focusing on right now, then EQ Bank would be your best bet. You can always supplement it with free chequing accounts from banks like Tangerine.

When it comes down to choosing between two banks, the one with the highest interest rates usually takes the cake. It is important, however, to always consider what your essential needs are when saving with a HISA or investing in GICs.

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