It is no surprise that digital banks are on the rise in Canada. With a big push towards digital solutions during the pandemic, digital banking solutions aren’t going anywhere any time soon.
In today’s post, we will compare EQ Bank vs Alterna Bank. These are two financial organizations in Canada that are solely digital; they have no in-person branches and excellent web-based services. I’m going to break down the comparison into the following three categories:
- Everyday banking
Of course, no two things are created equal, so keep on reading to see who wins in each category and who takes the ultimate winner title home.
EQ Bank is a wholly-owned subsidiary of Equitable Bank, the ninth-largest Schedule I bank in Canada. Equitable Bank introduced EQ Bank as its digital banking subsidiary several years ago, and it has been on the rise since.
With its headquarters in Toronto, EQ Bank’s front-runner product is their Savings Plus Account, which boasts a fantastic high-interest rate (currently at 2.50%) and no monthly fees.
Like other digital banks out there, EQ Bank reaps the advantage of having little operating costs (due to the lack of physical branches) and passes on the benefits to its customers in the form of low fees and relatively high-interest rates.
In addition to their famous savings account, they also offer a good range of other personal banking products, such as joint accounts, registered savings accounts, guaranteed investment certificates (aka GIC/term deposit), and mortgages.
A subsidiary of Alterna Savings and Credit Union, Alterna Bank is also a digitalized personal banking platform operating in Canada.
They offer a wide range of products and services, such as no-fee chequing and savings accounts, registered accounts, fully digitalized mortgages, and specialized small business banking solutions.
Because it is owned by a credit union, Alterna Bank is more values and community-driven than traditional banks out there. Again, their values are coupled with the low fees and relatively high-interest rates that characterize digital banks. Alterna Bank is headquartered in Ottowa, Canada.
In this first category, we will compare the everyday banking features of EQ Bank and Alterna. This category applies to simple day-to-day finances, such as chequing and saving accounts and money management.
EQ’s primary everyday banking product is their Savings Plus Account, which is a hybrid of chequing and saving. It gives its user the flexibility of a debit account with fee-free Interac e-Transfers, bill payments, money transfers, along with the benefits of a savings account with a great interest rate of 2.50%.
The account also requires no minimum balances, no monthly fees and offers the convenience of having all of your funds in one place.
It’s important to note that EQ Bank’s everyday banking features are fully digital. This means that they do not offer a debit card, chequebooks, or ATM access.
Due to this reason, it may be a good idea to hold another account at another bank, where you can have access to a debit card and withdraw or deposit cash if you ever need to.
Nonetheless, what makes this account attractive is the interest rate. It’s actually higher than what some banks offer for GICs right now.
Apart from the Savings Plus Account, EQ Bank offers the following for their everyday banking:
- Joint Savings Plus Account (up to three people)
- TFSA Savings Account
- US Dollar Account
EQ Bank does not offer a designated chequing account.
Alterna Bank offers a well-rounded suite of everyday banking products. With a No-Fee eChequing account, High-Interest eSavings account, and TFSA and RRSP savings accounts, you can divide up your funds in a manner that is convenient for you. Here are some of the features of these products:
No-Fee eChequing Account:
- No monthly fee and no minimum balance are required
- Free Interac e-Transfers
- Free Bill Payments, Cheques, Pre-authorized payments, Debit card payments (POS) and ATM withdrawals and transfers
High-Interest eSavings Account:
- No monthly fee
- 0.90% earned on every dollar
- Free and unlimited bill payments, transfers and debits
- Free and unlimited Interac® e-Transfers
Registered Savings Accounts:
- 0.90% earned on every dollar
Alterna does not offer a US Dollar account.
For high-interest savings accounts, EQ Bank is the clear winner. EQ is a great option if you need a place to park your money. It gives you easy access to your funds while earning an excellent interest rate.
For everyday banking purposes, Alterna Bank is the winner. I would say that it’s a very good option if you’re looking for a digital alternative to replace your current bank.
Alterna’s everyday banking features are more well-rounded than EQ Bank as it offers the flexibility of having separate chequing and savings accounts and, most importantly, comes with a debit card to make purchases and ATM withdrawals.
In short, if you’re on the hunt for a new digital bank to manage your everyday finances, go with Alterna. If you have some extra funds that you need easy access to while getting a decent interest rate on it, go with EQ’s Savings Plus Account.
In this section, we’ll compare the investment options at these digital banks to see which one comes out on top.
Please note that your returns with investments are never guaranteed (unless they are a GIC).
EQ Bank offers registered and non-registered guaranteed investment certificates (GICs). Their rates, much like their savings account, are excellent. I’ve outlined these below.
