banks | Financial Crooks

NOTE: As of December 2016, EQ Bank had reduced its interest rate to 2%. Please check the EQ Bank website for their current interest rate.

OK, so having just started opening an account at Zag Bank to get 2.5% interest for a few months, I’m now changing direction and opening a daily interest savings account at EQ Bank after I checked it out a bit to get 3 percent interest indefinitely, although I’m sure it won’t last the entire year.

NOTE: Unlike some lucky (?) financial writers I am getting absolutely nothing from Zag Bank or EQ Bank for writing these articles. I’m just hoping to get a higher interest rate on my own hard-saved dollars and I’m documenting my trials and tribulations for your edification and amusement.

Who Can Open a Daily Interest Savings Account at EQ Bank?

Now, on January 23, 2016 the rules say you must

be 19 or older
be a Canadian Resident
not live in Quebec
have a Social Insurance Number
have a personal cheque pre-printed with your name, for a Canadian dollar account at a Canadian financial institution that you can make payable to yourself for at least $1 to open the account

You cannot use a credit card cheque.

You cannot use a void cheque.

Why Do All These e-Banks Seem to Need Me to Send in a Cheque from My Own Chequing Account?

These e-Banks are using the other banks’ security systems to ensure you are who you say you are.

In other words, you are not presenting your personal id such as a Driver’s License with a photo or a Passport when you are opening these e-Bank accounts. So they are demanding you provide proof from another bank that you are who you say you are.

The other bank or credit union issued you cheques in your name after identifying you properly.

If it turns out you applied fraudulently under a false name when opening your e-Bank account, then the e-Bank intends to defend itself it court by shifting the blame to your chequing account bank or credit union for failing to properly identify you. It’s a cover their butt tactic.

How Else Do e-Banks Verify Your Id?

Most of these banks will also ask you a string of questions based on your credit history report. In theory, only you should know those details and be able to answer correctly.
Zag Bank uses credit history questions as part of their account setup practices. EQ Bank said it was going to but I haven’t been asked them yet, so I’m not sure when they will be asked.

What Do I Need to Get Started Opening My e-Bank Account at EQ Bank?

What should I have handy before I start this

your SIN
a valid email address NOTE Your email address will be your login ID!
a password for signing in to your bank account with a minimum of 7 alphanumeric characters

You will also have to be able to access your email quickly to get a passcode that they will email you. The code expires a few minutes after it’s sent.

Getting a Savings Account at EQ Bank

Go to the EQ Bank website and make sure the security settings say you are at the Equitable Bank site.

Click on the Join Now button.

The Step 1 Page

Type the required information in the following fields:

Email address (this will be your Login name!)
Password
Confirm Password
First Name
Middle Name (optional)
Last Name
Address
City
Postal code
Mobile number (optional, which is good because I don’t have a Smart phone) (Or a Smart fridge.)
Other phone number
SIN
Date of birth (dd/mm/yy or select from calendar)
Occupation

From the drop-down list select your Province

Do NOT click on the circle beside No for the question Are you a U.S. person? If you do, it slides over to say YES you are a U.S. person for tax reasons. It’s not a check box.

Click on the Next button.

Step 1 Second Page

Answer the question: “Apart from you (or your joint account holder) will anyone else use or benefit from this account?
If your answer is NO just leave the circle beside NO untouched. (If you click on it, it actually changes your answer to YES.)
Answer the question: “How do you intend to use this account?”
From the drop down list select Personal Savings or the applicable answer.
After you have clicked through and read the Terms and Conditions and the Account Agreement, click to check the box beside:
I have read and agreed to the Terms and Conditions and Account Agreement.
If you want to get ads and other communications, click to check that box.
Click on the button: Open Account

The Step 2 Page

Your new account number will be displayed. Make a note of it somewhere safe!
Sign in to them email address that you provided to EQ Bank.
Open their note to read it and find out your one time passcode.
Type the Passcode in the text field: Enter your six-digit passcode
Click on the button: Verify

Completing Your EQ Bank Account Setup

To completely open your account, you must send in a cheque to EQ Bank either by using a photo cheque deposit app or by mailing it in.

