If you are one of the many Canadians looking for a more convenient option than what traditional banks offer, look no further than online banks like Tangerine.
In 2020, there were about 240.1 million active online banking users in North America, which makes up about 40.5% of the population.
That’s actually lower than Europe (48.6%). Even before the pandemic, when the transition got an additional boost, the rise of digital banking (and the gradual demise of brick-and-mortar banking) was well underway.
And even though most large banks have made the switch and are now focusing more on online banking than their traditional physical branches, online banks like Tangerine still retain their value.
In this Tangerine Bank review, I will explore what this online provider has to offer and whether it’s a good fit for you.
- Full-service banking
- Sufficient banking products
- Great mortgage rates and Home Equity Lines of Credit (HELOC) interest
- Amazing money-back credit card
- Access to 3,500 ABMs
- Decent rates for business savings accounts
- Low chequing and savings account interest rates
- Low GIC rates
- Bad BBB and Trustpilot ratings
- Customer service can be unresponsive and unprofessional
What Is Tangerine Bank?
Named after the refreshing citrus fruit, whose roots can be traced back to Morocco, Tangerine bank can trace its origin back to the ING Bank of Canada, founded in 1997. It was the first of its kind and was a literal test case that aimed to reduce banking costs by focusing on phone banking.
The bank naturally evolved into an online bank, and in 2012, it was acquired by Scotiabank. Later, in 2014, it was christened “Tangerine”.
Whether you call its services “direct banking”, “virtual branchless banking”, or “pure online banking”, Tangerine can be counted among the very first—if not the first—online bank names in Canada. It has no physical branch, and you can take care of all your banking needs online.
Like most other online banks, the concept was to reduce the cost of banking and pass on the benefits of low overhead costs onto the customer in the form of no-fee banking and decent interest rates.
Although it’s not exactly a branch, Tangerine bank has a café in Toronto, where you can interact with Tangerine’s representatives, open up an account, and discuss your financials and banking needs.
Tangerine Banking Products
One problem that traditional banking proponents have with online banks is that they believe these digital banks don’t offer a full range of banking products. And while it may apply to FinTechs that are still in the process of evolving into proper banks or digital businesses that offer a checking account (like robo-advisors), it’s not true for Tangerine.
Canada’s premier online bank offers a comprehensive range of products, thanks mainly to its association with one of the Big Five.
- A chequing account
- Five different savings accounts
- Two credit cards
- Four business accounts
- Investment products (e.g., funds and Guaranteed Investment Certificates)
- Loan products (e.g., mortgage, Home Equity Lines of Credit, and a line of credit)
We will further discuss these products and services below:
1. Tangerine Chequing Account
As a full-service online bank, the first banking product Tangerine had to offer was a chequing account. Tangerine has a no-fee daily chequing account that offers unlimited transactions, a Visa Debit card, and a free cheque book for your first 50 cheques. The interest rates you earn depend upon how much money you have in your chequing account and are divided into three tiers:
- 0.01% for balances below $50,000
- 0.05% for balances between $50,000 and $100,000
- 0.1% (best rate) for amounts higher than $100,000
It’s one area where other online banks outshine Tangerine. Motus, for example, is currently offering 0.15% interest on each dollar you have in their chequing account.
The Tangerine chequing account allows you access to free automated banking machine (ABM) withdrawals via Scotiabank’s 900 ABMs in the country. Not only does having this account mean an unlimited number of transactions; it also facilitates Interac e-Transfers.
Despite that, one limit that a few users found is that you can’t tap your card for purchases over $100; you’d have to swipe it and enter the pin code.
Up to $100,000 in your Tangerine chequing account is insured by the Canadian Deposit Insurance Corporation (CDIC). You can also connect it with mobile wallets like Apple, Google, and Samsung Pay seamlessly.
2. Tangerine Savings Account
Tangerine offers a full suite of savings account offerings and has already paid out about $9.6 billion in interest to its bankers, thanks mainly to its massive user base. There is no monthly fee for any of the savings accounts and no minimum balance requirement, which is a plus.
The five savings accounts are:
Savings Account: The interest rate doesn’t go beyond 0.1%, but there are no tiers. You can start earning 0.1% interest on any dollar amount in your Tangerine savings account.
