EQ Bank Evaluation

I have revised my review of EQ Bank to include details about their newly introduced prepaid Mastercard, which doubles as a debit card. For those who may not be aware, EQ Bank is a digital financial institution known for consistently offering attractive interest rates. Customers do not need to hunt for promotional offers here; the rates are competitive year-round.

While ensuring the safety of your funds is crucial, the quality of customer service is equally significant. EQ Bank aims to deliver enhanced banking experiences that help Canadians achieve their savings objectives more efficiently. Below is my review of the EQ Bank Personal Account.

EQ Bank

Many Canadians express frustration with the meager interest rates provided by traditional savings accounts. The fact that EQ Bank offers a consistent 2.5%* interest rate accessible to all, rather than being a limited-time offer, makes their account particularly appealing. While the high-interest rate certainly captures attention, the additional features of the account are quite favorable as well.

No monthly fees, unrestricted transactions, and no minimum balance requirements are often found in the online banking sector, yet mainstream banks have been slow to adopt similar practices. Given the significant operational costs associated with physical branches and staffing, traditional banks face challenges in offering such advantages. EQ Bank, being entirely digital and branchless, channels those savings directly to its customers.

The EQ Bank Personal Account integrates features commonly found in both chequing and savings accounts. You can deposit cheques (including via mobile deposits) and arrange for direct deposits from your payroll. It is also easy to link an external bank account for straightforward fund transfers.

Access to your money is uncomplicated: link your EQ Bank account with your standard bank account; however, transferring funds may take up to two business days. For quicker access, you can utilize unlimited free Interac e-Transfers®, which allow funds to be accessible within 30 to 60 minutes.

These features should appeal to both savers and investors, offering a secure way to grow your money with guaranteed returns (taxes aside) and no associated risks. Interest accrues monthly with EQ Bank, and there are no holding periods.

Though EQ Bank has established itself over the past few years, some potential users might be wary of the elevated interest rates. Thankfully, EQ Bank operates under Equitable Bank, which is a member of the Canadian Deposit Insurance Corporation (CDIC), guaranteeing account protection up to $100,000.

It’s important to note that upon opening a new account, EQ Bank will perform a soft credit check to verify your identity, but this does not impact your credit score.

Despite these numerous advantages, EQ Bank is not available in Quebec.

EQ Bank Card

• No monthly fee
• Free ATM withdrawals across Canada
• Cashback on all purchases
• Interest earned on savings
• No foreign exchange fees

A notable concern about EQ Bank in the past was the inability to withdraw cash from ATMs, but this has been remedied with the launch of the EQ Bank card. This no-fee, reloadable Mastercard requires an initial transfer of funds, after which you can withdraw cash from any ATM without incurring a fee. Technically, ATMs may impose a withdrawal fee, but EQ Bank will reimburse that cost afterward.

The prepaid card is particularly enticing as it incurs no foreign exchange fees for purchases made abroad. While Mastercard does apply a slight markup during the exchange process, you’ll avoid the typical 2.5% fee charged by many credit cards.

Additionally, any funds loaded onto the card will earn interest at the same rate as the EQ Bank savings account.

Additional Accounts Offered by EQ Bank

• EQ Bank Retirement Savings Plan
• EQ Bank Tax-Free Savings Account
• EQ Bank US Dollar Account

EQ Bank has recently launched RRSP and TFSA accounts, which are distinct from their High-Interest Savings Account (HISA). Note that you must first open an EQ Bank Personal Account to establish an RRSP or TFSA account.

Both the RRSP and TFSA accounts will be limited to savings accounts and GICs, meaning you won’t be able to include stocks, mutual funds, or ETFs. The standard rules regarding contributions and withdrawals apply to these accounts.

The USD account has gained popularity as it also accrues interest on deposits.

Why Choose EQ Bank?

Many individuals hesitate to change banks (largely because the process can be cumbersome), but EQ Bank should not be seen as a replacement; rather, it is designed to enhance your everyday banking experience.

Whether you are saving for a holiday, education, or a new wardrobe, the EQ Bank Personal Account allows the creation of unlimited sub-accounts tailored to your objectives. A key feature is the ability to set savings goals for each sub-account, enabling easy monitoring of your progress. Notably, funds are never locked in with the EQ Bank Personal Account; you can withdraw your money at your discretion.

