By: Dominic Licorish on July 17, 2017
Thanks Dominic Licorish for sharing the following facts and insights into two no fee/low fee banking powers in Canada.
“When I graduated a few years ago, I found myself suddenly racking up nearly one hundred dollars a month in transaction fees just for doing regular banking with one of the big banks.
I decided it was time for some change.
Luckily, a friend of mine told me there are online banks that won’t fleece me — offering free chequing accounts and no-fee credit cards. Committed to ditching fees in whatever way I had to, I signed up with the first one I stumbled upon: President’s Choice Financial.
PC Financial was my first foray into the world of financial products beyond the big banks. More recently, I opened up an account with PC’s closest competitor — Tangerine. This was more out of necessity, because it was one of the only banking options available that would allow me to convert Canadian dollars to Bitcoin on a coin exchange website.
PC Financial and Tangerine are the top players in online-first, low-fee banking. And now that I have accounts with both institutions, I decided it was a good time to take a deep dive and explore which one does the whole online banking thing better.
So here’s a quick breakdown for those who might be unfamiliar with online banks, and which one I felt was better for my daily banking needs.
Who’s who in the online bank world?
PC Financial and Tangerine (formerly known as ING Direct) are the two main choices available in Canada. Both banks offer a wide range of financial products, including no-fee chequing. They‘re also both operated by a bigger financial institution — CIBC in PC Financial’s case, and Scotiabank in Tangerine’s case. This gives consumers convenient access to the large ABM networks of each bank.
Beyond those two, there are a handful of smaller financial service providers with very limited services. These include players such as EQ Bank, Zag Bank, Oaken Financial, and Alterna Bank. These banks offer high interest savings accounts and GICs. As time goes on, there’s always chances these smaller institutions will add more products, but for now they are just for people who are looking for better interest rates on their savings products — especially with the big banks being stingy when it comes to passing on savings.
Tangerine is the rebranded successor to ING Direct Canada. The reband happened after Scotiabank swooped in in 2012 and bought the company. Since the change in ownership, there’s naturally been concern from longtime customers that their scrappy, alternative bank would lose its competitive edge. However, so far, Tangerine has remained true to its spirit as a low-fee, online bank.
Here’s a quick look at its major offerings.
Chequing — the cornerstone of Tangerine’s product offerings. The no-fee chequing account offers customers:
- Unlimited monthly debit transactions
- Unlimited bill payments
- Free, unlimited Tangerine email money transfers
- Free unlimited access to Tangerine and Scotiabank ABMs and access to 50,000 worldwide ABMs through Global ATM Alliance
- Unlimited instant transfers between accounts, all for free, with no minimum balance
- Accrues small amount of interest depending on acount balance (0.15 – 0.65% as of July 1 2017). That’s not much, but is more than what’s offered by most chequing accounts
Savings accounts — Tangerine offers a range of savings products with relatively high promotional interest rates of 2.4%. Even though the standard rate clocks in at a lower rate, it’s an open secret that savvy negotiators can keep that special rate going indefinitely by calling in to customer support.
- Standard savings account: 0.8% interest rate, 2.4% special offer rate
- Tax-free savings account: 0.8% interest rate, 2.4% special offer rate
- Tangerine retirement savings plan account: 0.8% interest rate, 2.4% special offer rate
- Tangerine US$ savings account: 0.15% interest rate
- Tangerine RIF savings account: 0.8% interest rate
Credit card — Tangerine’s no-fee money-back credit card topped lists for no-fee credit cards when it was first introduced, thanks to its generous cash-back rate of 2% on up to three spending categories of your choice and 1% on everything else. Since then, they’ve scaled back the cash rate slightly, but it’s still the only card that gives you the ability to choose your cash-back categories to suit your spending, making it one of the most potentially lucrative cash-back credit cards available.
Mortgage — Tangerine offers a variety of fixed-rate mortgages, as well as a five-year variable mortgage.
Home Equity line of credit (HELOC) — homeowners can apply for a line of credit by leveraging the equity they have on their home.
Guaranteed Investments — If you don’t like risky investments, you can guarantee a competitive savings rate by locking into a guaranteed investment anywhere from 90 days to five years, with interest rates of 0.5% to 2%.
Some of the special fees
- Cheques: First book of 50 free, $20 per book of 50 after
- Interac e-transfers: $1 each
- Stop payments: One free per year, $10 each after
- Canadian bank drafts: $10
- Non-sufficient funds fee: $40
- Canadian ABM withdrawals (not Tangerine or Scotiabank): $1
- Other ABM withdrawals: $2
Convenience/ customer satisfaction
According to our scan of internet reviews, Tangerine’s customers are usually very satisfied with the service they get from the bank, saying that it’s easy to work with representatives over the phone to resolve problems or clarify processes. Setting up accounts is fairly straightforward and can be done in a matter of days.
