Saving money is tough. It's hard to put aside money for things that we know are farther along in our future and just seem to be out of reach meanwhile there are tons of things we want to buy RIGHT NOW. However, saving is not only crucial for your future, but it's important to start as soon as possible.
If you've heard about compound interest before then in short I'll tell you that interest earned on any amount you save - adds to your savings over time. What this means is that any money you deposit into savings earns interest and the longer you hold it, the more interest accumulates - you earn interest on interest. This is not something you can earn by hoarding cash under your mattress. Trust me, a savings account is honestly the best way to get the ball rolling on your future (investing helps too but let's start simple).
Disclaimer: before we delve into the fine details, benefits, drawbacks of signing up with EQ Bank, I wanted to let you know that this post is NOT sponsored by EQ Bank, so all opinions and recommendations are in fact my own or otherwise sourced and linked. My goal is to provide useful tools and information to you, Millenial, so that I can possibly help in arming you for your upcoming financial decisions.
What is EQ Bank?
EQ Bank is an online bank that offers savings products to customers across Canada. Their primary product offers customers a Savings Plus Account which is a high interest savings account (HISA) with NO monthly fees, NO minimum balances and unlimited FREE transactions and Interac E-transfers! They also offer Guaranteed Investment Certificates (GICs) at some of the most competitive rates in Canada (I will review these in another post soon!).
All of EQ Bank's accounts are held by the parent company Equitable Bank which is ranked Canada's ninth Schedule I bank and has been around since 1970! Equitable Bank deals mostly in mortgages loans for businesses. Headquartered in Toronto and with only 4 other physical locations, Equitable Bank is not as visible as other banks and serves majority of their clients online only.
Is EQ Bank safe to deposit my money with?
Equitable Bank is a publicly traded company meaning it's stocks are listed and traded on the Toronto Stock Exchange. In order for this to happen, they are required to provide and publish annual financial statements as well as quarterly reports - these are available to the public. Investors that value steady returns on their investments usually buy bank stocks for their ability to stay stable regardless of the rest of the market. Therefore, investors are usually hyper aware of bank financials, especially any Schedule I banks, so amounts are heavily scrutinized, audited and verified thoroughly (no scams here!).
Also, Equitable Bank is a member of the Canadian Deposit Insurance Corporation (CDIC), therefore it has deposit insurance on all of its accounts. This extends to all accounts in EQ Bank as well. What this means is that if this bank were to go bankrupt, your deposits would be insured. If you're unsure about what CDIC coverage is and how it works, you can read about them here. And for the future, always make sure that any financial institutions you go with are CDIC insured!
EQ Bank makes money through a simple cycle: it accepts savings deposits from customers on a large scale cross-country, loans out the money through mortgages and to businesses and finally collects interest from these loans. The interest money is partially given to those of us with savings accounts as interest while the other portion is deemed revenue for the bank.
In addition, since they have very few physical locations, they save a lot of money on operating costs and don't have to charge direct banking customers any fees!
How can I save with EQ Bank?
The Savings Plus Account by EQ Bank is a high interest savings account (HISA) in that it earns you some of the highest interest rates in Canada today. In addition, accounts with EQ Bank have NO annual or monthly fees, NO account minimums and UNLIMITED Interac E-transfers and Electronic Funds Transfers.
Currently (at the time of writing this article) EQ Bank offers 2.45% interest per year on any money you deposit with them, paid monthly. To give you an idea of how good that is, here is a small chart of savings accounts offered by Canadian financial institutions as of this post's date:
So as you can see, 2.45% is on the higher end of the spectrum and with zero fees to earn this extra money on your longer term savings amounts, EQ Bank is one of the best options for savings accounts currently. Even though there may be a bank or two that are higher in the list - take a look at their fees before you commit! Also of note is that the rate offered by EQ Bank is NOT a promotional rate, it's their standard rate!
If you want to see an up-to-date comparison list of current rates offered, visit this link on RateHub.ca that will show you how much you can make in a year on any deposit amount compared by financial institution.