While the primary focus is on saving, the platform also supports everyday transactions via the mobile app for fund transfers and bill payments. EQ Bank does not permit overdrafts, alleviating concerns about incurring extra fees, though it’s wise to ensure adequate funds are available.

There are no hidden conditions. Despite offering competitive interest rates, EQ Bank operates through a common banking practice: they lend out depositors’ funds at higher rates. As a digital institution, EQ Bank benefits from reduced overhead costs compared to traditional banks.

EQ Bank also accommodates pre-authorized payments, enabling you to utilize one of the best travel or cash back credit cards in Canada while setting up automatic payments from your EQ Bank account. This arrangement allows you to maximize interest earnings while also enjoying credit card rewards.

Although lacking physical branches, customer service is reachable through live chat, phone (from 8 AM to midnight), or email.

EQ Bank Joint Accounts

After a lengthy wait, EQ Bank has finally introduced joint accounts, which are particularly useful for individuals looking to share banking with others. These joint accounts can accommodate up to three users, ideal for situations such as elderly parents granting their adult children ease of access to funds.

The interest rate remains the same for joint accounts, and importantly, the CDIC treats these accounts separately from your individual accounts, providing an additional $100,000 in insurance coverage.

Is EQ Bank Secure?

As mentioned earlier, it bears repeating: EQ Bank is a secure option that is highly unlikely to cease operations. Being owned by Equitable Bank, which has been functioning since 1970 and is affiliated with the Canada Deposit Insurance Corporation (CDIC), you can trust your funds are safe.

Any individual with a CDIC member bank account has deposit protection up to $100,000. For increased coverage, consider your spouse opening a joint savings account, allowing access to an additional $100,000 in protection.

While a bank failure is a possibility for any institution, offering higher interest rates does not necessarily equate to greater risk. Personally, I park most of my cash savings with EQ Bank.

EQ Bank Refer-a-Friend Program

Recently, EQ Bank launched a referral program whereby new account holders receive $20 for signing up. If you refer someone, you’ll also earn $20, with bonuses increasing based on the number of people you bring on board.

• $20 for your first three referrals
• $30 for the following four referrals
• $40 for each additional referral

The referral incentive caps at $500, meaning you will reach that limit after 15 successful referrals. Keep in mind that to qualify for the incentive, your referral must deposit at least $100 within 30 days of activating their EQ Bank Personal Account.

EQ Bank GICs

Another noteworthy offering from EQ Bank is their Guaranteed Investment Certificates (GICs), which ensure a return on your investment. The caveat is that your money must be locked in for a specified duration. Typically, the longer the term, the higher the interest rate. GICs can be advantageous if you are certain that you won’t need to access the funds for a designated period. While EQ Bank’s GIC rates fluctuate, the available terms include:

• 3 Months
• 6 Months
• 9 Months
• 1 Year
• 15 Months
• 2 Years
• 27 Months
• 3 Years
• 4 Years
• 5 Years

To purchase an EQ Bank GIC, you must first have an EQ Bank Personal Account.

How EQ Bank Compares to Others

While it’s accurate that all digital banks have similarities, they can be categorized into different levels.

Motive Financial is EQ Bank’s closest competitor regarding interest rates, while LBC Digital started strong with competitive rates, though they have since decreased.

In contrast, Tangerine and Simplii, which are affiliated with larger banks (Scotiabank and CIBC, respectively), offer access to ATM networks but have lower interest rates.

One area where EQ Bank stands out compared to other online banks is in international money transfers, having partnered with Wise (formerly TransferWise) to provide great exchange rates.

Personally, I utilize EQ Bank for my banking needs but also maintain accounts with Tangerine due to long-standing balances. I have linked my EQ Bank account to Tangerine for seamless money transfers. It’s perfectly fine to use multiple online banks; choose the ones that best serve your needs.

Final Thoughts

In summary, my review of EQ Bank is largely favorable. They provide an above-average interest rate, alongside easy access to your funds via a physical card. It’s evident that EQ Bank values their clients’ funds and respects their business.