Christopher Liew: Not all banks are created equal. Here’s how to choose wisely

Christopher Liew breaks down key factors Canadians should consider when selecting a bank account, from ATM access and fees to the pros and cons of big banks, credit unions, and online-only institutions. (Getty Images / Dragon Claws)

Christopher Liew is a CFP®, CFA Charterholder and former financial advisor. He writes personal finance tips for thousands of daily Canadian readers at Blueprint Financial.

Choosing your first bank account might seem simple, but it’s a decision that can have a considerable impact on your day-to-day finances. Between monthly fees, ATM access, interest rates, and digital banking tools, no two financial institutions are exactly alike.

Whether you’re a young adult, a newcomer to Canada, or are simply looking for a better bank than the one you have, here are some important considerations you should keep in mind to ensure your next bank fits your needs.

What to look for when picking a bank account

When it comes to where you put your money, you want a bank that fits your lifestyle and finances. While possible, shutting down your account and moving funds over to a new bank simply because you made the wrong choice is tedious and may even come with fees.

With that in mind, here are some of the key points you should review with each bank you consider.

Access to fee-free ATMs

If you use cash frequently, look for a bank with a large fee-free ATM network. Also, pay attention to how many monthly transactions (e-transfers, debit purchases, withdrawals) are included with your account, as going over the limit can trigger extra charges.

Branch locations and customer service

Some people prefer face-to-face support, especially when opening accounts, applying for a loan, or dealing with more complex issues. Big banks offer lots of branch access, while credit unions and online banks may offer fewer (if any) in-person options.

Availability of high-interest savings accounts

A high-interest savings account (HISA) can greatly aid your financial growth. Online banks typically offer better rates than big banks, whose standard savings accounts may only offer a fraction of a per cent. Check whether the rate is promotional or permanent, and whether the account has any restrictions.

Type of loan

Big banks offer just about every loan you could need, including mortgages, auto loans, small business loans, or personal loans. Smaller or online banks may be limited in the types of loans they can offer to their customers.

Business banking solutions

If you’re planning to open a business bank account, make sure that the bank you’re looking at offers competitive business banking services. Ideally, you’ll want a chequing account, a business savings account, and the ability to open a line of credit for your business or apply for business loans.

Every bank is a bit different when it comes to what they can offer to businesses, so make sure that the bank you’re looking at can fit your specific business needs.

Types of banks

Big banks, credit unions, and online-only options all offer various strengths and drawbacks. Taking the time to compare accounts ahead of time can save you money, stress, and hassle later.

Big banks

Canada has six major banks, often referred to as the “Big Six”:

• RBC
• Toronto-Dominion (TD Bank)
• Scotiabank
• Bank of Montreal (BMO)
• Canadian Imperial Bank of Commerce (CIBC)
• National Bank

These are the most widely recognized institutions in the country and control the most assets. They offer large ATM networks, in-person services, credit cards, loans, and investment products all under one roof.

While convenient, the trade-off is their cost. These big banks typically charge higher monthly fees and offer lower interest rates on savings accounts. Still, they remain a popular choice for those who value convenience, branch access, and a full suite of financial services.

Credit unions

Credit unions operate very similarly to banks, but are structured as non-profit organizations. The difference is that they tend to be more community-focused and are owned by their members.

Essentially, each member owns a share of the credit union and gets a vote to elect a volunteer board of directors, no matter what their account balance is. Any profits generated by the credit union are “returned” to members in the form of better interest rates, lower fees, and improved services.

Due to their non-profit structure, credit unions are one of the best places to get a low-interest auto loan, mortgage, or small business loan. Some local credit unions may also offer special discounts, rates, and incentives to members who work in local hospitals, factories, or who work for the city.

Some examples of large popular credit unions in Canada include:

• Meridian
• Servus
• Vancity
• Coast capital

It’s not uncommon to find smaller local credit unions that may only have a few branches to serve their local city.

The advantage of banking with a credit union is that they typically have lower fees, feature competitive interest rates, and offer a more personalized customer experience. The drawback is that they tend to be more localized with fewer ATMs and branches, making them not as ideal for those who travel or move around frequently.

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Overall, credit unions are great for customers looking for a more community-oriented bank and for individuals who plan to settle down, buy a house, or open a local business.

Online banks

Online banks have become increasingly popular in recent years. Some examples include:

• Tangerine
• EQ Bank
• Simplii Financial

These banks operate without physical branches, allowing them to offer no-fee accounts and special high-interest savings accounts. The high-interest savings accounts come with a maximum account limit (typically between $100,000 and $200,000), but are a great way to store your emergency savings and earn monthly compounding interest at the same time.

Online banks are ideal for people who primarily bank digitally and want to avoid monthly charges. The downside is the lack of face-to-face support and limited options for cash services or certified cheques. Additionally, many online banks may not offer business banking solutions or traditional loans.

Final thoughts

Having the right bank account will influence how easily you’re able to save, budget, and manage your money over the long term. With so many options available, taking the time to compare fees, features, and banking tools can help you avoid unnecessary costs and build a solid financial foundation.

Whether you prefer the full-service approach of a big bank, the community focus of a credit union, or the low fees of an online bank, the best choice for you is the one that aligns with your individual lifestyle and financial goals.

More from Christopher Liew:

• Is financial freedom still realistic for most Canadians?
• Thinking of refinancing your debt? The benefits, drawbacks, and credit impact
• The smart way to pay off debt without feeling deprived
• The benefits and drawbacks of renting versus owning