EQ Bank Review 2023: What you need to know
We’ve spent out last couple of reviews looking at several different credit unions across Canada. We’ve explored the basics of those financial institutions, explained how they resemble and how they differ from traditional banks, and the services they offer.
But today we’re going to shift our focus for bit. While all the credit unions we’ve looked at recently have had an online presence, they have ultimately been brick-and-mortar institutions with physical branches across the various provinces they serve. In other words, even though their members likely find the credit unions’ online banking options useful and convenient, each credit union nevertheless needs to maintain a physical presences in order to fully serve its customers
This is not so with today’s subject bank. Today, instead, we’re going to look at EQ Bank, a unique financial institution that is truly a product of modern times. So keep reading to find out what EQ Bank has to offer.
About EQ Bank
EQ Bank is an online-only financial institution, meaning it has no brick and mortar branches. But to be sure this doesn’t make EQ Bank any less legitimate. Indeed, EQ Bank is a trademark of Equitable Bank, a federally regulated Schedule I Bank with over 900 employees and total assets under management of approximately $33 billion.
As you can see, EQ Bank isn’t just another start-up that’s seeking to disrupt an established industry. Equitable Bank, rather, is the industry! Founded in 1970, Equitable Bank has accumulated a wealth of knowledge and experience in the financial industry over the last 50 years. Equitable Bank leveraged this experience to create a truly unique type of financial institution.
Built expressly for “today’s go-anywhere, do-anything world,” EQ Bank’s sole mission is to help its customers grown their savings. EQ Bank takes full advantage of its lack of brick and mortar branches. No physical branches means EQ Bank enjoys significantly less overhead than traditional banks. After all, not maintaining a physical presence means no construction costs, no mortgage or rent payments, no utility payments, physical security costs, nor any other type of overhead expense required to maintain a physical branch.
Equitable Bank is a member of the Canada Deposit Insurance Corporation, which means your money at EQ Bank is eligible for deposit insurance.
The CDIC is a federal corporation charged with ensuring the stability of the Canadian financial system. Established by Parliament in 1967, the CDIC insures deposits in chequing accounts, savings accounts, and GICs up to a maximum of $100,000.
Deposit insurance corporations, in general, are designed to prevent “runs” on banks. A “run” happens when a large portion of bank’s depositors lose confidence in the institution around the same time and all rush to withdraw their money at once. Because banks don’t keep all the cash deposited with them on hand, they are unable to meet the demand for withdrawals, causing the bank to fail. Deposit insurers, therefore step in to mitigate depositors’ worry that they won’t be able to withdraw their money and to make depositors whole when a bank does fail.
The CDIC has made over 2 million Canadian depositors whole by reimbursing their deposits after various financial institutions’ failure since its inception.
Personal financial services
EQ Bank is different from the other financial institutions we’ve looked at recently. It does not offer a full suite of financial services. Instead, EQ Bank focuses its effort on doing just one thing very well: helping Canadian depositors grow their savings. EQ Bank, therefore, offers only a limited array of financial services all designed to facilitate passive growth of its depositors’ savings.
EQ Bank is built for a particular purpose, and we think it achieves its purpose well. EQ Bank accordingly could fit in nicely to a larger financial plan.
EQ Bank Personal chequing accounts
Although EQ Bank does not offer chequing accounts, the EQ Bank Savings Plus Account can function like a chequing account and can be used to pay bills and also transfer money instantly.
We mentioned earlier that EQ Bank is dedicated to a single purpose and it makes sure to fulfill that purpose better than any other financial institution. Well, saving is what EQ Bank is built for. So, unsurprisingly this is where EQ Bank shines.
EQ Bank offers two financial products: their unique EQ Bank Savings Plus Account and the Guaranteed Investment Certificate, or GIC. So, without further delay, let’s dive into EQ Bank’s offerings.
The Savings Plus Account is EQ Bank’s flagship product. Its key feature is an astronomical (by savings account standards) interest rate of 2.50%*. EQ Bank requires no account minimum, so you can take advantage of EQ Bank’s high-yield savings account regardless of your financial circumstances. EQ Bank calculates interest daily and pays interest monthly.
The Savings Plus Account comes with a host of additional features. Customers can maintain an account balance of up to $200,000, all the while never incurring account maintenance fees or transaction fees (except for international money transfers). The Savings Plus Account provides free domestic funds transfers and free transfers between EQ Bank accounts.