To access this great savings rate, you can sign up online through their website and then download their app through your phone's mobile app store to use for monitoring your account and making transfers in/out. The app is smooth, simple and easy to use - you can see all of your accounts in one spot.
Speaking of accounts, you can open up to 5 savings accounts at the same time! The best perk is that each one can be named individually based on what you're saving for. Currently, I'm saving for a new vehicle, my upcoming post-grad education, Christmas season and a down payment for a new home.
Why is this great? When you typically open a checking and savings account in the same bank with the same access, it is very easy to transfer the money from savings when you are running low in your checking account. I used to do this all the time: instead of going into overdraft, I would take money from my savings and boom - money for that new hoodie. This is counter-productive to saving and is a bad habit so I moved my savings to a different bank! If you simply NAME your savings fund, you're less likely psychologically to take that money out and use it for something else because it already has a dedicated purpose beyond being a general lump of savings.
Another great thing about EQ Bank is your ability to set goals for every account. For example, I have a goal of saving $10,000 for my next vehicle by spring 2021. When it comes times to buy the car, anything I don't spend on the purchase will be transferred over to another goal. In the meantime while I deposit money into my "New Ride" savings account at EQ, I am able to see a little thermometer and percentage of where my account is compared to the goal. I love seeing it get bigger and greener with every paycheck!
One of the best things about EQ Bank's Savings Account in my opinion, is the ability to automate your transfers to make savings something you don't have to think about. Just set it up to automatically transfer an amount from one of your linked bank accounts (best way: withdraw from your checking account biweekly on pay-day) and watch your goals get closer and closer to completion without having to do much.
Some other things you should know about opening up an EQ Bank Savings Plus Account that depending on your preferences may or may not deter you:
1. No physical branches means you have to deposit your money electronically. This can be done through setting up direct deposit, taking a photo of your cheque in-app, or an Electronic Funds Transfer (EFT) from linked accounts.
2. Transfer timing for an EFT takes 1-2 business days when withdrawing. This is great for those of you Millenials that are impulse shoppers and need their money out of sight and a little bit out of reach to curb the spending appetite. Think of it as burying your chocolate at the complete back top shelf of your pantry: less access = less attempts to withdraw!
3. When depositing, EQ Bank holds all EFT transfers for about 5 business days. The reason being is that EQ Bank would like to verify the amounts are available from the funding source before withdrawing - this eliminates any risk to EQ Bank not receiving money. For those of us that are impatient and need to see the account balance RIGHT NOW, these deposited funds appear in your totals immediately and start earning you interest however they are not available to spend in your account until the hold period is over.
4. Joint accounts are not currently being offered however according to their website, they are working hard to make this happen for us. A huge leg up in savings is when you are able to save with someone towards a common goal and keep each other accountable over willy-nilly transactions!
My EQ Bank Recommendation
Overall, I think the Savings Plus Account is a great option for those of us starting to save for medium - long term goals that are several years away. The high interest rate will add some extra money to deposits and allow for a cash-stash away from the likes of your daily used debit and credit cards!
There is a small transfer delay when you are moving money in and out of your savings accounts but a timing buffer like this is a boon for saving! After all, pre-planned purchases shouldn't include hasty withdrawals - those are linked to frivolous spending that we don't want with our savings!
Over time, I've been able to accumulate a healthy amount of savings and stick to my goals by naming these separate mini goals and keeping tabs of these accounts separate from my checking bank. I've definitely gone a long way from emptying my savings to buy silly things for myself to funding my Christmas savings a year in advance!
With a zero-fee account that makes money on your deposits at some of the highest rates available in Canada, EQ Bank really made the perfect product for those looking to start saving seriously.
Let me know in the comments below what your thoughts are about EQ Bank's Savings Account or if you have any questions for me in regards to other Fintech you'd like me to review. I'm always looking for ways to automate my finances and keep everything super simple.
Happy Spending and Happy Saving!
Linda Kamaev