- 6-month non-redeemable: 1.30%*
- 1 year non-redeemable: 1.55%*
- 3 year non-redeemable: 2.40%*
- 5 year non-redeemable: 2.50%*
*GIC rates are subject to change without notice by EQ Bank, see here for updates
You can invest in up to 20 GICs at EQ Bank, and the minimum investment is only $100. EQ Bank does not offer wealth management or options to invest in stocks, bonds, ETFs, or mutual funds.
Alterna Bank also offers GICs, along with other investment vehicles. Here are rates on their GICs, which are the same for both registered and non-registered products.
- 1 year non-redeemable: 1.00%*
- 2 year non-redeemable: 1.15%*
- 5 year non-redeemable: 1.30%*
*GIC rates are subject to change without notice by Alterna Bank, see here for updates
The minimum investment for Alterna’s GICs is $500.
In addition to GICs, Alterna Bank offers the following investment vehicles:
- Direct investing through Qtrade
- Guided portfolios through VirtualWealth
- Personalized wealth and investment advice
When it comes to GICs, EQ Bank is the clear winner. Not only are their rates significantly higher and their terms shorter than Alterna Bank, but they also have a very low minimum investment ($100). This reduces the barriers to getting good returns on your cash.
Nonetheless, Alterna has a more well-rounded investment offering. With direct investments, guided portfolios and wealth management services, you will likely find what you are looking for at this digital bank.
At the end of the day, definitely go with EQ Bank if you’re on the hunt for GICs. You can sign up with them here.
Don’t forget, you can also trade stocks on your own through discount brokers/trading platforms. I have lots of information on Canadian trading platforms on my website, which you can find here.
Lastly, let’s go through the borrowing options at EQ Bank and Alterna. This section would normally apply to homebuying, lines of credit, and credit cards. However, both EQ Bank and Alterna only have mortgage services available.
For personal loans, lines of credit, or credit cards, you will have to visit another financial institution.
EQ Bank does not actually offer a mortgage themselves, but they do offer a free service called the “Mortgage Marketplace.” This offering allows EQ Bank customers to shop for more than 2,000 mortgage products offered by lenders across Canada to get the best rates in the market.
This service is available and free regardless of what mortgage product you end up choosing, although EQ Bank naturally recommends Equitable Bank’s mortgages (EQ Bank’s owner). They even offer an exclusive rate for this mortgage for EQ Bank customers.
In addition to this service, all EQ Bank customers can have access to a mortgage specialist who will recommend you unbiased options for homebuying. In my opinion, these tools can certainly make your borrowing experience much more seamless.
Did you know that Alterna was the first to offer a 100% end-to-end digital mortgage in Canada? They are one of the few fully digital banks out there that actually provide mortgages through themselves and not through third-party financial institutions.
Their mortgages have reasonable rates on both variable and fixed-rate options. The details can be found here.
Alterna Bank mortgages also have some other appealing features that you might want to check out: they permit payments of up to 20% of your original mortgage and waive closing legal fees up to $800. This mortgage is definitely worth checking out if you are on the market.
Please do note that Alterna Bank mortgages are not available to the residents of Quebec.
Because EQ Bank does not offer any loan products themselves, the winner of this section is Alterna Bank. Not only that, but I think that their end-to-end digital mortgage is really innovative and deserves some recognition.
Nonetheless, EQ’s mortgage marketplace is a great tool to learn more about your mortgage options in Canada. In addition, the option to take advantage of a special rate on Equitable Bank’s mortgages can be beneficial for you as well.
Meridian is the largest credit union in Ontario. They serve more than 360,000 members and have more than $23.9 billion of total assets under administration. For a complete list of credit unions in Ontario, you can head to Central 1’s website.
The overall winner of this head-to-head comparison is Alterna Bank. With a well-rounded set of products, they can be your go-to for everyday banking, investing as well as mortgages. If you’re looking for a new digital bank to replace your current one or simply a good all-rounder addition to your banking, they are the way to go.
With that said, some of EQ Bank’s offerings are undeniably attractive and can certainly be good additions to your current banking setup, and it clearly wins for high-interest savings accounts. At the end of the day, your choice should depend on your personal banking needs. The section below should help you in making a decision.
- You are just looking to supplement your current banking needs as opposed to replacing them
- You are interested in guaranteed investment certificates with excellent returns
- You want a new savings account that is a good hybrid between chequing and savings and has a good interest rate
- You are particularly tech-savvy
- You are looking for a new digital all-rounder bank to support all of your banking needs
- You like the flexibility of having separate accounts for your chequing and savings
- You appreciate value-based banking
- You are particularly tech-savvy