Your cheque must

have your name pre-printed on it
be for an account at another Canadian bank or credit union, not a foreign one (credit card cheques are not acceptable)
must be for an amount of at least $1 (This is because they will actually cash the cheque to prove the account is active and in good standing)
not be a void cheque (So you can’t print a void cheque off at, say, Tangerine)
be made payable to yourself
be signed by you like any other cheque

You can use the EQ Bank app to deposit it OR

Mail it to EQ Bank at their Toronto mailing address which will be provided on the enrollment screen.

Before closing the window, you may want to read the other EQ Bank documents. If so, click on the link provided.

NOTE: EQ Banks says your new account will become active 5 days after they receive and deposit your cheque. They will advise you by email when your account is fully active.

Will it work? Stay tuned!
UPDATE: February 10, 2016: My account is fully activated at EQ Bank and I’m using it in various ways. It all went fine, if a bit slowly.

Related Reading

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Are you tired of opening new bank accounts to chase a better interest rate? Please share your views with a comment.

I see this question all the time on financial chat boards. The sad part is there is really no place where you can get much return on your money if you need to keep the principal safe and you need to use the money in 1-3 years. I know because we often save up money for a new home renovation or a major vacation in advance and I’d love to make some profit on that money while it sits waiting. (Yes, it’s true: we do not use a HELOC to fund our renovations or our vacations. We actually SAVE the money before we need to spend it. There are more Canadians like us than you’d think if you listen to the endless radio ads for using a HELOC to build a Sasquatch farm.) Even though the return will be low, though, I still need to check where to put this money we’ve set aside for a new furnace so where can I get the best rate for 2 years?

What Rate Can I Get for a Daily Interest Savings Account Deposit at the Big Banks?

The interest rate I can get by just putting the furnace money into a savings account is tricky to estimate because so many banks are now offering short-term rate bonuses. But let me see what I can find today, November 3, 2105.

First, the Big Canadian Banks

BMO Savings Accounts

Today, BMO has a “Savings Builder Account” where you only get 0.3% on your savings unless you add at least $200 a month, in which case you get a bonus interest rate for that month of a fraction of 1% annual interest. In theory if you added at least $200 a month every month you’d get about 1.3% on your money. It’s a possibility for someone just building up the savings for a trip or home repair, but it’s a bit more complex than I need given I already have this chunk of money saved up. (There may be fees to use this account.)

BMO’s regular high interest savings account is offering 0.5% today. (There may be fees to use this account.)

CIBC Savings Accounts

For their eAdvantage Savings Account, CIBC is offering 0.6% but only if you have a minimum balance of $5000. You can also earn an additonal 1.15% per year (but since it’s only an offer till February 29 2016 that’s not possible because there isn’t a year left to earn it during) on new deposits above your previous balance. (There may be fees to use this account.)

Rates on their other accounts as listed today are much lower.

RBC Savings Accounts

RBC has a high interest eSavings account paying 0.65%. (There may be fees to use this account.)

ScotiaBank Savings Accounts

ScotiaBank has a confusing array of accounts paying from 0.9% – 1.5% if you have $5000 or more to deposit. (There may be fees to use these accounts.)

TD Savings Accounts

TD seems to have a high interest savings account paying 0.55% today on balances over $5000. (There may be fees to use this account.)

None of these offerings from the Big Banks seems particularly good to me and all of them require me to read a lot of fine print to be sure what, if any, fees they are charging.

What Rate Can I Get for a Daily Interest Savings Account Deposit at the No Fee Online Banks?

This is where it gets really murky because of all of the special, limited-time offers.

Tangerine Savings Accounts

For example, in July I accepted an offer from Tangerine for 3% annual interest payable on my savings account balance for 180 days. This was a special rate offered to customers who keep shifting large amounts of cash in and out of their Tangerine account. I had to have at least $10 000 in my account to get this rate (which I did have because we need a new car sometime between now and five years from now as well as a furnace. If someone can accurately predict how long my 1998 Corolla is good for, please let me know!)