Tax-Free Savings Account (TFSA): You can earn up to 0.1% interest with no service charges or unfair fees.
Retirement Savings Plan (RSP) Savings Account: You can get up to 0.1% interest, with no minimums or unfair fees.
U.S. Dollar Savings Account: Tangerine offers 0.1% interest with no unfair fees for this savings account type. The conversion rates for buying can be 3.6% higher compared to selling.
Retirement Income Fund (RIF) Savings Account: Tangerine’s RIF Savings Account provides 0.15% interest, with no minimum balances or unfair fees.
Like the interest rates on its chequing account, the savings account rates don’t really compare very well against the competition. You can easily get ten times the returns when you use other banks, especially on a TFSA or RRSP savings account.
However, there is still a reason why many people prefer to bank with Tangerine: accounts like TFSA and RRSP are more for investing than they are for plain saving. Furthermore, if you invest most of your money in stocks and funds, you might prefer the ease of moving your money around with no or minimal transfer fees than higher interest rates.
3. Tangerine Credit Cards
Credit cards are one area where Tangerine online bank really shines. It offers two credit cards:
Money-Back Credit Card
Tangerine’s Money-Back Credit Card might be among the best credit cards in Canada since it’s one of the few that comes with no annual fee. Also, its cashback flexibility means that you get up to 2% back on two categories of your choice, like gas, recurring bills, and grocery. There are ten categories in total, and many usually earn a smaller cashback on other credit cards.
Aside from that, you can also earn 0.5% cashback on all your other everyday purchases. The interest rate on cash advances and purchases is the same at 19.95%, which is a bit unusual. Note also that the penalty for dishonoured payments and over-limits is $25.
To qualify, you must at least have a gross annual income of $12,000, be a legal adult, be a permanent Canadian resident, and be clear of bankruptcies for the past seven years.
If you have a gross annual income of $60,000 or more, you will be eligible for the World Mastercard option. You can get up to 2% money-back rewards on your two favourite expense categories or 2% on three categories if you opt for your cashback to be placed into a Tangerine Savings account.
The categories for cash back, penalties, and interest rates are the same as those of the Money-Back Credit Card. However, World Mastercard has more travel-centric rewards and offers mobile device insurance of up to $1,000 if you buy the device using this card.
Moreover, World Mastercard comes with various discounts, such as subscription services, rental car collision or loss damage insurance, travel rewards, and airport experiences with LoungeKey.
Suffice to say, credit cards are one area where Tangerine trumps its competition.
4. Tangerine Business Accounts
While Tangerine business accounts offer significantly more generous interest rates compared to its regular accounts, there is one problem. Tangerine doesn’t offer a business chequing account, which means that for day-to-day transactions, you’ll have to open a business chequing account with either a credit union or a Big Five bank. For example, the Bank of Montreal’s e-Business Plan is a popular choice.
In this regard, Tangerine is somewhere in the middle of regular digital banks in Canada, most of which don’t offer a business account at all, and regular banks or credit unions that offer both business chequing and savings accounts. The good news is that the business savings account offers no monthly fee and no minimum balance requirements.
It offers four business savings accounts:
Business Savings Account: Earn an interest of 0.25% for any balance under $100,000, 0.45% for $100,000 to half a million, and flat out 0.5% for sums above that.
Business U.S. Dollar Savings Account: The bank offers 0.2% interest on this type of business savings account.
Business Guaranteed Investment (GIC): With a Tangerine Business GIC savings account, you can start earning 0.2% interest for 90 days and a maximum of 1.5% for five years.
Business U.S. Dollar Guaranteed Investment (GIC): The Tangerine Business US$ GIC savings account offers an interest rate starting at 0.1% for 90 days and not more than 0.7% for five years.
One thing you need to keep in mind is that even if your money isn’t tied up in a GIC, it might still take up to two days to move money from a business savings account to a business checking account. So, you have to balance the advantage of its great interest rates with your need for convenience.
5. Tangerine Investment Products
For individuals, Tangerine offers two main kinds of investment products: GICs and Investment funds. While both come in a variety of individual components and accounts, there are some general characteristics that you need to know about.