The Guaranteed Investment Certificate
The Guaranteed Investment Certificate is a hybrid financial product that is not exclusive to EQ Bank. But that doesn’t stop EQ Bank from putting its signature spin on this venerable tool. Part investment instrument and part savings account, the GIC is a simple, safe, and secure way to grow money at a guaranteed rate of return.
GICs resemble savings accounts in that they involve customers depositing cash with a bank. But they differ in that, once deposited, the customer cannot withdraw their funds for a set period of time. This is where the GIC turns into an investment instrument. Because the customer forgoes his or her right to withdraw the funds at any time, as with a traditional savings account, the bank pays a higher interest rate on the amount deposited in the GIC.
Because all banks, EQ Bank included, make money by taking their depositors’ money, lending it out to other customers, then receiving interest payments from their lending customers, banks like to know they’ll have access to the deposited funds for a guaranteed period of time. In this vein GICs provide security to the bank by ensuring that the depositor will not withdraw their money while it’s lent out to another customer. Because banks, therefore, can be (relatively) sure all funds deposited in a GIC will stay in the account until the certificate matures, banks pay higher interest rates on GICs. By this same token, though, customers cannot withdraw funds deposited in a GIC for a set period of time without incurring a substantial fee. If you’re familiar with US financial markets, the GIC is very similar to the certificate of deposit, or “CD.”
EQ Bank offers GICs ranging from 3 months to 10 years. Predictably, the interest rate that EQ Bank pays increases with the length of time the GIC takes to mature.
Below are the interest rates that EQ Bank pays on its GICs as of this writing:
– 3 months: 3.10%
– 6 months: 3.60%
– 9 months: 3.75%
– 1 year: 5%
– 15 months: 4.95%
– 2 year: 4.75%
– 27 months: 4.70%
– 3 years: 4.55%
– 4 years: 4.40%
– 5 years: 4.30%
– 6 years: 4.10%
– 7 years: 4.10%
– 10 years: 4.10%
Lastly, we should note that EQ Bank offers its products only to Canadian residents who have reached their province’s age of maturity (either 18 or 19 years old), and its accounts operate exclusively in Canadian currency at this time. Additionally, the EQ Bank Savings Plus Account is not available in Quebec.
Business financial services
EQ Bank does not offer financial services to businesses at this time. EQ Bank’s savings accounts are for personal customers only.
EQ Bank does not offer traditional investment products such as stocks, bonds, or mutual funds. Its high-yield savings account and especially its GIC, however, are a form of safe and guaranteed investment tool that allows customers to grown their money without facing the risk and volatility of the stock market.
Despite its lack of a physical presence and smaller quiver of financial products, EQ Bank is not without additional perks.
New EQ Bank Debit card
EQ bank is now offering a debit card with great features:
- Free withdrawals from any ATM in Canada
- Cash back on every purchase
- Earn 2.50% interest right up until you spend
- No FX fees, monthly fees, or hidden fees
The EQ Bank mobile app
Given its nature as an online-only bank, it’s unsurprising that EQ Bank offers an industry-leading mobile app. The EQ Bank mobile app allows customers to take care of their banking any time and from any place with an internet connection. The app supports both facial and fingerprint recognition to make signing in a breeze. It also allows customers to instantly transfer funds between others’ EQ Bank accounts, making mobile payments secure, fast, and easy.
Additional features include photo cheque deposit, online bill payment, account alerts, and access to account documents.
Cheap international money transfers
EQ Bank has partnered with TransferWise to provide low-cost international money transfers. Integrated into EQ Bank’s online banking platform, TransferWise allows EQ Bank customers to send funds around the world up at the real exchange rate, without any markups. EQ Bank allows customers to send up to $9,500 per day.
How does EQ Bank stack up to the competition?
EQ Bank is not the only Canadian financial institution to offer a high-yield savings account. But its commitment to transparency sets it apart from other banks. EQ Bank provides access to nearly any information a potential customer could want to know before entrusting EQ Bank with his or her money. EQ Bank’s partnership with TransferWise also could prove very valuable for those customers who frequently send money abroad.
EQ Bank is not a one-stop shop for all your financial needs. But it also isn’t designed to be one. Rather, it’s designed to be just one part of a larger financial plan. For Canadians who don’t need in-person banking services, for those looking for an institution that provides a high-yield CIG, or simply want to transfer your savings to an institution that pays a higher rate, EQ Bank may be able to help. But as always, we encourage you to check them out or give them a call before deciding whether they’re right for you.