Today, though, the best offer I can see from Tangerine is no where near that high. For a regular savings account with no fees and no minimum balance, Tangerine is paying 0.8% per year.

If you have never had a savings account, RRSP, RRIF or TFSA account with Tangerine, they have a special interest rate offer in effect. You could earn 2.4% per year (but not for a whole year, so that’s not really true) on your deposits for 6 months from the day you first open your first account. Remember if you open the account on say, November 5, the clock starts ticking then, even if you don’t put the money in until Jan 5.https://www.tangerine.ca/en/landing-page/rateoffer/index.html The offer started September 1 and could be withdrawn at any time, so don’t sign up for a new account without making sure you will get the offer! Also, it looks like the rate is actually the regular interest rate plus 1.6%, so if the regular rate goes down, so will the total rate.

I like Tangerine and use it regularly, but I do move my money in and out to take advantage of better rates if they come up, especially from PC Financial.

President’s Choice Financial Savings Accounts

So what does PC Financial have on offer right now? Well, they also have a short-term bonus rate. There’s is 2.6% on new balances. Oops, no sorry that’s only for TFSA and RRSP deposits.

OK, what do they offer for their no-fee savings accounts? Well, they are matching Tangerine’s 0.8% per year for regular savings in their no-fee Interest-Plus savings account. I don’t see an ad for a current bonus rate offer. They often have them, though, so it’s worth keeping an eye out on their website. In the spring of 2015, I was getting 2.5% per year for a few months from PC Financial.

Oaken Financial (Home Trust) Savings Accounts

I also have a savings account at Oaken Financial which I use to move money in and out of GICs for our emegency fund.

The Oaken no-fee Savings Account is paying 1.75% per year on any balance.

That is a good rate!

This is just a savings account, by the way. There are no ATMs and no way to get cash from the account directly. You have to transfer your money to another bank, or wait for them to send you a cheque in the mail, if you want to get your money out. I linked our account to one of our other banks and transfer the money back and forth. As usual, it takes several days (about 5) for the money to be available to spend again from my other bank account. That said, I am talking about where I want to park money for a year or two, so the usual bank hold times on transfer are not a problem.

Oaken has been paying a good rate like that for the year I have been with them. I have not had to apply for any special offers, etc, to get their best rate.

ZAG Bank

Since last I worried about cash deposit rates, another eBank has opened and started playing the short-term higher-interest-offer game. Zag is apparently owned by the Desjardins Group. Like the other banks mentioned in this article, it belongs to CDIC so your cash savings deposits are insured up to $100 000.

Like PCF and Tangerine, Zag is offering a base rate for their no-fee Savings Account of 0.8%.

Right now (November 3, 2015) they also have a short-term offer. If you open a savings account before November 15 and keep $1000 in it, you will earn a 2.5% annual interest rate (although you can’t really because the offer ends before a year term) on any deposits until March 20, 2106. You can read the details on their website. https://www.zagbank.ca/fineprint/fall2015

Credit Unions

I don’t have much experience with credit unions and there are some that are only really servicing certain markets such as the GTA and the Vancouver area. I strongly suggest you do look at what they have to offer, though, as often they have good rates and no or low fees for savings accounts.

Which eBank Would I Recommend Saving Your Money In?

As I’ve mentioned, I have an account at 3 of the 4 eBanks described in this article.

If you don’t mind having several bank accounts and if you are organized enough to transfer your money every few months to take advantage of new interest rate promotions, then I recommend you also open an account (if it is no fee and no minimum balance!) at each of these banks. This past 12 months I have been able to earn 2.5-3.1% per year rates using this transfer method.

If you want to “set it and forget it” I would recommend opening an account at Oaken Financial. Keep an eye on their rate when you receive your statements, though, in case they suddenly drop the rate.

What Other Ways Can I Invest My Money Safely for the Short Term?

I’d like to write an article about investing in GICs and cashable term deposits to go with this review of daily interest savings accounts. I’ll link to this article when that gets written.

In the meantime, I’d like to say that there is no way to invest in the stock market, not even through a market-linked GIC, for the short-term (5 years or less) that is safe. There just isn’t.