For all Canadian GICs, such as Regular, TFSA, RRSP, and RRIF, the rates reach up to 1.5% max. For Tangerine’s one-year GICs, the rates are generally around 0.6%. On the other hand, the USD GICs carry different rates: 0.2% for one-year and 0.7% for five-year GICs. There is no monthly fee for holding the GICs.
Tangerine offers two different kinds of portfolios: Core Portfolios and Global ETF Portfolios.
It has five core portfolios, mostly made up of Canadian equities and bonds. All of them carry a Management Expense Ratio (MER) of 1.06% and are actively managed. The expense is higher compared to robo-advisors like Wealthsimple, but it’s actually lower if you compare it to mutual funds.
The Balanced Growth Portfolio in Tangerine’s Core Portfolio offers an 8.2% ten-year annualized return. Even if you take out the 1.06% fee, the returns are still quite decent.
Know that global ETF portfolios carry an even lighter MER of 0.77%. In fact, three out of five core portfolios have assets over $1 billion.
If the fund’s historical returns justify its high MER in your opinion, Tangerine investment funds can be a great, passive way to invest. Note, however, that you don’t have any power over your investment portfolio, and you can’t trade with a Tangerine investment account.
6. Tangerine Loan Products
A full-service bank wouldn’t be “full-service” if it doesn’t have any loan products. And while Tangerine doesn’t offer personal loans, it does offer a line of credit, in addition to mortgage and HELOC.
For mortgage, Tangerine might be a good option for long-term, ten-year, fixed mortgage rates because it stands out against conventional banks and mortgage lenders.
For ten-year fixed mortgages, Tangerine’s current rates at 3.09% are easily among the best. There is a lower threshold on the mortgage amount, too, at $250,000, and the rates are guaranteed for up to 120 days. In addition to that, prepayment rules are quite flexible.
In spite of it, Tangerine’s rate for five-year fixed-rate mortgages falls short of the rate from other digital banks like Motus or EQ.
Tangerine’s Home Equity Line of Credit loan products are currently among the best in the Canadian market, even compared against other digital banks. Tangerine currently offers an interest rate of 2.35%, which is 0.1% lower than the Tangerine Prime Rate. You can also take advantage of a fixed payback plan.
Line Of Credit
Tangerine doesn’t provide specific rates or guidelines about the Line of Credit that Tangerine clients can get. However, it does state that you will get rates based on Tangerine’s Prime Rate plus an adjustment factor, which may be determined by your income, credit score, and history with Tangerine, among others.
Tangerine’s loan products are decent, and some of them, like HELOC, is top of the line, even compared to other digital banks. This is a stark contrast to its interest rates and GICs.
Tangerine is as big as digital banks usually get, especially in a country where the conventional Big Five banks have consolidated most of the market. The bank has over 1.9 million clients and has been number one in the best mid-sized banks for customer service in Canada for ten consecutive years, according to a JD Power study.
Yet, it fails abysmally in its Trustpilot and BBB ratings:
- BBB: B- BBB rating and 1.36/5 customer rating based on 14 reviews
- Trustpilot: Bad (1.4/5) based on 779 reviews
Most bad ratings seem to be about lack of personal banking and unresponsive customer service.
The application ratings, however, are not so bad:
- Google Play Store: 3.4/5 based on 8,437 votes
- Apple Store: 4.7/5 based on 2,205 reviews
One analysis that generously falls in Tangerine’s favour is that people who can handle most things online are satisfied with Tangerine. On the other hand, people who can’t, either because of their personal banking style or they need a problem resolved, may dislike Tangerine.
Is Tangerine Safe and Legit?
Yes, and yes. As a wholly-owned subsidiary of one of the big five, Tangerine carries quite a bit of credibility. That’s in addition to its own roots as ING Direct, a one-of-a-kind bank at the time of its inception.
Another layer of safety is its CDIC backing. It’s important to note that its CDIC membership is not a result of it being a subsidiary of Scotia Bank; it’s a member in its own right. Hence, the CDIC insures Tangerine funds directly. The $100,000 cap might not seem ideal, but the protection is offered per name registration.
If a person has $100,000 or less in a Tangerine chequing account, Tangerine RRSP savings account, and Tangerine TFSA account or GIC, each of these accounts and their respective amounts will fall under CDIC’s protection.
