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Have you ever wanted a chequing account with a rate as competitive as a high-interest savings account? Well, you’re in luck, because these accounts exist, and while somewhat rare, hybrid bank accounts are great financial products that allow Canadians to earn high-interest on chequing account deposits.
What is a hybrid bank account?
A hybrid account (also known as a high-interest chequing account) is the combination of a high-interest savings account and a chequing account. A hybrid bank account comes with a higher interest rate and with the flexibility of a chequing account.
Like chequing accounts, hybrid bank accounts can be used to make daily transactions, such as point of sale purchases, bill payments, and money transfers. In most cases, regular chequing accounts provide little to no interest. On the other hand, high-interest savings accounts offer interest at a rate higher than 1.05%.
A hybrid bank account combines the best of both financial products into one convenient package.
Who should use a hybrid bank account?
People looking to simplify their banking products by taking a more minimalist approach to banking might benefit from a hybrid bank account.
Financially conscious Canadians can enjoy more of the benefits with fewer products by keeping all of their financial banking products under one hood, which can alleviate any confusion surrounding banking and make it easier to monitor. It can also help cut costs if the account charges no monthly fees.
One major benefit of having access to a hybrid bank account is that keeping money in a hybrid account keeps money deposited into the account earning interest. Chequing accounts, which rarely offer interest, cause funds in an account to lose value over time.
While hybrid bank accounts generally benefit higher deposits, anyone can benefit from combining their chequing account with their savings account.
The best hybrid accounts in Canada
Since hybrid bank accounts are rarely offered by financial institutions in Canada, using several products can replicate a hybrid banking account. Below are hybrid bank account options and alternatives for people seeking to reap the benefits of a high-interest chequing account.
1. Wealthsimple Cash
Though it’s not technically a chequing or savings account, Wealthsimple Cash manages to combine the best qualities from both traditional bank products.
For additional context, Wealthsimple is not a bank or credit union, but an investment management platform that offers a very flexible high-interest chequing account option, known as Wealthsimple Cash.
Wealthsimple Cash comes with no monthly costs and 2.40% interest. It also manages to offer unlimited transactions, bill payments, and fund transfers. The account comes with a sleek tungsten debit card and compatibility with Apple Pay and Google Pay.
Customers can also deposit their paycheck through mobile cheque deposit or direct deposit.
Wealthsimple Cash also offers additional investing options, including registered accounts such as a Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP) options for its robo-advising services.
Wealthsimple is available to all Canadian citizens.
2. EQ Bank Savings Plus Account
A 2020 Personal Finance Awards winner, EQ Bank offers the Savings Plus Account at absolutely no cost to their customers.
The online bank also offers unlimited free e-transfers, making the account a suitable option for using with a no-fee chequing account. EQ Bank Savings Plus Account allows linking other bank accounts for easy money transfers.
Customers can also set-up direct deposit to their EQ Bank Savings Account.
EQ offers an interest rate of 2.45% on all savings account deposits, and, much like a high-interest chequing account, can be used to keep their money parked and accrue interest.
Since this EQ Bank account offers free e-transfers, using it with a no-fee chequing account would save you a substantial amount of money.
To make a great account even better, EQ Bank now offers affordable worldwide money transfers through TransferWise.
EQ Bank is not available in Quebec.
3. Manulife Bank of Canada Advantage Account
Manulife One Bank of Canada is one of the most well-known independent banks. The Advantage Account, Manulife’s hybrid bank account, offers an interest rate of 1.50%.
Customers can use ATMs in the EXCHANGE network at no extra cost. Customers can also use the mobile app to monitor their savings.
With a minimum balance of $1,000, Manulife Financial customers can enjoy the following benefits:
- Unlimited monthly transactions
- Unlimited e-transfers
- Unlimited chequing transactions
- Unlimited self-serve transactions
If the high-interest chequing account balance is below $1,000, the following account fees will apply:
- $1.00 per transaction
- $1.00 for every e-transfer
- $1.50 for every ATM transaction.
Manulife Bank of Canada is available to all Canadian citizens.
4. Simplii Financial No-Fee Chequing Account
Simplii Financial offers almost every financial product that the big banks provide at no monthly cost to their customers. Some of these products include their high-interest savings account and their no-fee chequing account.
Using Simplii’s no-fee chequing account allows cardholders to transfer savings at their convenience using the Simplii Financial mobile banking app, making this account an excellent option for people looking for a high-interest savings account and a chequing account at no cost.
Since Simplii Financial customers can also enjoy unlimited e-transfers, point-of-sale transactions, and cash withdrawals from CIBC ATMs.
Simplii Financial is not available to residents of Quebec.