In the world of high interest savings accounts in Canada, two always stand out above the others, but for very different reasons. The Tangerine savings account and EQ Bank Savings Plus Account are great options for Canadians to get the highest return on their savings, both with pros and cons. This overview will break down both Tangerine Savings Accounts and the EQ Bank Savings Plus account and compare them in terms of which one has the best interest rate, the lowest fees, the best variety of account types and the best usability. Take a deeper look at both accounts and determine which one is best for you, and why it might make sense to have both.
Tangerine Savings Account
I’ve written a bit before about using Tangerine as my day-to-day banking account and the perks of using an online only bank. When it comes to online banking in Canada, I think Tangerine is one of the best options available. But when it comes to holding emergency funds or savings in a savings account, Tangerine isn’t always the best. They offer some great promo’s, like their current bonus offer of a 2.50% interest rate for new customers for 5 months, but their day-to-day interest rates severely fall behind compared to one of their biggest online competitors, EQ Bank.
EQ Bank Savings Plus Account
In the space of online savings accounts in Canada, EQ Bank’s offering has been consistently one of the best interest rates available over the past few year. I’ve written previously about my experience with EQ Bank, and the steps you can take to easily open an EQ Bank Savings Plus account. But does the higher day-to-day interest make it better than Tangerine and it’s promo offers?
Best Day-to-Day High Interest Savings Rates
Interest rates are hard to compare between EQ Bank and Tangerine. EQ Bank is very consistent in the high interest rates that it offers, not relying on ever changing promo rates like Tangerine does. Over the last few years, EQ Bank Savings Plus account has offered between 2.00% annual interest and 2.45% annual interest, only changing slightly once or twice a year. Currently, EQ Bank Savings Plus Account offers 1.70%* as it’s long term interest rate.
Tangerine on the other hand, has a much lower long term interest rate, currently at 0.20%*. That looks pretty abysmal when you compare it to EQ Bank’s current offer of 1.70%* interest. But what complicates things is promo rates that Tangerine offers.
*Rates as of August 2020
Tangerine Promo Rates
Throughout the year, Tangerine will offer various promo rates on their savings account for customers. These short-term promo interest rates have ranged anywhere from 2.00% – 3.50% and can last anywhere from 3 months and 6 months at a time. For example, I am currently on a 2.75% interest rate until the end of June that Tangerine offered me in February.
The catch is, that these promo rates only apply for new deposits to your savings account, so if you already had $5,000 in your savings when you activate a new savings rate promo, the high rate would only apply to anything in your account that is above $5,000.
You also never know when Tangerine is going to offer a promo, some people seem to get offered them at times when other customers don’t. You can also be successful at contacting Tangerine and requesting a promo rate. It’s all a little random unfortunately though.
For new customers, Tangerine is currently offering a bonus 2.50% interest rate for your first 5 months!
So which bank has the best interest rate?
This is where it gets hard to compare. While Tangerine offers higher interest rates in the form of short term promos, EQ Bank offers a much higher long term rate. This is where it makes sense to actually have both an EQ Bank Savings Plus account and a Tangerine Savings Account!
Taking advantage of the best rate at the time
As I’ve mentioned in previous articles, I have both a Tangerine Savings Account and an EQ Bank Savings Plus account. To make sure I’m always getting the best rate, I switch my savings between the two. I start with all of my savings with EQ Bank, to take advantage of their higher long term rate. Once Tangerine offers a promo rate that is higher than EQ Bank, I activate it, and after activated, move all my savings funds from EQ Bank to Tangerine.
After I’ve activated a Tangerine promo, I then put a reminder in my calendar a few days before it is set to end. When the reminder comes up and it’s almost time for the promo interest rate to end, I move all of my savings back into my EQ Bank account. I then wait for Tangerine to offer me another promo, still earning 1.70% while I wait.
I continue this process over and over again, always receiving 1.70% + interest on my savings. It’s very simple and doesn’t take very much time at all.
Best Annual Fee
Both Tangerine Savings Accounts and EQ Bank Savings Plus account have no monthly fee, and no minimum balance. One of the beautiful things about online banking vs in-person bank accounts is that online banking accounts typically come without some of the fees that brick and mortar banks have.
EQ Bank Savings Plus has free Electonic Fund Transfers and Interac e-Transfers. A companion Tangerine chequing account also has free Electronic Fund Transfers and Interac e-Transfer. Read more below on why you might need a companion chequing account when using Tangerine.
Overall, when it comes to fees, for a basic savings account with EQ Bank an Tangerine, they are both totally free!
Best Savings Account Types
One of the major downsides of EQ Bank is the lack of variety of account types that it offers. EQ Bank does not offer registered accounts such as Tax Free Savings Accounts (TFSA), Registered Retirement Savings Plans (RRSP), or Registered Education Savings Plans (RESP). It only offers a regular unregistered savings account.
Tangerine, on the other hand, offers regular savings accounts, TFSA, RSP’s and other options for high interest savings accounts. The option to open multiple and various different account types is a plus when looking at Tangerine.
The downside, though, is that if you follow a cycle such as myself, where you transfer between Tangerine and EQ Bank to get the best interest rate availble, you would want to use unregistered accounts anyways, as you don’t want to face the tax implications of constantly withdrawing and moving funds out of a registered savings account.
Best Savings Account Usability and Access
When it comes to usability, and access to your funds, Tangerine and EQ Bank have slightly different offerings. Tangerine provides the option for a free companion chequing account and Interac bank cards to allow immediate and easy access to any funds you have in your Tangerine Savings account. You can access funds directly through any bank machine, and with free use of Scotiabank ATMs.
While EQ Bank does not provide a bank card to be able to access your savings funds through an ATM, you do get unlimited Interac e-Transfers and Electronic Funds Transfers (EFTs), so it is still easy to use your savings funds to transfer money and pay bills. It is also easy to transfer money between your EQ Bank account and other day-to-day banking accounts. Transfers can take a few days, which means you don’t have immediate access to withdraw it, but if you’re using it as a savings account, you likely don’t need immediate access and can wait a few days.
The Tangerine Savings account doesn’t have Interac e-Transfers or EFTs, but their free chequing account does, so if you sign up for a Tangerine Savings account and get a free chequing account as well, it’s simple and instant to transfer funds between the two accounts, and then have access to e-Transfers and EFTs.
So which high interest savings account should you choose?
When it comes down to it, Tangerine Savings Accounts and the EQ Bank Savings Plus account both have perks and features that make them a great savings account option. If you are a person that just wants to put there savings away, and let it earn the highest interest possible without worrying about it, then EQ Bank is likely your best choice.
But if you want to maximize the money that your savings can earn for you, then I suggest you follow my example, and open both a Tangerine Savings Account and a EQ Bank Savings Plus account. By switching your savings between the two accounts, you can maximize your earnings with very little effort.