It also offers other more widely accepted security features like two-factor authentication, Interac and Visa Zero Liability policies, and SecureChip technology.
To conclude, yes. It’s safe to bank with Tangerine.
Is Tangerine better than RBC or any of the other Big Five banks?
Ans.: Yes and no. All the Big Five now offer digital banking and more banking products compared to Tangerine. But as a pure-breed digital bank, Tangerine might offer better interest rates on a few of its banking products.
Is Tangerine Mortgage good?
Ans.: If you only compare by rates and you’re looking for a ten-year fixed mortgage, then yes. If you’re looking for a five-year fixed mortgage, then no. However, it does offer softer prepayment terms.
Can I deposit cash into my Tangerine account?
Ans.: Yes, but there is essentially one way of doing it. You can use one of Scotiabank’s ABMs to deposit cash into your Tangerine account.
Does Tangerine have any fees?
Ans.: As stated on its website, Tangerine has no unfair banking fees. However, there are certain fees and penalties related to some banking services like a new card or a second chequebook.
Where can I withdraw my money from Tangerine?
Ans.: You can use any Scotiabank ABM to withdraw money from your Tangerine account.
Where is Tangerine bank located?
Ans.: Tangerine’s head office is located in Toronto. However, this physical location doesn’t offer any banking services or assistance. Still, they have a café (a branch-equivalent) located in Toronto that you can go to if you need any face-to-face interaction or assistance from Tangerine personnel.
Does Tangerine work with mortgage brokers?
Ans.: No. Tangerine sells mortgages directly. If you apply for a mortgage with Tangerine, they will assign you a dedicated mortgage account manager who will help you with your mortgage calculations and the whole process.
Tangerine Alternatives And Competitors
As a digital bank, Tangerine can be more aptly compared with other digital banks.
Tangerine vs. Simplii
Simplii boasts over 2 million users, even though it’s younger and was founded in 2017. It’s a division of the Canadian Imperial Bank of Commerce (CIBC) and also offers no-fee banking. Its interest rates on the chequing account are lower at 0.05%, while the interest rate for the savings account is the same as Tangerine’s at 0.1%.
Simplii has one credit card with higher cash advance interest rates. However, Tangerine wins with its cashback offers. The mortgage rates are a bit higher as well. Although both banks have almost the same number of 3,400 ABMs, Tangerine may have a slight edge.
For instance, Simplii’s Trustpilot rating is even worse than Tangerine. Tangerine also allows you to set up external accounts from its website, while the process is quite difficult with Simplii. However, Simplii does offer personal loans.
Tangerine vs. EQ Bank
EQ Bank’s rates for savings accounts blow Tangerine’s out of the water. EQ Bank’s interest rates are usually among the best in the country, but that’s about it. It doesn’t offer a chequing account, has a maximum cap of $200,000 on a savings account, and doesn’t have a credit card.
Additionally, EQ’s GIC rates are also a bit higher than Tangerine’s. Although it doesn’t offer mortgages, it does offer a mortgage marketplace like an aggregator or broker service). Furthermore, you don’t have access to ATMs and free cash withdrawals. Simply put, EQ bank may be great for saving, but it can’t fulfill all your banking needs like Tangerine can.
Tangerine vs. The Big Five Banks
Although it can be argued that right now, Tangerine is essentially an extension of one of the Big Five banks, it’s radically different from a conventional bank.
Tangerine still benefits from Scotiabank’s backing, though, and offers a much broader range of banking products than other digital banks do. But, there are areas where it can’t mimic the Big Five, like the range of credit cards, loan products, and investment products that they offer. Also, it doesn’t allow you investment freedom, whereas some products from the Big Five banks can.
We hope this Tangerine review helped you realize whether it’s the right online bank for you or not. Tangerine has an impressive presence, a decent history, and is backed by a century-old financial institution. It’s also trustworthy and easy to use. Even though it has its flaws and limitations, it’s a complete banking solution by itself.
Not only that, but some of its banking products, like its money-back credit card and ten-year fixed mortgage, far outshine its competitors. For this reason, along with its holistic approach to digital banking, Tangerine gets a (gentle) Wealthawesome nod of approval (not an overwhelming one).
If you sign up here, you can take advantage of the higher cashback and there might be a promotional interest rate that Tangerine offers for a limited time.