Hitting up the Bunz Helping Zone on Facebook, I talked to one woman who uses Tangerine. She explained how after being given wrong information by a representative, she was quickly apologized to and assured that the representative would undergo further training to prevent confusion in the future. In her words, “every single person I’ve spoken to at Tangerine (which is only three people — one in person and two on the phone) have been absolutely wonderful. Kind, professional, helpful and SUPER apologetic for giving me wrong info.”
Tangerine offers limited in-person banking access via “Tangerine cafes” and pop up locations for those who feel more comfortable doing banking with someone they can actually see. But these locations are limited.
PC Financial has been operating in Canada since 1996 and competes with the big banks as far as product offerings go. It operates as a subsidiary of CIBC and offers a range of products. They include:
Chequing — PC offers a no-fee chequing account with:
- Unlimited monthly debit transactions
- Unlimited bill payments
- Unlimited cheques
- Free unlimited access to PC and CIBC ABMs
- Unlimited transfers between accounts (transfers take one day to process)
- Accrues small amount of interest depending on account balance (0.05 – 0.5% as of July 1 2017). That’s slightly lower than Tangerine, but by an insignificant amount
Savings accounts — similar to Tangerine accounts. In an era of low interest rates, these won’t make you rich, but if you negotiate with PC, you may get a higher rate.
- Interest Plus saving account: 0.8% interest rate, competitive special offer rates
- Tax-free savings account: 0.8% interest rate, competitive special offer rates
- Interest Plus RRSP: 0.8%
Credit cards — PC financial offers three no-fee rewards credit cards. While there are minimum income requirements on the premium cards, they are unique for offering free extended insurance benefits and perks normally associated with fee cards.
- PC Financial Mastercard: earn 10 PC points per dollar spent
- PC Financial World Mastercard: earn 20 PC points per dollar spent (in PC stores)
- PC Financial World Elite Mastercard: earn 30 PC points per dollar spent (in PC stores)
Guaranteed Investments — PC offers competitive GICs for anywhere from one year to five years with interest rates of 1.3% to 2%.
Lines of credit — PC offers unsecured personal lines of credit in addition to HELOC.
Personal loans — Apply for flexible loans at both fixed and variable rates.
PC Plus loyalty program — the PC Plus program lets you earn points on purchases that can be redeemed at Loblaws retailers for free groceries and merchandise. When you bank with PC, your opportunities to earn are doubled or tripled, making for a good rewards opportunity for savvy shoppers.
Some of the special fees
- Interac e-transfers: $1.50 each
- Stop payments: $10 – 16.50
- Canadian bank drafts: $7.50 + courier charge if requested
- Non-sufficient funds fee: $45
- Canadian ABM withdrawals (not Tangerine or Scotiabank): $1.50
- International ABM withdrawals: $3.00
- Foreign currency conversion fee: 2.5% of the converted amount
PC has built a solid reputation of good customer service over its decades of service.
Scanning online reviews, many of its customers are happy longtime users who report that not only is it rare that they’ve run into issues with their banking, it’s been easy to resolve said problems. There is also a focus on transparency and clarity in communicating with the customer.
A PC Financial customer I talked to on the Bunz group on Facebook mentioned having both a chequing and savings account. According to the user, they’ve had “no issues so far, and I’ve been with them for about seven years. I have only had to call in for assistance once (when I overpaid a bill) and the customer service was friendly + amazing. She was able to fix my problem and reverse my transaction right away, even though it was like 11:30 p.m.”
Personally, after having my credit card information stolen and charged with purchases I didn’t make, it only took a single phone call to PC Financial to clear the charges off my statement. The customer service agent was very understanding and kept apologizing even though it really wasn’t the bank’s fault. About one week later, my new card arrived in the mail and with another phone call it was activated and ready to go.
I’ve opened accounts at both banks, and while the products themselves are equally competitive, I give PC Financial the edge for my daily banking needs. This is subjective, of course. The deciding factor for me was the free access to CIBC ABMs, which are slightly more common (CIBC claims to have 3,931 machines, Scotiabank claims to have “nearly 3,600” nationwide), as well as the addition of more in-person customer support at their PC Pavilions. Pavilions are located in Loblaws stores, making them easy to find and convenient to access for many people.
The PC Plus program is also a big reason I choose PC Financial over Tangerine. With mindful shopping, I can easily earn more than $100 in free groceries per year, which always feels handy. I also like that I can match the savings rates of other institutions by calling in to talk to the right person, although there’s no guarantee that will work for everybody.
Tangerine is by no means a bad option. For those with more convenient access to Scotiabank, it could even be a better option. It’s also a better option for people who send money via email often and need to move money around accounts instantly. Tangerine also offers greater benefits to someone who does a lot of foreign withdrawals, giving them no-fee access to international ABMs on certain networks.”